What Would YOUR Plan Of Attack Be? Senators Tell Volkswagen They Need To Offer Buy Backs On 482,000 Vehicles

VW SOOOO has to get in front of this story! Their silence is deafening. They should have had their solution announced at the time (which they knew about in advance) that this problem was disclosed.

The most rational solution is for VW to fix the cars and then offer customers a cash settlement based on a deterioration of resale value formula, based on the age and mileage of the vehicles to make the customers whole. The payment should be cash and the customers would need to sign a release. That is the best fix for everybody.

Else, you get these regulatory psychopaths suggesting buy-backs (which would be for "used" KBB value (i.e. a fraction of what the car is worth) and then VW would have to send the cars to the crusher (or to the third world).

It would be "cash for clunkers" all over again - a complete disaster with no winners because VW would be out the money, the owners would be out the cars without enough money to replace the cars.

A big YUP to you! +1

Agree, but VW has a culture of being antagonistic with dealers and customers, so being magnanimous is not in their genes.

A complete wipe of upper management is necessary. Replace them with American and German executives head hunted from the competition and then return with a dealer-friendly, customer-friendly stance all while developing new cars that look nothing like current VWs that have new names.

The have to treat this near-death experience as seriously as their last one when their line up was the Beetle, Karmann Ghia, Type 3, 412, and Microbus that were replaced by the Polo, Golf, Scirocco, Passat, GTI, and eventually the Jetta.

I'd wager that VW thinks this will all blow over.

It’s obvious that many people who have never run a successful business, or any business at all, have an opinion on how VW should compensate affected Dieselgate owners. The idea of buying back a car rather than performing a recall and fixing the problem is just plain ridiculous. It’s likely impossible too, but folks don’t think about that.

Consider a car that sells to a dealership for $20,000 (dealer cost), and assume that a generous 5% of that dealer invoice is the manufacturer’s profit for that vehicle. In this scenario, the manufacturer’s costs are $19,000 and they make $1,000 profit. So if you want the manufacturer to buy back your car, they not only lose the $1,000 profit (fair enough), but now they also have to come up with the $19,000 manufacturing costs (materials, labor, and other fixed expenses such as amortized capital investments, factory and machine depreciation, heating, electricity, maintenance costs, etc.) Somehow, the manufacturer has to come up with $19,000 to buy back each car. Another way to look at this is that 19 grand – buying back 1 car -- represents about 19 car’s worth of profit. So in asking the manufacturer to buy back 1 years’ worth of production, we’re basically telling them that for the next 10 to 19 years, you’ll have to keep selling similar vehicles and not make one cent of profit.

But it’s worse than that. The number of affected Dieselgate cars isn’t 1 year’s production. It’s 3+ years (the exact number isn’t known yet), so multiply that “in the hole” number by 3+. Do you really believe it’s *possible* for VW to somehow secure financing that’s equivalent to, say, 25 to 30 years’ worth of their annual profit in order to buy back all the affected vehicles, and then somehow continue to operate for the next 30 to 35 years (they’ll have to pay interest on the loans), without turning a profit? It’s just downright foolhardy to believe this is possible.

Yeah, VW cheated. They broke laws. They lied to consumers. They should right that wrong by fixing the emissions in affected cars to legal levels, paying fines, *appropriately* compensating affected owners, and possibly having some VW execs do so jail time. But bankrupting the company with impossible expectations will result not only in little or no compensation for affected VW owners, it’ll likely mean you’ll have a hard time getting your VW supported, or the availability and quality of parts and service will go way down, provided by whomever buys the bankrupt VW’s assets.

The best avenue for the environment AND for owners of affected VW vehicles is (a) fix the high emissions, (b) ensure VW stays healthy so they are able to (c) perform all the recall work, pay fines, and compensate owners appropriately, to the greatest degree *feasible*.


(Disclosure: I took delivery of a new 2015 Audi Q5 3.0 diesel in May 2015. It has not been implicated in Diselgate yet, but I do have some skin in the game.)

Your assumption of 5% manufacturer profit in a $20K car is absurdly low.

The problem for this senator is that all of those effected VW owners were reasonably happy with their purchase until it was discovered that VW lied.

If all it takes is a "software" upgrade and a new sensor, then VW customers will get this plus a few extra $$$ for their inconvenience.

Remember, they did not force GM, Ford, Honda or Toyota to buy back vehicles that had a direct link to loss of life.

Every TDI owner I have talked with doesn't want VW to touch their vehicles. They like them just the way they are and want to keep on driving. They bought them for the fuel mileage and performance. "Clean" wasn't part of their decision process.

These two senators are famous for putting out statements and positions that are designed to be "click bait" and attractive to the hard line environmentalists. One would expect this from them. Real world constraints and problem solving are not part of their thought process.

I was considering a summer trade-in of my 2013 TDI Golf DSG & Tech Pkg. KBB and AutoTrader listed Trade-In Value at $16-$16.5K. With another 3K miles, it has a value of $13.5K...

VW has to get in front of this or they'll be in courtrooms forever...