Latest on VW Diesel Scandal: Evaluating Resale Impact and Lawsuits Galore

Details on the Volk­swa­gen recall of its diesel-pow­ered cars sold in the U.S. is still in the ear­ly stages. Here’s a few news devel­op­ments and mar­ket analy­sis on where it all stands for now………

  • Cer­ti­fied pre-owned sales saw a big year-over-year drop in Sep­tem­ber at near­ly 17%, while the first nine months had seen a 1.8% increase over the pre­vi­ous year for VW. While it’s too ear­ly to tell how the recall and diesel report­ing scan­dal will be impact­ing CPO and over­all used val­ues, Kel­ley Blue Book’s Alec Gutier­rez says that the VW Jet­ta is par­tic­u­lar­ly vul­ner­a­ble. About 80% of Jet­ta Sport­Wa­gen have been diesel TDI mod­els.
  • The scan­dal may be felt in asset-backed secu­ri­ties (ABS) trans­ac­tions pri­mar­i­ly through its impact on used car val­ues, Fitch Rat­ings says. If the vehi­cle recall results in low­er fuel econ­o­my and per­for­mance, resale val­ues may decline. In turn, this could bol­ster own­ers’ civ­il cas­es against VW, result­ing in longer last­ing rep­u­ta­tion­al dam­age. Oth­er pos­si­ble but less like­ly con­se­quences that have some loss poten­tial include the inval­i­da­tion of loans or lease con­tracts or cars being declared not road wor­thy, Fitch Rat­ings says.
  • Law­suits being filed are also gain­ing their atten­tion and analy­sis – includ­ing Har­ris Coun­ty, Texas, fil­ing a mul­ti­mil­lion dol­lar law­suit stat­ing that VW con­tributed to the region’s poor air qual­i­ty in the Hous­ton metro area. West Virginia’s Attor­ney Gen­er­al is seek­ing resti­tu­tion for Volk­swa­gen cus­tomers, who paid as much as $6,855 extra for cars with the clean diesel engines, plus $5,000 in civ­il penal­ties per vio­la­tion of West Virginia’s con­sumer pro­tec­tion law. Inde­pen­dent auto deal­ers have filed suit against VW in a Cal­i­for­nia fed­er­al court on behalf of inde­pen­dent deal­ers for loss­es they say they will incur as more infor­ma­tion on the scan­dal is released. A pen­sion fund in Michi­gan has filed the first investor law­suit against Volk­swa­gen over its dras­tic stock drop in the after­math of its emis­sions scan­dal. Toron­to law firm Roy O’Connor LLP, announced com­mence­ment of a pro­posed class action law­suit action against Volk­swa­gen AG and a num­ber of its sub­sidiaries in Cana­da. The pro­posed class action seeks dam­ages in excess of $2.5 bil­lion.
  • VW hopes to see a recall affect­ing as many as 11 mil­lion of the Ger­man maker’s diesel vehi­cles begin in Jan­u­ary – but for the 482,000 of those cars sold in the U.S., VW must still win U.S. Envi­ron­men­tal Pro­tec­tion Agency reg­u­la­to­ry approval for the planned retro­fit. The automak­er is cur­rent­ly meet­ing with the EPA to get reg­u­la­tors’ approval for a pro­posed fix that would meet emis­sions stan­dards.
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