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If Most Owners Want Cash, Why Is VW Still Seeking Dieselgate Fixes?

Volkswagen received approval of its first fix in the Dieselgate scandal. However, you have to wonder why owners would opt out of a buyback of their vehicles for a fix?

In what may be more of a pyrrhic victory than anything else, Volkswagen’s plan to fix about 70,000 polluting Volkswagen 2.0-liter four-cylinder turbodiesel engine received an okay from the Environmental Protection Agency (EPA) Friday.

According to Reuters, the fix – only the initial one – involves a software change, now. There will be a second phase in about a year when VW is slated to install other software updates and new hardware. The hardware includes a diesel particulate filter, diesel oxidation catalyst and an NOx catalyst. NOx stands for nitrous oxide.

Majority Of Owners Opt For Buyback

Volkswagen is forging ahead with its plan to fix vehicles involved in the diesel-rigging scandal despite the fact that more than 400,000 of the 475,000 owners eligible for the buyback-or-fix plan had opted for the buyback as of late December.Majority Of Owners Opt For Buyback

Volkswagen agreed to buy back up to 475,000 polluting 2009-15 2.0-liter four-cylinder turbodiesel vehicles under terms of the Dieselgate class-action lawsuit settlement reached in June and given final approval in October. Lost in the commotion of the settlement plan, though, was the fix portion. The automaker had the option of repairing or buying back the vehicles if regulators approved the repair.

Every story that has appeared on Dieselgate in the last three months has always included a line: “the automaker agreed to pay up to $10.03 billion…” That line may have given VW some wiggle room in the amount it ultimately pays owners to settle the emissions rigging scandal. However, it is questionable just how much wiggle room the automaker has. VW may think that it can now go back to the more than 400,000 owners who have filed for the buyback and offer them the fix. And it will likely try, all things being equal.

However, again, all things being equal, it is quite unlikely that buyers who are expecting the trade-in price of their vehicle as of Sept. 15, 2015, plus anywhere from $5,100 to $10,000 in compensation, for their vehicles, will opt for any fix, other than the money.

So, you have to wonder why the automaker has done it? That is an interesting question that no one can answer. One thought is that it provides VW with some cover if its shareholders ask about the size of the final amount of the buyback plan. VW can easily say, from this point on, that vehicle owners did have the option of the buyback or fix and that most of them opted for the buyback. VW can even say that it has sent the owners notes suggesting the fix and possibly offering other options. However, at the end of the day, if, as is most likely, owners continue to opt for the cash and not the fix, then the automaker has the cover it needs to answer stockholders asking “why the huge buyback figure; why not more fixes? We think you should have…” The automaker can hold up any paperwork that is generated by the repair plan and say to the shareholders, “we tried, but … not our fault.”

Vehicles Eligible For Repair

The vehicles involved in the first stage of the repair include:

  • 2015 Diesel VW Beetle
  • 2015 Diesel VW Golf
  • 2015 Diesel Golf SportWagen
  • 2015 Diesel Jetta
  • 2015 Diesel Passat
  • 2015 Diesel Audi A3

Volkswagen is still awaiting approval for the remaining 400,000 vehicles eligible for the buyback-or-fix program. “With today’s approval, VW can offer vehicle owners the choice to keep and fix their car or have it bought back,” the EPA said in a statement. The agency sad that testing showed the fix wouldn’t affect the turbodiesel’s “fuel economy, reliability or durability.”