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Average VW TDI Owner May Get TWICE What Vehicle Is Worth In Settlement

2K views 17 replies 13 participants last post by  Burnout Czar 
#1 ·
Bloomberg.com
July 26, 2016

Jeremy Malczyk's 2012 Volkswagen Jetta Sportwagen is no prize. It has 70,000 hard miles on it, and the interior has been finely detailed by his two young children: beige leather buffed with beige Cheerios. But the vehicle comes equipped with a two-liter diesel engine doctored to cheat on emissions tests, so it will likely fetch almost $22,000 in Volkswagen's buyback program. A similarly used Sportwagen without the dirty diesel would fetch about $9,000 on the open market.

A U.S. District Court in California may approve the details of a massive Volkswagen repurchase program as early as Monday, and checks are expected to trickle down this fall to U.S. owners of some 482,000 Golfs, Beetles, Jettas, and Passats, as well as Audi A3 sedans sold with engines that violate emissions standards. It will mark a painful hit for Volkswagen—part of a $15.3 billion settlement with the Environmental Protection Agency—and a windfall for owners of otherwise deeply depreciated vehicles.

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UPDATE: The deal with VW has been approved by the U.S. District Court.
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The average purchase is expected to range from $12,500 to $44,000, with values pegged to the value 1 of each car just before the diesel scandal broke in September 2015. All of the afflicted vehicles will be considered in “clean condition,” even if the wheels are falling off. Tacked onto the value of each car will be a “restitution” payment equal to 20 percent of the vehicle value, plus $2,987.

All told, owners stand to make at least double what their cars were worth just before news of the scandal.

“Financially, consumers are going to do far better than if diesel-gate never happened,” said Ernie Garcia, chief executive officer of Carvana, an online used car dealer in 14 U.S. cities. “My guess is most of them will be able to make a decision on this very quickly.”

Regulators pushed Volkswagen to spread payments widely. Owners who are upside-down on car payments–owing more than their car is worth–will be offered loan forgiveness or an even larger payout, up to 130 percent of the value of the car. Even a former owner who sold one of the afflicted cars after news of the scandal will be eligible for half the restitution payment, with the other half going to the current owner of the car.

This is all in addition to the $500 cash cards that the company has already scattered to owners.

“Honestly, I think [Volkswagen will] probably just junk them,” said Bloomberg Intelligence analyst Kevin Tynan. “They’ll have already spent all that money to buy them back. They’re not going to spend more to retrofit them.”

Brauer, at Kelley Blue Book, expects from 70 percent to 90 percent of owners to take the buyback. “I think Volkswagen’s approach is, ‘We’re going to assume scrap value on all of these,” he said.

It's a staggering number of cars to toss onto the scrap heap. Volkswagen needed the past 18 months to sell as many new vehicles in the U.S. The company is still trying to figure out how to make amends for diesel gamesmanship on its larger, three-liter engines. There are 85,000 of them on the road in the U.S.

Malczyk, meanwhile, is one of a few people who knows exactly what to do with his tainted Volkswagen while he waits to sell it back to its maker. He’s going to wreck it, or at least flog it extremely hard in the coming weeks. Oil changes? Pass. Car wash? Nah. An impromptu rally course through the hardwoods of Connecticut? Sure. None of those will affect his payout.
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#2 ·
“Honestly, I think [Volkswagen will] probably just junk them,” said Bloomberg Intelligence analyst Kevin Tynan. “They’ll have already spent all that money to buy them back. They’re not going to spend more to retrofit them.”
No matter your age, this is the automotive story of your lifetime.

Simply incredible how our government has pounded the living hell out of VW. Question is, will Europe do the same in the coming weeks as their agreement seems to be falling apart.

It all started so simple, with this press release...

Sep 18, 2015

Volkswagen Group of America, Inc., Volkswagen AG and Audi AG received today notice from the US Environmental Protection Agency, US Department of Justice and the California Air Resources Board of an investigation related to certain emissions compliance matters. As environmental protection and sustainability are among Volkswagen's strategic corporate objectives, the company takes this matter very seriously and is cooperating with the investigation.


And now TDI owners will get the value of their vehicle locked on an early, pre-crisis September date, plus much, much more.

As I have said before, they will be studing this at the Harvard Business School for decades to come. Can't wait for the movie*.


*No kidding, a movie is in development.


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#7 ·
I plan to pick a couple up at auction while they're cheap.

If VW does junk them, they'll go up in value significantly. Similar to how Cash for Clunkers affected used car values.
 
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#5 ·
I think I'll see if I can go buy myself a fleet of these used VW's from anyone who isn't aware of this settlement (we live in a country where many people can't even name our first president, why would I expect everyone to be aware of the VW scandal?). Seems like a great investment!
 
#10 ·
How will this actually work though? Will this offer apply only to people that bought the vehicle when new and still own it? Or does it apply to whomever the current owner might be? How will VW know?
 
#6 ·
Sound alike this is designed to get as many people as possible to take the buy out. I wonder if doing so takes away the right to further legal action. If so, getting most people to take the settlement and quickly defining how much this will cost VW will help them more quickly move beyond this.
 
#13 ·
Tone:
Sound alike this is designed to get as many people as possible to take the buy out. I wonder if doing so takes away the right to further legal action. If so, getting most people to take the settlement and quickly defining how much this will cost VW will help them more quickly move beyond this.
The onus for effective completion of the compliance order is all on VW, not the owners.
 
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