What the Volkswagen Settlement Means for Used Car Owners

The German Automaker's Plan to Pay Consumers

2015 Volkswagen Golf Sport photo
2015 Volkswagen Golf. (c) Volkswagen

The ongoing saga of the Volkswagen TDI 2.0-liter diesel engines and their understated emission levels first came to light in September 2015. Fast forward eight months to April 2016 and there appears to be a settlement in the works for used Volkswagen owners.

Earlier, we had published a report about the early impact of the Volkswagen turbodiesel scandal. Now there is more news to report.

Here are some of the details you need to know about the settlement.

The official Volkswagen response

This is what Volkswagen USA had to say …. in its entirety, “Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public. These agreements in principle are an important step on the road to making things right. As noted today in court, customers in the United States do not need to take any action at this time.”

How much will VW owners receive?

There has been a lot of speculation in the media, including USA Today [which has been cautious in its reporting] about Volkswagen owners receiving $5,000. Nobody knows that for sure yet because the details are still being worked out as of April 23, 2016.

There has also been an estimate that Volkswagen will need to set aside $18.6 billion to settle the lawsuits, repair used Volkswagens, and repair them for owners who decide to keep the vehicles.

How long is it going to take?

AutoTrader.com’s senior analyst Michelle Krebs told AutoRemarketing.com that much more work needs to be done to flesh out the details of Volkswagen’s plan in the coming months.

“Indeed, it is a fairly sketchy framework at this point,” she said.

That means Volkswagen’s comment above that customers do not need to take any action at this time is both prescient and bad news. At this point, Volkswagen used car owners are holding vehicles they really can’t sell because nobody knows what the plans are for them or how much VW will actually reimburse them.

Plus, unless you enjoy speculative risk, there’s no reason to buy a used Volkswagen with a 2.0-liter turbodiesel at this point. Why put yourself through that headache? Also, one wonders if you could get a used car loan on one not knowing their true value.

Should I keep driving my used diesel Volkswagen?

Absolutely because there is no reason not to, unless you are truly concerned by the impact on the environment.

The fuel economy and performance are going to change once any improvements are made to bring the cars back into compliance.

What deal should I take for my used VW?

It’s impossible to say at this point but it’s never impossible to speculate. But, at this point, it probably makes most sense to take the $5,000 (if that is the final figure) from Volkswagen and then turn the car into Volkswagen for a certified pre-owned model.

While that might seem odd, it isn’t. You’re not going to get a better deal for your used Volkswagen than from a VW dealer.

Unless of course, VW is offering you the value of the car plus $5,000. Then you might want to consider other diesels on the market.

Is it just Volkswagen?

At this point it appears not to be. Just as news about the early stages of the VW settlement were being discussed, comes new from a French news service “that 16 major car brands -- ranging from France's Renault to Italy's Fiat to Japan's Nissan -- showed up irregularities.”

And, of course, Mitsubishi has just admitted to cheating on emissions tests as well.

What’s the impact on the environment?

When the scandal first broke, Volkswagen had the unfortunate timing of launching its all-new Passat in Brooklyn, N.Y. At the time, one sage auto journalist pointed out the emissions from the jets carrying journalists to the event and the diesel ferries transporting them back and forth across the East River had more of an impact on the environment than the cars ever would.

That may have been an exaggeration but the website The Truth About Cars really did the math on the environmental impact of Volkswagen buying back the cars. The writer for that site puts forth the theory that the solution is going to have a much worse impact on the environment than the emissions from 500,000 vehicles ever could.

It’s a lengthy read but it seems pretty thorough. It’s important to note that the numbers were independently verified. However, from a layman’s perspective (i.e. one who just made it through high school math] the figures are chilling.