The VW emissions “cheating” scandal has been below the fold for a couple months now, but the repercussions are beginning to hit home.
Literally.
At home.
If you are among those who own a diesel-powered VW – whether “affected” of not – its resale value has dropped by about 20 percent, according to data compiled by Kelley Blue Book. The average auction price paid for a used VW diesel last month was down to $10,674 vs. $13,196 last August.
That’s a big hit – especially for cars that (pre-scandal) were known for holding their value better than average.
But expect resale values to take a real dump come June 28 – next week – when Uncle will finally allow VW to tell owners of some of the “affected” vehicles how much they’re going to get for turning in their cars to be destroyed. (The company has decided that “fixing” some of these cars is not economically doable; that it’s cheaper – and easier – to just offer to cut customers a check for the value of the car and be done with it.)
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Even if VW offers full MSRP (original purchase price) rather than 20 percent (or more) depreciated price, the value of other VWs will fall through guilt-by-association.
And even if your TDI-powered VW is not going to walk the Green Mile but will instead merely be “fixed” (software/re-programming in order to appease Uncle) it will take a hit, too – because it’s now public knowledge that the “fix” will probably hurt mileage and performance.
Which Uncle doesn’t care about, of course.
But people who buy diesel-powered cars do.
The taint of “scandal” has badly gimped VW sales generally. They are down 13 percent through May – and the company’s share of the U.S. market has slipped below 2 percent.
Part of this decline is due to the fact that Uncle has refused to grant the company permission to sell any new/2016 models powered by the TDI diesel engine. There are thousands of them sitting at depots, tucked out of sight somewhere… waiting. Uncle may finally grant permission next week, but it is probably too late to avert a catastrophe because we’re approaching mid-year/high summer and the 2017s will be soon be arriving at dealerships.
This virtually assures fire-sale prices of the stacked-up inventory of left-over 2016s.
This, in turn, will further depress the values of the diesel-powered VWs already in circulation – as well as VW vehicles generally.
Which will likely further gimp sales of new VWs as people shy away from the brand.
That plus double digit billions in actual and potential liability in the form of fines and class-action litigation could result in VW abandoning the U.S. market and perhaps going away completely. It is entirely possible. The amount of fines alone is high enough that VW has publicly announced it may not be able to pay any dividends to shareholders; high enough that VW might not make a cent in profit for several years to come.
