By on April 2, 2016

Volkswagen Dealer Sign (Image: Rob Brewer/Flickr)

Volkswagen dealers in the U.S. have formed a go-to team tasked with drawing compensation out of the automaker while avoiding a looming barrage of dealer lawsuits.

The five-member committee was formed at a dealers-only meeting held yesterday at the National Automobile Dealers Association convention in Las Vegas, one day before U.S. dealers were expected to meet with top Volkswagen brass, Automotive News has reported.

The move is designed to head off a potential slew of lawsuits from U.S. dealers seeking reparations for sunk costs and lost revenue stemming from the automaker’s expansion push and subsequent diesel emissions scandal.

One of the five negotiators in the committee is Jason Kuhn, chairman of Tampa’s Kuhn Automotive Group, who said the group plans to negotiate a settlement package out of Volkswagen so dealers can get back to the task of running their businesses.

“At the end of the day, we both need to get past this, and doing it in a courtroom is not acceptable,” Kuhn told Automotive News.

One New York-based lawyer has already drafted a class-action lawsuit for a group of Volkswagen dealers, but that party is awaiting the results of this weekend’s NADA meeting with VW brand chair Herbert Diess and North American chief Hinrich Woebcken.

U.S. dealers said they felt increasingly ignored by Volkswagen head office as the emissions scandal persisted, an alienation that worsened when their biggest ally, Volkswagen of America CEO Michael Horn, abruptly resigned in early March.

Besides Kuhn, the dealer committee is made up of Mike Sullivan, owner of the LAcarGuy network in southern California, Jimmy Ellis of Atlanta’s Jim Ellis Automotive Group, Richard Fisher, owner of the Evanston, Illinois-based Autobarn Evanston Dealer Group, and Jack Bertolet Jr., president of Orwigsburg, Pennsylvania’s J. Bertolet Volkswagen.

The NADA convention wraps up Sunday.

[Image: Volkswagen, Rob Brewer/Flickr]

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25 Comments on “Talk to Our Committee to Avoid Lawsuits, Volkswagen Dealers Tell Automaker...”

  • avatar

    Judging by VW’s previous lack of motivation to deal with things, I can only wish the dealers good luck on this…..I think the VW ship in North America is going down.

  • avatar
    SCE to AUX

    “…the group plans to negotiate a settlement package out of Volkswagen so dealers can get back to the task of running their businesses”

    I’m not sure they’ll have a business to run in the next few years.

    This plays into Volkswagen’s hands, and exposes the dealers’ blindness to how bad things could get.

    VW would love to throw the dealers a bone now, because when it becomes obvious to the dealers that the ship is sinking, they’ll want more than they’ll get today.

  • avatar

    I am curious as to what the legal grounds would be, for the VW dealer group seeking compensation. While it sucks to be in their shoes, isn’t this just the nature of being a franchisee? If the companies products are hot, you make out well, if not you don’t. If you can’t make money, or you are losing money, you shut down your store. This sounds more like an extortion attempt.

    • 0 avatar

      It would depend on the state law and the franchise agreement. I believe some states require a company to disclose financial liabilities to franchisee. I have been involved in some agreements that had similar statements. The ones I have seen that said this (not automotive) basically offered this up as a bone for dealers to more willingly sign multi year contracts with heavy branding investments.

    • 0 avatar

      VW’s US problems stem from VW’s own fraud, not the vagaries of the market.

    • 0 avatar

      willful corporate malfeasance is not considered the “cost of doing business,” regardless of what some people might think. Like the end customers, the dealers bought these cars on good faith that the statement underhood saying “this car conforms to regulations for model year blah blah” was true.

      you got to remember, dealers finance their inventory (“floorplan,”) often via the automaker’s in-house lending arm. Dealers are stuck paying financing on inventory *they are barred from selling.* this is not the same as “oh, our inventory mix doesn’t fit the market.” at least in that case you can discount what you have to so you can move cars and make your floorplan payments.

  • avatar

    slimy manufacturer
    slimy dealers
    slimy lawyers
    slimy governments
    equals yet another chronically juvenile society synergism.

  • avatar

    V.W. brass have put so many feet in their mouths, they must be some kind of species of millipede.

  • avatar

    I am not optimistic the dealers will get anything out of this. In fact, I think that committee is only a face-saving move for them. They need VW to be there, but VW is playing high-stakes poker witht their US future plans, and the dealers are being used to further that strategy.

    VW couldn’t afford to have any more suits filed against it, but what leverage or upside do the dealers have – wait around for years until their suit settles?

    On the flip side of this, the dealers saw the best advocate of their interests (MH) leave abruptly. This would be an unquestionable indication that VW cares almost zero about their dealers’ concerns. And if you look at the other actions by VW (goodwill package and dealer TDI buyback) they were just a shut-up bone thrown their way. The track record is “we are tone deaf”.

    I almost want to say that at this point the TDI scandal itself is irrelevant. The long wait with no exit in sight has shattered the brand in the eyes of the car buyer, but the dealers care about selling cars going forward and VW isn’t offering anything that people would line up to get their hands on. Cash on the hood is one thing, but they’d do a whole lot better if they offered much longer warranties, and of course a fresh set of products.

    TL;DR. I never thought I’d say this, but I feel bad for the dealers.

  • avatar
    el scotto

    VW group already has overpriced, finicky cars and they’re called Audis. They should offer VW dealers a settlement; say it’s this or nothing, and cease selling VW’s in the US.

    • 0 avatar

      VW’s US dealers have various rights by contract and by state franchise laws. VW’s other US assets, probably including its Audi, Bentley, Bugatti, Crewe, Ducati, Lamborghini, and Porsche businesses and brands, would be subject to attachment in judgments.

  • avatar

    “U.S. dealers said they felt increasingly ignored by Volkswagen head office…”
    but the rest of us are enjoying top-notch treatment, so there’s that.

    • 0 avatar

      Ha! At least the dealers are able to get false promises from VW corporate. The actual TDI owners continue to be left in the dark with cars they essentially can’t give away.

      • 0 avatar

        Silver lining…if I test drive any new car, I bet the salesperson will refrain from a hard sell once he sees what I drove in with. So, a good time to try out other cars with less pressure?

  • avatar

    I’ve opined here before, VW will not survive this in it’s current state. They have vastly underestimated what the cost of litigation and fines will be both here in the US and in Europe. The CARB will not be as sympathetic to VW as the goverenment of Lower Saxony, especially as it continues to unfold that very large numbers of VW employees and execs were in on this deception. Here in US, the diesels were a third of sales. Good luck on replacing that volume overnight. VW in recent years was not know for its crossovers, reliability or forward thinking design (I can’t tell the new Passat from last year’s). VW will have to sell a major division to raise Euros, as their credit rating also took a big hit. If I were an American VW dealer, I’d try to SELL my dealership now. Perhaps Audi and Porsche will prosper, but VW has nothing to really keep a dealership open.

  • avatar

    On a day to day, I can see that there is a small but steady stream of buyers. The CamCord folks that VW sees pass by aren’t coming in, but they aren’t anyway…VW didn’t cater to them nor will they trust VW, unless VW does the ten year Hyundai warranty, which they won’t do…they know their product and will get killed.

    If I were, or represented a dealer, there would be grounds for misrepresentation and fraud. The Glossy showroom I just built (with a mortgage) is now a glass and metal monument to a niche brand. I’d be unhappy, and dealers are great with attorneys, as anyone who has ever sued a dealer learns. They aren’t scared, won’t settle, and will hardball all the way…this is who will be the plaintiff against VW.

    Yah, dealers suck, but VW has had intercourse with the canine, so there.

    It is all about the product, at the end of the day, as Mr. DeLorenzo instructs us.

  • avatar

    Year ago when Hyundai/Kia shipped a bunch of marginal product into the us and upset a whole lot of early buyers, they responded with a 10 year, 100,000 mile warranty, aggressive pricing and a long term product improvement program that saw each newly designed vehicle become clearly better than its predecessor. Today the Hyundai/Kia group is a very viable competitor and has been taking share from the Japanese.

    VW, on the other hand, has shipped numerous vehicles with poor reliability going all the way back to the Pennsylvania built Rabbits of the 80s. Time and time again, VW has “managed” its warranty costs and angered customers. There are probably more “never again” former VW customers in the US than there are for any other current brand.

    • 0 avatar

      Sad but true. I have had nothing but VWs for 14 years and had good luck with mine…and have a good dealership to match. And I know I am far and away the exception to the rule. A friend was looking at an Audi Q7 – I told him to run, and run fast. Another friend bought a ’14 Passat before I could talk him out of it; thus far he’s had good luck with it. My wife has an ’05 TDI Golf w/ 90K miles and I’m starting to bite my nails. I have an ’02 1.8T Beetle, 53K miles…waiting for the Brittle VW Plastic Syndrome to kick in. Company pays for my ’13 CC, soon to be replaced with a 2016 CC. Previous was a 2010 TDI Jetta wagon, an ’07 Passat wagon, and an ’04 Passat wagon. All leased to 75K miles, all more than reliable enough for business use. Maybe I’m living right, I dunno….

  • avatar

    I wonder when VW will start selling it’s brands to Chinese and Indians. For VW it makes sense to keep only core brands like VW and Audi and may Porche. Ford did it in face of looming bankruptcy. VW is not Ford but money have to come from somewhere. Or American tax payers have to bail it out?

  • avatar

    Were these same dealers griping as diesels drove out the showroom doors? I didn’t think so.

  • avatar

    There’s going to be a dealer class action lawsuit. Count on it. The dealers are the most likely target to be sued by the public for fraud. When that starts happening, the feces will roll down hill to the mothership.

  • avatar

    The VW dealers are waiting for a miracle. Just yesterday after about 3 months of search I saw a vehicle that peaked my interest. A nice 2014 VW Sportwagen with only 10k miles and 6 speed manual. The dealership is about 2 hrs. away from my house. This is one of those “unfixable” vehicles, without the urea. I didn’t want their fix anyway and since I live in a state that doesn’t have inspections, who cares? I get there and find a decent size dealership, Saturday afternoon, beautiful day out, sunshine. Only about 3 customers kicking tires. The vehicle was on their lot for 155 days at this time. It was priced at the pre-scandal prices for $19,989. This is the lower trim level, no sunroof, no navigation, just back-up camera and roof rack. I test drove it and found the torque to be intoxicating in 2nd and 3rd gear. I went inside and told them that I will also need to test drive another vehicle at another dealership. Since the car only had 10K on the clock and it is 2 years old I asked about the warranty. Dealer said, these diesel vehicles have no bumper to bumper warranty at all, but we will give you included in the price some Zurich company aftermarket warranty. I found that really bizarre but didn’t dispute it. I drive 47 miles each way to work and I knew that for the right price I was ready to take a huge leap of faith. My logical side of the brain kept telling me to run, don’t walk. As soon as we started to talk about the price, the salesperson told me how busy they are, and have been lately, although I could clearly hear crickets and see tumbleweeds on the showroom floor. I told him that I am ready to buy if the price is right but we are a bit far away from a fair, post-dieselgate realistic price. The salesperson laughed and said ” oh no, this is plenty discounted, we are not going lower than 19K”. At that moment I realized that they are waiting for the buy-back from VW. he had no incentive to sell that car. Not unless I gave him pre-dieselgate price of 19K. I politely said good-bye, got up, walked across the street, test drove the other used car I had in mind and bought it after short negotiation. Now I am the owner of a mint condition, 9k miles on the dashboard, great little commuter, 2014 Corolla S plus with 6 speed manual. This car came with bumper to bumper warranty, extended warranty for engine and transmission ( all used Toyotas do) and will probably go 300K miles. I feel that my unrealistic dream to own a VW diesel went up in smoke last night, but I also feel that I dodged a bullet.

  • avatar

    Excellent choice with the Corolla. My husband had a Geo Prizm, a rebadged Corolla, for years. It was an unkillable, nice little car. Our neighbor had one too that lasted her many years. I cannot wait to get back in a Japanese car. I will never buy another VW again after my husband and I unload our TDIs.
    You really did dodge a bullet. I’m jealous.

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