The majority of the half-million owners of VW diesels with emissi ons problems want Volkswagen to buy the cars back, then they’ll move on to a different car. That’s a big fraction, possibly because the owners don’t really know yet what the fuel economy and performance of their TDI VWs will be like post-fix.
About 475,000 Volkswagen owners have already signed up to be part of the class action settlement – a large number in a relatively short time since details were hammered out in June – and only a relatively handful have opted out of the lawsuit, those people perhaps thinking they can cut a better deal one-on-one.
Volkswagen has set aside $10 billion to fund buybacks and/or repairs and cash back for the owners of lessees of the 485,000 four-cylinder diesels with non-compliant emissions. The total fund is $15 billion, which covers buybacks or repairs for the 75,000 of Audi, Porsche and VW six-cylinder diesels with emissions problems; compensation to VW dealers for lost revenue; and environmental good works.
An initial agreement over the four-cylinder buyback/repair program was reached in late June in the US District Court in San Francisco. Details of the six-cylinder program have not been finalized and approved.
If you discount the ribbing VW owners may be getting from their friends, the repair/buyback program works out well for the owners and leaseholders. First, they have two more years, until Sept. 1, 2018, to decide which way to go: Take a buyback or get the car repaired and at least $5,100 in cash compensation for their trouble.
If VW buys the car back, it’s essentially for the blue book value of the car before the emissions scandal broke a year ago. There are also some cash incentives they’ve received in the past year, such as credits that can be used for maintenance or in the parts department (carpet mats and a new shift knob, say). Basically, they’re getting more than the car is worth. If VW repairs the car, owners get $5,100 — that should more than compensate for the lower resale value.
If the owner wants to think about it for a while longer – two more years from today – they’ll be getting two more years of use out of a car that is fun to drive, gets great highway mileage, and almost certainly passes emissions tests, since one certainty about VW diesels is that the emissions gear works when it’s at the inspection station. Compared with other big class action settlements, analysts and lawyers say that the fraction of people who’ve signed up to be part of the lawsuit is high in such a short period (two months). Meanwhile, only a little more than 200 owners have opted not to be part of the lawsuit, about one of every 2,500 people affected.
Despite the higher cost of buying back the cars, then repairing some and scrapping others (older cars with emissions more out of compliance), VW may prefer the buyback scheme. Part of VW’s agreement in the initial settlement is that VW eventually buys back or repairs 85% of the affected cars. Penalties kick in if VW doesn’t reach that level.
Cars affected by the four-cylinder diesel recall are:
If VW isn’t on target to reach the 85% level, it’s possible there’ll be more mailings and possibly further promotions to get owners to bring their cars in for emissions work or for buyback. People who have leased have the option of ending the lease at any time with no penalties.