While the firestorm engulfing Volkswagen over its diesel-engine emissions-test cheating, will undoubtedly reverberate throughout the automaker’s headquarters in Wolfsburg, Germany, the crisis is also impacting the U.S. dealer network. So far, with only the U.S. and, now, Canada forcing a stop-sale of current VW products equipped with the 2.o-liter diesel four-cylinder engines—and no fines, court settlements, and other payouts yet, it’s the dealers who are being hit the hardest by this scandal. Which is why, as uncovered by Automotive News, VW has laid the groundwork for financial assistance to American dealers to help them weather the storm.
The financial parachute first and foremost targets the biggest potential sore spot for U.S. dealers: the diesel cars they can no longer sell (and which make up between 20 and 25 percent of VW’s U.S. volume). Volkswagen will offer financing reimbursement for diesel vehicles left sitting on dealer lots as a result of the stop-sale order, and the plan will even cover certified pre-owned diesel models affected by the stop-sale. This support will continue until a plan for repairing the cars is put forth.
Other goodies include a guaranteed payout worth 1 percent of the MSRP of each vehicle sold in the third and fourth quarters of this year, plus $300 per car ($600 per Passat) during the month of September.
That’s all well and good for a start, but Volkswagen is facing lots more fallout. It still isn’t known whether the more than 10.5 million cars sold with the same diesel powertrain globally—482,000 VWs and Audis with the mischievous software at the heart of the scandal were sold in the U.S.—run afoul of other nations’ emissions laws, too, or what possible repairs can be made to the cars sold to get them compliant with EPA regulations. And while Europe’s diesel emissions regulations are far laxer than those in the U.S., you can bet government agencies across the pond are looking into whether or not Volkswagen duped them, too.
Should Volkswagen’s problems go global, or repairs to the affected vehicles prove too complex, costly, or time-consuming (if not all three), the company could be looking at an even more soiled reputation and the prospect of buying back noncompliant vehicles or passing out financial settlements to owners. And that’s before the Department of Justice’s investigation into VW’s conduct, EPA fines for each noncompliant vehicle, and the inevitable class-action lawsuits filed by disgruntled owners kick into high gear. And then there are the customers stuck with the diesel cars named by the EPA. For now, these folks are up to their ankles in VW’s problem, and must wait and see what restitution comes their way.
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