Pay fine and fix emissions problem or buyback?

I am wondering to myself. What would be the most cost effective thing for VW to do in this situation. Pay the fine per car and fix the problem or just buy back all the TDI's they sold that are effected by this problem. I have been through the buyback process with GM this year and in my case I was better off trading in my Cadillac for the Jetta TDI I now have. The reason I traded that car in is because with in 27k mi I was on the 3rd engine because of a bad piston design on the 2.0t.

I researched TDI's for a while and I saw what kind mileage people were getting so I decided to check them out. I ended up driving every single VW model that's available with a TDI and I decided the most fun to drive and least expensive to maintain was with a manual. I wanted a fully loaded car with a manual which left me with the only choice of the Jetta SEL.

What I am getting to is, if this fix ruins the car I don't want it anymore and if the most cost effective thing is to buy back the car this is what VW should do.

steves ls6 said:

What I am getting to is, if this fix ruins the car I don't want it anymore and if the most cost effective thing is to buy back the car this is what VW should do.

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There are too many unknowns at this point to make that statement. We have no idea what the fine is going to be. (We know what the are proposing, but not what it will be) We don't know what the fix is and we don't know if we can get out of having the car fixed if we don't like it. We also don't know if a buy back would eliminate the fine.

I agree that a buy back would restore faith in the brand and would eliminate any class action suits as well, since you can't sue for something that the company has actually fixed. (Well, you can sue, but winning is a lot more difficult)

So, it really depends on the fix. It may be some time before we know what that will be.

Short of it being impossible to fix, VW will not buy back the cars. Lets assume the average buyback price was only $10K (less for older vehicles, more for newer) for 500K vehicles that is $5B. Even if it is insanely expensive to fix say $4K per car it would be much cheaper to just fix it. The cost per car is lower and not everyone will comply with the recall. Just using some numbers for illustration but say half of the vehicles get fixed at a staggering $4K per car. That is $1B. $1B vs $5B is pretty easy to see which route VW would go. I mean a billion here, a billion there pretty soon you are talking about real money.

The second reason is that the US is the least of VWs problems. They have 20x as many affected vehicles outside the US. If they did spend $5B buying back vehicles in the US you can imagine people in other countries will want the same deal. So a $5B problem becomes $100B. That kind of sum would require a governmental bailout.

It just isn't going to happen. The one exception would be that if for whatever reason (none that I can think of) it simply is physically impossible to solve the problem.

Serra said:

There are too many unknowns at this point to make that statement. We have no idea what the fine is going to be. (We know what the are proposing, but not what it will be) We don't know what the fix is and we don't know if we can get out of having the car fixed if we don't like it. We also don't know if a buy back would eliminate the fine.

I agree that a buy back would restore faith in the brand and would eliminate any class action suits as well, since you can't sue for something that the company has actually fixed. (Well, you can sue, but winning is a lot more difficult)

So, it really depends on the fix. It may be some time before we know what that will be.

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I will tell you the problem that I have with this at this point. I drive a lot and from my situation earlier this year GM deducts a certain amount of money per mile to buy the car back. I like my car the way it is and I don't want the fix PERIOD. So if I have to do the fix and my car ends up being different and less dependable.....like some of the other stories I have read on this board with the fix they tried earlier this year.....I don't want my car anymore. The more I drive it the less it's worth and I don't want to be financially hurt when and if the time comes.

I understand this is going to be a long process and what the out come will be is anyone's guess at this point.

ChemMan said:

Short of it being impossible to fix, VW will not buy back the cars. Lets assume the average buyback price was only $10K (less for older vehicles, more for newer) for 500K vehicles that is $5B. Even if it is insanely expensive to fix say $4K per car it would be much cheaper to just fix it. The cost per car is lower and not everyone will comply with the recall. Just using some numbers for illustration but say half of the vehicles get fixed at a staggering $4K per car. That is $1B. $1B vs $5B is pretty easy to see which route VW would go. I mean a billion here, a billion there pretty soon you are talking about real money.

The second reason is that the US is the least of VWs problems. They have 20x as many affected vehicles outside the US. If they did spend $5B buying back vehicles in the US you can imagine people in other countries will want the same deal. So a $5B problem becomes $100B. That kind of sum would require a governmental bailout.

It just isn't going to happen. The one exception would be that if for whatever reason (none that I can think of) it simply is physically impossible to solve the problem.

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But If they have to pay a fine per car ($34k?) and fix them, (your number $4k). That equals to $38k........ If they don't have to pay a fine then its a whole different story.

They can buy back the cars part out the crappy ones and sell the good ones to countries where they don't care about emissions or convert them to gas and re-sell them warrantied at a bargain price to recoup part of their loss.

steves ls6 said:

I will tell you the problem that I have with this at this point. I drive a lot and from my situation earlier this year GM deducts a certain amount of money per mile to buy the car back. I like my car the way it is and I don't want the fix PERIOD. So if I have to do the fix and my car ends up being different and less dependable.....like some of the other stories I have read on this board with the fix they tried earlier this year.....I don't want my car anymore. The more I drive it the less it's worth and I don't want to be financially hurt when and if the time comes.

I understand this is going to be a long process and what the out come will be is anyone's guess at this point.

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I bought my TDI almost exclusively because of the number of miles I knew I would be putting on it (80miles a day) with the expectation that it would A.) reasonably be reliable for the long haul and B.) that I would save a reasonable amount of money over a gas-fed car. I know that it is obviously too early to be speculating on the outcome, but if it goes into the worst-case scenario and a buy-back is forced I for one will not be thrilled with the idea that VW might adjust the value of the buy-back based on mileage accrued. To me, that's almost like treating affected consumers like you are trading your vehicle back in and simply considering basic depreciation. Again, this definitely seems like the most extreme case and I hope it isn't the actual outcome, but I hope that none of us end up on the losing end of this situation financially.

They will be forced to pay the fine regardless. There is no commit fraud and when caught buy the car back for no fine option. The fine is very likely going to be much lower and conditional on fixing the issue.

This is really a rather interesting discussion. I for one hope that the performance and fuel economy of my vehicle are not affected. I would be partial to a combined solution wherein I would have the vehicle's problems fixed, but where there would be some sort of compensation for the changes to my vehicle. Does that make any sense? Is there a precedent?

Jetmobile said:

This is really a rather interesting discussion. I for one hope that the performance and fuel economy of my vehicle are not affected. I would be partial to a combined solution wherein I would have the vehicle's problems fixed, but where there would be some sort of compensation for the changes to my vehicle. Does that make any sense? Is there a precedent?

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I always like to see an out come that's fair to both parties.....but in this case I did nothing wrong so why should I be the one that A) takes the depreciation hit...if any B) suffer with the extra fuel costs. Most likely I can see this happening in the future.

I am not going to take it in and get the fix and I think in the end that will be the only thing making my car valuable to the enthusiast community.


Another point that nobody seems to be ignoring about the emissions subject is the Diesel we have. From what I see in the US we have the crappiest fuel available and our cars are not running at peak efficiency with out additives.

TOTAL RECALL!

https://uspirg.webaction.org/p/dia/action3/common/public/?action_KEY=12829&__utma=1.799665490.1443200867.1443200867.1443200867.1&__utmb=1.4.10.1443200867&__utmc=1&__utmx=-&__utmz=1.1443200867.1.1.utmcsr=uspirg.org|utmccn=(referral)|utmcmd=referral|utmcct=/news/usp/we-launch-%E2%80%9Cmake-vw-pay-campaign%E2%80%9D-over-epa-cheating-scandal&__utmv=-&__utmk=169934624

steves ls6 said:

I always like to see an out come that's fair to both parties.....but in this case I did nothing wrong so why should I be the one that A) takes the depreciation hit...if any B) suffer with the extra fuel costs. Most likely I can see this happening in the future.

I am not going to take it in and get the fix and I think in the end that will be the only thing making my car valuable to the enthusiast community.

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The problem for me, as an Ontarian, is that my car has to pass emissions tests every three years. So I'm not sure how a recall or repair order would interfere with that. If I could keep my car without modifications, I would only do it if there was no incentive programme

Jetmobile said:

The problem for me, as an Ontarian, is that my car has to pass emissions tests every three years. So I'm not sure how a recall or repair order would interfere with that. If I could keep my car without modifications, I would only do it if there was no incentive programme

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I small detail our forgetting......your car will pass emissions its designed to do so.

steves ls6 said:

I small detail our forgetting......your car will pass emissions its designed to do so.

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hahaha oh I know it will « pass » but the question will be, will I need to show authorised documentation that I have had the module fixed? I will obviously have to wait to find out, but that is among my biggest worries!

This is from a New York Times article.

"I asked Kelley Blue Book to run those numbers, and it's estimated that Volkswagen would need about $7.3 billion to buy back all 482,000 of the tainted vehicles in the United States at the price one private party would pay another for the cars. Coincidentally, that is the same amount as the company has set aside for now to deal with the scandal, which is not limited to the United States."

Here is the link

http://www.nytimes.com/2015/09/26/your-money/how-volkswagen-could-compensate-diesel-owners.html

Ur2warped said:

This is from a New York Times article.

"I asked Kelley Blue Book to run those numbers, and it's estimated that Volkswagen would need about $7.3 billion to buy back all 482,000 of the tainted vehicles in the United States at the price one private party would pay another for the cars. Coincidentally, that is the same amount as the company has set aside for now to deal with the scandal, which is not limited to the United States."

Here is the link

http://www.nytimes.com/2015/09/26/your-money/how-volkswagen-could-compensate-diesel-owners.html

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They can do this and buy back some of their stock and when it goes back to normal sell it off again......win win.

Here's an interesting article with Bob Lutz's take on this...

https://www.yahoo.com/autos/s/vw-faces-worst-situation-ex-120800972.html

Here is another interesting article.

http://www.thetruthaboutcars.com/2015/09/heres-might-cost-fix-vw-car/

I keep running into these articles

http://finance.yahoo.com/news/vw-recall-could-be-the-most-expensive-ever-194521326.html

Not everyone can just afford to turn in their car either. An 'oops' and 9K for a 2010 Golf might sound ok to some folks but not everyone is going to want to go out and buy another car, and other headaches with a used car. Some won't be able to afford it.

Other problems are what will be 'fair market value' of these cars. The value just before the scandal hit or what Volkswagen says right now. I can bet that they will try to get as little for these cars as possible which means 6K on a 9K car. Disposal of a half million cars is another issue but won't get into that.

I honestly think VW will probably find out the most economical fix for these cars and just do that. The problems with these cars is not safety or mechanically related, it is emissions related and short of the cars being unfixable (which I doubt) then VW will probably go that route.

Wklink said:

Not everyone can just afford to turn in their car either. An 'oops' and 9K for a 2010 Golf might sound ok to some folks but not everyone is going to want to go out and buy another car, and other headaches with a used car. Some won't be able to afford it.
Other problems are what will be 'fair market value' of these cars. The value just before the scandal hit or what Volkswagen says right now. I can bet that they will try to get as little for these cars as possible which means 6K on a 9K car. Disposal of a half million cars is another issue but won't get into that.
I honestly think VW will probably find out the most economical fix for these cars and just do that. The problems with these cars is not safety or mechanically related, it is emissions related and short of the cars being unfixable (which I doubt) then VW will probably go that route.

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Here is hoping that VW will not have much say in the matter and that the class-action lawsuits will force them to buy back vehicles. Sure, that's not for everyone, but if my 2010 SWJ loses performance or fuel economy with a software fix, I don't want to keep it. Even if it doesn't (unlikely), I feel sufficiently defrauded that I don't want to drive their logo through town anymore.

sunkid said:

Here is hoping that VW will not have much say in the matter and that the class-action lawsuits will force them to buy back vehicles. Sure, that's not for everyone, but if my 2010 SWJ loses performance or fuel economy with a software fix, I don't want to keep it. Even if it doesn't (unlikely), I feel sufficiently defrauded that I don't want to drive their logo through town anymore.

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I read somewhere that retrofitting cars with a urea system could cost $5000 with parts and labor. If VW has to retrofit the LNT cars with a urea system, then do some crash-testing/safety certification and extend emissions component warranties, suddenly voluntary buybacks look like the easier and cheaper option for them.

In addition to the fines, VW will also have to reimburse the federal government for those tax credits, plus penalties and interest.

Jimmy Coconuts said:

I read somewhere that retrofitting cars with a urea system could cost $5000 with parts and labor. If VW has to retrofit the LNT cars with a urea system, then do some crash-testing/safety certification and extend emissions component warranties, suddenly voluntary buybacks look like the easier and cheaper option for them.
In addition to the fines, VW will also have to reimburse the federal government for those tax credits, plus penalties and interest.

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So $12K+ per vehicle is cheaper than $5K per vehicle?

There doesn't seem to be a cost effective way to fix this problem that would also keep the same level of performance. The EPA should fine VW and use the money to upgrade power plants so that it would offset the exceed emissions that the TDIs produce. Then they can allow the existing 500k cars to remain the same.

I am halfway through my payments and owe about $16k on my Passat. I would not be excited by a buyback for FMV. I don't want another 5 years of car payments. I was looking forward to 5-10 years without a payment.

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Buyback is a longshot. I got my 13 Jetta TDI on the 16th. Haven't even made a payment yet and this stuff happens.

I dont see a buy back happening, they are smart enough to find a fix that will keep the current power figures since thats all anyone is worried about. MPG might suffer a bit, but if anything it'll just be at the advertised MPG. I do however think consumers should be compensated.

ChemMan said:

So $12K+ per vehicle is cheaper than $5K per vehicle?

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2009 owners are almost guaranteed to be offered buybacks, because of age/mileage/current value, and that 1-piece dpf/cat that likely gets scrapped in a retrofit. 2010s and maybe 2011s are buyback candidates as well, especially higher mileage cars. I think there will eventually be a menu of choices for owners.

VW can write a check for $7K to $10K and close the books on a car (plus recoup some salvage value), or they can spend $5K for a retrofit, plus whatever associated costs for testing and recertification, plus another $2K to $5K down the line in warranty repairs on emissions components that will fail at higher rates. It's not cut and dried. No option is going to be cheap for them with the LNT cars.

Fix the software problem and make the cars compliant.

Pay the owners the difference in fuel costs over the life of the vehicle and something for pain, suffering, inconvenience.

Done.

We're talking about a billion dollar corporation. What ever they end up doing, take off your pants and grab your ankles, it should at least speed it up.

Hey VW of USA, you can buy back my car for NEW Value I paid as you cheated and deceived me when the original purchase was made. Regardless of how many miles I driven you OWE the Money I paid when it was NEW NOT the Market value!
I make you an offer, give me my money back what I paid and I stay a customer and buy in return a brand new GTI 2016! Title for Title. I stay quiet and not join a lawsuit or file suit individually. (Mind you I actually end up paying more in gas and insurance, so be happy I don't tag that on) I don't care where you take or get that money from, as you did not care when you decided to deceive me in the first place. Take some of the $/ € from Winterkorn's retirement bonus ($32Million) and PAY UP to EVERY CONSUMER you deceived!

Dieselchen said:

Hey VW of USA, you can buy back my car for NEW Value I paid as you cheated and deceived me when the original purchase was made. Regardless of how many miles I driven you OWE the Money I paid when it was NEW NOT the Market value!
I make you an offer, give me my money back what I paid and I stay a customer and buy in return a brand new GTI 2016! Title for Title. I stay quiet and not join a lawsuit or file suit individually. (Mind you I actually end up paying more in gas and insurance, so be happy I don't tag that on) I don't care where you take or get that money from, as you did not care when you decided to deceive me in the first place. Take some of the $/ € from Winterkorn's retirement bonus ($32Million) and PAY UP to EVERY CONSUMER you deceived!

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I totally agree with Dieselchen! VW committed what amounts to fraud with TDI consumers. Consumers will suffer if a forced buyback results in anything lower than the price paid for the car. In my case, I bought a 2015 Passat TDI last year and paid almost 31k. If they settle me with a 22k check (1st year depreciation is the greatest) I have lost 9k and am without a car. In the end, It is the consumer that suffers and I, for one, will not stand for it. If I have to hire a private attorney and sue the **** out of them, I'll get my money back + legal fees and maybe other damages. VW has no defense and no right to "cheap out" on making their customers whole. If they had not deceived us, we would still have our full purchase price to spend on a new vehicle.

Forgot to mention, I need to be reimbursed for the extended warrantee I bought.