VW Ordered to Compensate $1B to Consumers

Feb. 2, 2017
As the brand and dealerships lose trust with consumers, auto care shops may profit in the process.

Feb. 2, 2017—The Federal Trade Commission (FTC) is requiring Volkswagen to fully compensate consumers who purchased 3-liter TDI diesel vehicles through a combination of repairs, additional monetary compensation and buybacks for certain models.

Adam Liu, owner of M-Spec Performance in Middle Village, N.Y., says this presents an opportunity for auto repair shops specializing in VW work. As this is just the latest scandal to plague VW—recalls for the company’s emission scandal rose costed it over $18 billion this year—he claims the brand is losing trust, which means many dealerships are likely to lose business with customers.

“If you run a trusted, ethical, clean and welcoming independent shop and service VWs, I feel there is an opportunity to capitalize on being the dealer alternative specifically targeting TDIs,” he says. “Marketing campaigns concentrated on this subject might be very profitable. “

The order will return more than $1 billion to consumers. If no emissions repair is approved and if the company must therefore offer buybacks for all 3.0-liter TDI models, Volkswagen may have to pay as much as the full $4 billion judgment reflected in the order. This amount includes a contribution from Bosch, which manufactured the defeat device.

Under the federal court order, owners of older vehicles (model years 2009-2012) will be able to sell their car back to Volkswagen at favorable prices and obtain full compensation for their losses. Consumers are eligible to receive approximately $26,000 to $58,000 for a buyback, depending on the model, mileage and trim of the car. These owners can also opt to keep their cars and receive an emissions modification that would improve their vehicles’ emissions, if a modification is approved by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). Consumers receiving an emissions modification will also receive monetary compensation.

For owners and lessees of newer vehicles (model years 2013-2016), Volkswagen is expected to obtain regulatory approval for an emissions repair that brings the cars into full compliance with originally certified emission standards and does not materially reduce the performance of the vehicle. If Volkswagen obtains EPA and CARB approval within the timeframe in the FTC Order, consumers will receive this repair and additional monetary compensation ranging from approximately $8,500 to $17,600. This means consumers with newer vehicles will receive the car they thought they purchased, plus a substantial additional payment. If an emissions repair is not available under the timeframe in the FTC order, then Volkswagen must offer to buy back those models and provide lease terminations.

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