A worried owner of a diesel-powered VW wrote to ask me whether he ought to accept the buy back offer announced last week (read more about that here) or keep the car.
The first thing to know is that the cars are great. That there is nothing functionally wrong with them (as opposed to the millions of cars running around out there with defective and known-to-be-lethal government-mandated air bags).
Excellent fuel economy, great performance.
VWs diesels are “guilty” of the automotive equivalent of not buckling up for “safety.”
I’d hate to have to get rid of mine, if I owned one.
The next thing to know is that the feds are not (yet) requiring people who own the cars to accept the buyback – or forcing them to get the cars “fixed.” (Depending on the model you own, this could mean physical alteration of the car’s emissions system or having the computer that controls the engine reprogrammed; possibly both.)
So, you can keep your perfectly good car, if you like.
Unless that changes (I’ll explain in a minute) the next issue – if it is one – is depreciation.
And by the way, it’s not just a problem for the “affected” (diesel-powered) models. VW the brand is depreciating as a result of all this mess. If you own any VW, its value has been “affected,” too.
And not for the better.
However, depreciation doesn’t affect the car’s function. Its value to you as transportation. We are talking about resale value. Which matters only if you are planning to sell the car.
If you bought the car to drive it depreciation is largely irrelevant.
What matters in that case isn’t what the car is worth on the market right now (or ten years from now) but what it’s worth to you right now.
Keep in mind that the amount of the buyback might cover what you spent to buy the car, but is it enough to replace it with something equivalent? Probably not. Because – now that diesels are unavailable in any passenger car except expensive luxury cars (BMWs, Benzes, etc.) there’s nothing in the same price ballpark that delivers the mileage a TDI-powered VW was capable of delivering that isn’t a hybrid.
And maybe you don’t want a hybrid.
Depreciation is also a function of time. The longer you keep (and drive) your car, the less it will be worth regardless of the make/model. Cars are, fundamentally, disposable appliances that either wear out from use or become obsolete. If you bought your car with the idea that you’d probably drive it for the next 10-12 years or so, don’t sweat depreciation.
Unless you leased.
Then depreciation is a big issue – and could hit you hard. Depreciation affects residual value – what the car is worth at the end of the lease. A car that depreciates faster than average (or expected) is not one you want to lease. The good news is VW is either going to forgive some portion of the remaining balance due on lease contracts or offer some other form of compensation. In this case, it might be a good idea to take the deal.
But otherwise – if you like the car – keep the car.
Don’t worry about parts. The things you’ll need to maintain the car, such as filters and so on. The supply is not likely to dwindle for decades. I have a 40-year-old car (Firebird) made by a brand that no longer exists (Pontiac) and it’s still no problem finding service parts at AutoZone, NAPA, Pep Boys and so on. Even if VW goes out of business, as Pontiac did, necessary parts should be readily available for a long time to come.
However, service could be a problem.
Dealer service especially.
VW may order its dealers to refuse service to customers who refuse to accept the buyback or who do not agree to have their cars “fixed.”
That leaves independent shops – and DIY service.
So long as Uncle does not require that the “affected” cars be “fixed,” this is a very workable end-run.
But what if Uncle does require it?
That’s the $14.8 billion dollar question.
Uncle just might.
But what, exactly, could Uncle do?
He could refuse to issue or renew your registration – thereby rendering your car 3,400 pounds of useless metal, glass and plastic. This is a very real threat to any person who lives in a jurisdiction where successfully passing periodic tailpipe emissions tests is required in order to get or renew the vehicle’s registration, without which you can’t legally drive the car.
The good news is not everyone has to deal with this.
In my part of SW Virginia, for example, there is no emissions testing requirement. Therefore, no worries about getting/renewing registration.
On the other hand, if you live in Northern Virginia (the portions of the state near the Heart of Darkness) annual emissions tests are required. If your car doesn’t pass the test, it doesn’t get the sticker – and you can’t (legally) drive the thing.
So far, there has been no official announcement about what will happen to owners of “affected” cars who keep them/don’t get them “fixed” but live in areas that have periodic emissions tests. The cars will probably pass those tests. VW programmed them to pass the tests. But will those results continue to be accepted by the county in which your car is registered?
For now, yes.
So, the risk you run – if you keep your car – is that the government might at some point decree those test results invalid and require you to have your car “fixed” else (cue the Soup Nazi) no renewal for you.
Will this happen?
On the one hand, such a fatwa could trigger a backlash from the hundreds of thousands of VW TDI owners who love their cars – and do not want them “fixed.” Uncle might leave well enough alone. Crippling VW might be enough for him.
On the other hand, Uncle (through his EPA) has a track record for Inspector Javert-like relentlessness when it comes to anything “environmental.” And he will have the backing of a compliant media and millions of Clovers, too.
Nothing is likely to happen to VW owners for the next year or two – while Uncle is busy kicking VW the company in the guts. But the time may come when he shifts his gaze elsewhere.
And probably will.
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Dear Eric, et al,
Stumbled across this article:
Engineers Create Diesel From Water And Carbon Dioxide That Has Zero-Carbon Footprint.
Audi engineers utilized the Fischer-Tropsch process to create a clean-burning diesel fuel.
Read More: http://www.trueactivist.com/engineers-create-diesel-from-water-and-carbon-dioxide-that-has-zero-carbon-footprint/
If this is true, and it sounds like it is, then for the USG to do what it did to VW, even as it subsidizes Musk, is even more Kafkaesque and tragic.
Several factors still remain an issue on CO2 to fuel production, but the largest is the energy required for converting the materials into useable fuel in the first place makes the whole operation a bit wasteful. Another issue is that CO2 is still very much a trace gas if you will, so to sequester enough CO2 to combine with H20 takes a fair amount of energy inself, i.e. average PPM of CO2 in the atmosphere is just 380 according to “scientists”, and then there’s the issue of having a reliable CO2 filter and scrubber system that doesn’t require a lot of energy and can cope with mass production. Sure we could talk carbon capture technologies as a CO2 source (unlikely for transportation due to weight of CO2 produced), but that opens up another can of worms in itself and still doesn’t address the energy required for conversion in the first place.
Cool stuff though, although not new. I believe the first instance of this type of fuel being produced in mass production was in Germany during WW2 when there was an oil shortage. It was called “Syn-gas” I believe, ran their fleet of vehicles for quite a while.
Dear AJ,
Perhaps thorium reactors could produce the electricity to create the “blue crude”?
this type of reactor can’t suffer the kind of catastrophic failure that happened at Chernobyl and Fukushima, making unnecessary the expensive and redundant safety systems that have driven up the cost of conventional reactors.
What’s more, the new plants should produce little waste and might even eat up existing nuclear waste. They could run on uranium, which powers 99 percent of the nuclear power plants in the world, or they could eventually run on thorium, which is cleaner and more abundant.
https://www.technologyreview.com/s/602051/fail-safe-nuclear-power/
That would be a double win.
So we have yet another process to make hydrocarbon fuels using any energy source of our choosing. The best batteries are hydrocarbon fuels and if these processes can be commercialized and the will exists to do so they will out run electricity producing batteries. 1) They use the existing systems of distribution. 2) the existing vehicles. 3) store more energy per unit weight and/or volume.
I’ve thought once or twice about trying to pick up a 2nd hand 2015 Golf Sportwagen tdi. Yes, they are late model, but I have not seen any for sale in the greater SF bay area. I think even post-scandal they are still in demand, maybe not all models and years, but certainly some.
Hi Eric,
Thanks for answering my question with such a detailed article. I have to imagine I’m not the only one wondering what decision to make.
You talked about the Heart of Darkness in North Virginia. I’m in the Heart of Pitch Blackness here in California. We Basically need emissions testing to test drive a car. So this makes our decision quite tough. We do love the car very much and really wouldn’t mind driving it into the ground.
I’m just not sure we’ll get that chance with the government increasing steadily with no sign of restraining itself anytime soon.
Like you said, we may end up having to get it “fixed” anyway at some point. Do you think the buyback will be around for a while? Or will we miss our opportunity if we decide to keep the great car we have?
Parts was a problem we were wondering about. But it makes sense there the parts will be around for a while to come, but maybe just a little more pricy.
Service isn’t something I’d worry about as most of my life we have used private auto shops to service our cars. Do you think they would have any problems servicing our car without being an official VW dealer?
I’m thinking the inevitable situation for us will probably be that California will force us to get the cars fixed or else withhold our registration. At which point we will probably do that, just to keep the car.
Thanks for your insights!
That is what is cool about Eric and his site. It’s been a number of times now, that Eric has written whole articles based on a question or comment I posed. How many people would do that? Not many. Most places may just write a quick comment or standard reply or simply ignore my question.
@ eric and The Bruce
https://www.vwcourtsettlement.com/en/
VW’s official site on the matter.
Enter an email for updates and check VIN for eligibility.
I intend to sell it back, I need a new 4wd vehicle. My biggest complaint with this car was its lousy snow performance.
In Colorado, outside of Denver and Colorado Springs, there’s no emissions testing and no inspection. There are plenty of light diesel trucks that have straight pipe exhaust on the highway and no one says a thing. The goal of the EPA is to get at least 85% of the vehicles off the road. I’m sure that the 15% of cars that remain will be just fine.
The settlement deal is out in the public now, it can be found at https://www.vwcourtsettlement.com. The court documents section will point you to the lookup tables for how to calculate any buyback amount. The general consensus is that the 1st and 2nd generation versions of the 2.0 TDI are the ones they really want off the road. The 3rd generation (I think 2013 – present) seem like they can be modified to run properly without losing much performance. This has a lot of 2015 VW owners very upset because they will get a better deal if they take the fix, but still will have the depreciation and unknown future service to worry about. The owners of pre-2006 cars aren’t going to get much of a deal either, just because they generally have high milage cars that weren’t worth much last year. They’re still getting more than what they’d see selling or trading it in, but replacing an otherwise good vehicle that’s paid off with a newer vehicle is going to cost them some money.
I figured out what my buyback price will be (if the judge accepts the deal) and have decided to take the money. I like my A3, but I want something that can run on forest service roads and tow a small camper. Until the scandal I figured I’d be running it into the ground, or at least living with it until I get the house paid off. But what they’re offering is way over what I’d ever see on a trade-in, private sale, whatever, so I’m going to take it (basically, the retail used price as of September 2015 + over $5000 – $0.05/mile). Depending on what I buy to replace it, I might even have a little cash left over to offset the increase in fuel costs.
The downside is that since I only have (and can afford to insure and license) one vehicle, I can’t just pocket the money and wait for the right deal to come along. I’ll need to buy another vehicle first then sell the A3 back to Audi. That means either dipping deep into my savings or getting a car loan, neither prospect sounds all that wonderful right now, and makes the deal a little less palatable. That and although I love cars, I really can’t stand shopping for them. But it looks like I’ll have at least 2 years (or ~40,000 until the timing belt needs replacement) to decide. At least I don’t have to worry as much about paint chips and scratches.
BTW, the plan is to destroy the cars. They’ll drill a hole in the block and sell them for scrap.
“They’ll drill a hole in the block and sell them for scrap.”
We’ve been down this sick road before with “Cash for Clunkers”: sodium silicate
http://www.wsj.com/articles/SB124934376942503053
Sad and pathetic.
I can weld…..anything. I might be in the scrap engine biz.
But if I want to take the buyback, how and when do I get it? My TDI is dead in the driveway w/a busted DSG, maybe not worth fixing anyway, and definitely not worth it w/this question hanging over it. The sooner the better for me, so I have some cash to get some sort of replacement. We are currently limping along w/1 vehicle.
You should be hearing from VW – corporate – in the near future. Or, alternatively, give your local VW store a call.
The local dealers aren’t talking, or aren’t in the loop. Best source I’ve found is the tdiclub.com forums, although quite a lot of noise to filter these days!
check out the Emissions section over at tdiclub.com. There’s a lot of discussion over the issue and links to where you can figure out what the payback will be for your vehicle. One caveat is that the car must be in running order when sold back, but no one really knows how “running” it has to be. The general thought is that if everything goes without any hangups, the earliest anything can happen is late September or October. After that you’ll have 2 years or more to act (or not).