Taking a significant step forward in its effort to emerge from the emissions-cheating scandal, Volkswagen AG agreed to fix or buy back about 500,000 tainted cars in the U.S.

The German carmaker was commended at a hearing in San Francisco on Thursday for its cooperation and given until June 21 to fine-tune the agreement after months of acrimonious wrangling with U.S. authorities.

The judge overseeing the process said specific details will remain confidential until the agreement is finalized even as people with knowledge of the matter told Bloomberg that the deal is set to cost at least $10 billion.

U.S. District Court Judge Charles Breyer said at the hearing that “there is a definite momentum” to resolving this issue. The judge, who is presiding over more than 600 lawsuits linked to the scandal said that the final deal will include “substantial compensation” for affected owners of cars rigged to cheat on official emissions tests.

As it seeks to emerge from the seven-month-old crisis, the agreement with U.S. authorities is a milestone for Volkswagen. After admitting in September that it rigged the exhaust systems of 11 million diesel-powered cars worldwide to pass official emissions tests, the German carmaker has been battling to appease regulators and regain customers’ trust.

The news caused Volkswagen to delay releasing its 2015 earnings due to uncertainty over the cost of the scandal and led to the departure of Chief Executive Officer Martin Winterkorn.

Amid growing investor optimism over the outcome of the crisis, the stock of the company has risen 12 percent over the past two days. Volkswagen climbed 5.1 percent to 127.05 euros in Frankfurt on Thursday.

Including some buybacks, the plan covers about 480,000 2.0-liter diesel vehicles in the U.S. it is however still not clear what would  be done about 85,000 VW, Audi and Porsche models with 3.0-liter engines.

Volkswagen’s lawyers told the judge on Thursday that the

accord with U.S. authorities includes a fund for remediation and has been agreed to by state and federal regulators. The Wolfsburg, Germany-based company said in a statement that Volkswagen has also agreed in principle on a settlement with class-action plaintiffs, which will be finalized in the coming weeks.

“VW is committed to winning back confidence of consumers,” Robert Giuffra, a lawyer for Volkswagen, told the court.

Dan Becker, director of the Washington-based Safe Climate Campaign said that the final assessment of whether the Volkswagen agreement is a good deal for the U.S. public will have to wait until the deal is final.

“The devil is in the details, and there aren’t a lot of details,” Becker said.

The German carmaker is set to discuss further financial impacts from the scandal at a supervisory board meeting on Friday and has so far set aside 6.7 billion euros ($7.6 billion) for the recalls. With Volkswagen’s first-quarter market share reaching a five-year low in Europe, sales have also struggled.

(Adapted from Bloomberg)

Categories: Economy & Finance