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Volkswagen (VLKAY) up 5% on $10B Emissions Fraud Settlement

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Volkswagen went up 5% on Thursday with news that it would pay a nearly $10.3B settlement to U.S. regulators over its emissions cheating scandal.

According to Reuters, the average compensation to current car owners is around $5,000, but to some can reach upwards of $7,000. They also have the choice to either sell their vehicles back to Volkswagen or have the vehicles repaired for free by the firm. Most of the money would be allocated to paying owners of vehicles with 2-liter diesel engines, which were the ones programmed to cheat the emissions tests.

In September of last year, Volkswagen admitted that it had used specific software to bypass emissions requirements in nearly 11 million vehicles globally since 2009. Along with paying individual owners, Volkswagen also agreed to fund a grant program to offset air pollution. Here, we can see the very noticeable drop in stock price due to the scandal.

The settlement comes a day after Volkswagen CEO Matthias Müller promised shareholders that the firm would grow, in particular through added investment in electric vehicle development. Müller expects Volkswagen to sell around 10 million vehicles in 2016.

Although the settlement is currently listed as explained, it is subject to change until next Tuesday, during which it will be submitted to a U.S. judge for approval.

VLKAY currently sits at a Zacks Rank #2 (Buy).

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