Struggling U.S. Volkswagen Dealers Will Get Cold, Hard Cash
America’s Volkswagen dealers took the brunt of the automaker’s diesel emissions scandal, but a cash payout designed to ease their troubles is on the way.
Lawyers for the dealers, who were once poised to revolt against their employer, announced a tentative settlement deal with the automaker today, Reuters reports.
The announcement of a deal in principle came following a federal court hearing in San Francisco.
In a statement, the automaker says it “has agreed to make cash payments and provide additional benefits to the dealers to resolve alleged past, current and future claims of losses in franchise value.”
The emissions scandal, which went public 11 months ago, sidelined popular new and pre-owned TDI models and tainted the VW brand overnight. Dealers were left scrambling to shore up their operations, amid complaints about a lack of guidance from head office.
Quelling a nation-wide rebellion of the dealer network took months. Volkswagen promised dealers larger shipments of gas-powered vehicles that might actually sell, while top brass delivered them increased autonomy through a newly created North American region.
In the end, lost money is lost money. Before the scandal hit, dealers burned through tens of millions of dollars refurbishing and expanding their operations to satisfy the company’s expansion plans. Now that nearly half a million U.S. TDI owners are being handed cash for their cars, dealers can look forward to a payout of their own.
“We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States,” said Hinrich J. Woebcken, CEO of Volkswagen’s North American Region, in a statement. “Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand. This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market.”
How much cash will the dealers get? We won’t know until the details are filed in a U.S. District court at the end of September. The lawyers involved in today’s negotiations represent 650 dealers. Details about how the money will be divided among them are still being hammered out.
[Image: © 2015 Mark Stevenson/The Truth About Cars]
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"Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand. This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market." Yes, sir. And I wonder how many of them are considering dropping VW; certainly this new deal has some contract duration built into it that some won't like. But there are always complications. Of the dealers near me, one is a standalone VW store, and another also sells Audi and Porsche, in addition to Chevy. For these examples, dropping VW would be quite painful.
It amazes me just how much this scandal cost VW in the US. They've refused payouts in Canada and Europe to owners and dealers, despite breaking similar emissions regulations. Why is the US such an important/expensive market? A few years ago they had barely any presence here. They almost disappeared in 1993. Total US sales in 2015 were 350,000 - whereas just the Polo nameplate alone sells 300,000 a year in Europe.