Cliff Banks - The Banks Report

Volkswagen to Decide on Dealer Compensation

July 18, 2016 — In a meeting with dealers on Friday, Volkswagen executives said they would make a decision within the next month regarding compensating its dealers for damages from the diesel emissions scandal.

Friday’s event is part of a series of meetings with dealers in which VW executives are outlining how the company plans to execute the $15.2 billion settlement announced three weeks ago. (Volkswagen’s Initial Diesel Payout to Exceed $15 Billion).

Volkswagen, though, has yet to disclose how it intends to provide its dealers with financial support for losses they’ve incurred. The automaker’s 650 dealers still have more than 12,000 vehicles sitting on their lots  they cannot sell.

According to a report in the Wall Street Journal yesterday afternoon, dealer restitution was not on the meeting’s agenda Friday. But dealers interrupted the presentation demanding answers. The best the dealers could wrestle out of the automaker, though, is that an internal agreement exists inside Volkswagen to provide “fair restitution” to its dealers and that it would make a final decision sometime next month.

Meanwhile, Volkswagen received more bad news last week as the California Air Resources Board (CARB) rejected Volkswagen’s plan to recall and fix the 85,000 vehicles (VW, Audi and Porsche) with the 3.0 liter diesel engines. When Volkswagen announced its proposed $15.2 billion settlements with regulators in June, it also announced confidently that it would submit a fix for those vehicles this month.

According to letters CARB sent the automaker, its plan is “substantially deficient.” Volkswagen’s plan for the 475,000 affected 2.0 liter vehicles in February was also rejected. Based on the letters, it doesn’t appear as if VW is any where close to coming up with a fix for the affected vehicles.

  • The automaker has failed to adequately describe the nonconformities and defeat devices on all the vehicles;
  • has not sufficiently described the remedial procedure for affected vehicles;
  • Failed to show the process to make sure there will be enough parts;
  • Failed to outline the impact proposed fixes will have on fuel economy, drivability, performance and safety;
  • Did not describe the impact the fixes will have on emissions;
  • Has not shown how the fixes will correct the problems nor has VW shown how quickly the fixes can be made;
  • Has not provided enough data to show the proposed recall and fixes will be successful.





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