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Volkswagen Is Looking For Alternate Payment Plans

Volkswagen’s future isn’t looking terribly bright. After the scandal many are calling Dieselgate broke in September and slowly expanded to include millions of diesel vehicles worldwide, stalled sales in October soon led to a 25 percent sales plummet in November. That’s also when the automaker admitted it may have also fudged the CO2 emissions on a few gasoline vehicles, although the company has since revised its 800,000 vehicle figure down to 36,000. Not good that it happened at all, but at least it’s better than before.

As far as Volkswagen’s future is concerned, however, there are two names appearing on its radar which may offer some help: Ken Feinberg and Elon Musk.

Feinberg’s Alternative Dispute Resolution

Ken Feinberg has a storied history when it comes to settling financial matters outside of courts. He’s peacefully ended personal injury disputes brought on by Vietnam vets sickened by Agent Orange, 9/11 survivors, the BP Gulf oil spill, and GM’s faulty ignition switches. Considering the rest of his record, deceptive diesel engines are small potatoes.

Although some consider Feinberg’s alternative dispute resolution plans to be a “uniquely American” alternative to litigation, the fact is that they actually follow a well-worn pattern: insurance payouts. The injured party puts in a claim, haggles over the details for a time, and then either receives an agreeable payout or else moves on to a civil lawsuit.

Thus, it makes sense for Volkswagen to create a compensation fund and to put an expert negotiator in charge, but whether or not it will prove helpful will likely vary on a case-by-case basis. Either way, VW diesel owners may still benefit from hiring a personal injury lawyer for the same reason that car accident victims can benefit from hiring a lawyer: the fund will likely offer a higher payout to claimants who show they’re willing to go to court.

Musk’s Alternative Punishment

Meanwhile, Elon Musk, CEO of Tesla Motors, has joined with numerous other executives and investors in requesting a different kind of punishment for VW. In an open letter to the California Air Resource Board, they suggested abandoning the idea of recalling and refitting Volkswagen’s diesel cars since it’s unlikely that car owners will give up the extra power and acceleration and the number of diesel VWs in America is small anyway.

Instead, the green company executives believe that regulators should push Volkswagen into accelerating development on their hybrid and fully electronic vehicles, including building production plants in America. This investment would cost about the same as the proposed fine, it would give jobs to Americans, it would help salvage their reputation as a green company, and it would eventually generate income, giving VW the chance to weather the storm of its own making.

However, while Musk’s suggestions make some business sense, it may not be punitive enough for the government, or else it might come too close to government meddling in business affairs. Only time will tell whether regulators stick with their current plan or else get creative.

Volkswagen’s position isn’t getting much better, but with most of the facts now public the company’s position isn’t getting much worse, either. Sales will likely continue to slump as civil cases and fraud claims pile up, but with Feinberg negotiating in America and Germany intervening on their behalf in Europe, Volkswagen may be able to survive their mistake after all.