Volkswagen AG (ETR: VOW3), the German carmaker, as part of a strategy to recover some of the trust that they have lost from its customers after the cheating scandal, is going to offer cash to diesel vehicles owners.

According to Volkswagen, an official announcement is supposed to take place on Monday, after the website The Truth About Cars said that owners would get a cash card worth $500 to be freely spent, and another card from $500 to $750 to be spent at a Volkswagen dealer.

The German automaker looks to appeal to customers and dealers following the emissions scandal. Credit:

A Volkswagen spokesman said that a sales initiative was planned, although he didn’t provide many details.

“Volkswagen of America informed its dealers about a planned initiative,” he said, adding that the company would “publish the details about this in the coming week,” according to The Wall Street Journal.

This initiative is believed to be one of the first steps that the company has to make in order to restore the consumer’s faith in the largest automaker in Europe. Michael Horn, chief executive of Volkswagen in America, as well as other executives, have been sending letters to U.S. dealers explaining these steps.

According to the NY Times, two Volkswagen car dealers said last Saturday that they were familiar with this plan, but they stated that they didn’t have many details. Moreover, Alan Brown, head of an association of VW dealers, acknowledged that there is a program being developed.

High costs for the company

Volkswagen is facing lawsuits from owners who want compensation for the value lost of nearly 500,000 Volkswagen and Audi cars that are equipped with the illegal software.

According to statistics from Kelly Blue Book, a research group that studies car values, said that since the scandal, the value of the VW models has dropped in a 16 percent, and in some models up to 30 percent.

What isn’t clear about the initiative, is whether VW customers are going to be required to release of liability, or if it is a no-strings-attached gift from the automaker.

Fixing the cheating device on every car is likely to be too expensive and complicated, and the company hasn’t even explained how they would do it although they have expressed in several occasions that they are going to make the necessary changes.

Encouraging dealers

Just after the scandal became public, the company started to make a discount on car sales on the U.S., as well as offering dealers financial support. Mr Horn assured dealers of cash payouts of $300 to $600 for each car that they had sold, and guaranteed several other bonuses.

Moreover, after the company gave the order to stop selling affected cars, VW offered to pay dealers $70 a month for each car affected on their lot, and $50 for every certified pre-owned vehicle, according to the Wall Street Journal.

On October 15th, VW sent a letter to U.S. dealers offering a $2,000 bonus for the purchase of a new gasoline, electric or hybrid vehicle to those customers who had ordered a diesel vehicle that couldn’t be handled to them due to the sales stop.

Source: The Wall Street Journal