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.