Buyback is cheaper for VW as it struggles to find fix, report says
Almost half of all owners affected by the 2.0-liter VW TDI settlement program announced at the end of June have registered, and most are opting to sell their cars back to Volkswagen, Bloomberg reports. Some 210,000 owners have already contacted the automaker and indicated they want VW to buy their cars back rather than wait for the automaker to approve and implement a fix.
“Under the proposed settlement, eligible customers will have two choices: (1) They can sell back their vehicle to Volkswagen or terminate their lease without an early termination penalty, or, (2) keep their vehicle and receive a free emissions modification, if approved by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB),” Volkswagen stated in announcing the program. “Customers who select any of these options under the settlement will also receive a cash payment from Volkswagen.”
Under the terms of the settlement reached with U.S. authorities, VW is expected to buy back 85 percent of the affected 2.0-liter TDI cars still in use and to provide owners cash compensation in addition to the value of the car before the EPA’s announcement of the existence of emissions-cheating software at the end of September 2015.
“If you choose the buyback option, you will receive your car’s September 2015 Clean Trade Vehicle Value, plus a cash payment, ranging from a minimum of $5,100 to nearly $10,000, depending on your vehicle,” VW stated when announcing the settlement program. “If you choose the emissions modification option, you will receive a free modification plus the same cash payment.”
While the buyback and compensation program is ready to commence, the option of a fix is proving elusive. The EPA has rejected several proposed technical solutions, though the automaker has indicated it still wants to find a fix that will allow it to repair a portion of the vehicles.
“Of approximately 499,000 2.0L TDL vehicles that were produced for sale in the United States, approximately 460,000 Volkswagen and 15,000 Audi vehicles are currently in use and eligible for buybacks and lease terminations or emissions modifications, if approved by regulators,” VW said in a statement earlier, adding the Audi A3 TDI model to the totals.
The California Air Resources Board (CARB) rejected Volkswagen’s proposed technical solution for the larger 3.0-liter V6 TDI models, some 85,000 of which the automaker planned to fix instead of …
Since the settlement with U.S. authorities back in June, VW hasn’t indicated what percentage of cars it expects owners to opt to keep and repair. Even if we were to assume that 460,000 of the 482,000 vehicles are still on the road and are eligible for the repair — a low estimate — VW may have to repair a maximum of 69,000 cars. Even given the expenses related to the buyback option per vehicle, experts have warned that repairing any given car may well turn out to be more expensive for the automaker, meaning it’s in VW’s interest to buy back as many as possible.
Given the possibility that a technical fix will not be available for several months, the percentage of VW owners opting for a buyback may exceed the 85 percent buyback mandate that is a part of VW’s agreement with U.S. authorities.
Owners will have until September 2018 to decide which route to go; it is hoped and expected that VW will have received approval and actually implemented the technical fix by that point.