Volkswagen is facing a huge challenge about what to do with hundreds of thousands of diesel cars it is being forced to buy back because of the emission-cheating scandal.
The German automaker agreed in 2016 to buy back about 500,000 diesels that it rigged to pass US emissions tests if it can’t figure out a way to fix them. Except for a handful of 2015 models, VW dealers can’t sell the cars until – and unless – the company comes up with repairs to satisfy regulators.
In the meantime, the company is hauling them to storage lots, such as ones at an abandoned NFL stadium outside Detroit, the Port of Baltimore and a decommissioned Air Force base in California.
“This could get drawn out for a long time,” said Dave Sullivan, an analyst with industry consulting firm AutoPacific. “The question is how long will it take for VW to say ‘I give up?’”
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The buyback – a costly logistical headache – is part of the penance for Volkswagen’s years-long scheme to circumvent US emissions regulations. The automaker sold half a million diesel vehicles with software that activated stronger emissions controls during government lab tests but were inactive in the real world, when nitrogen oxide emissions surged to as much as 40 per cent above legal limits. Six VW executives have been indicted and the company has set aside nearly US$24 billion (NZ34.4b) to cover cheat-related costs, including more than NZ$14.3b to buy back vehicles in the US. A second buyback of around 20,000 3.0-litre diesel cars is expected to start in the coming months.
About 15,000 VW owners are showing up at dealerships in the US each week now to sell their Jettas, Golfs, Passats, Beetles and Audi A3s to the carmaker in exchange for payments of as much as US$40,000 (NZ$57,000). The agreement dictates that the cars can’t be put back on the road without being brought into environmental compliance, something that is almost certainly impractical for most of them. Even exporting them to countries with lesser emissions standards is forbidden.
In all, around 288,000 owners or lessees had opted for a buyback or early lease termination as of February 18, of which 138,000 had been completed, according to the latest update filed with a court overseeing the settlement. Another 52,000 owners have said they want to keep their cars and are awaiting a fix.
Depending on the model, it could be a long wait.