The VW Scandal and Car Dealers: An Overlooked Dilemma

A lot has been written about the VW emissions scandal and how this will impact consumers, but what about car dealers? Now that VW has been caught rigging emissions data, dealership owners are left with a number of diesel VW models that can no longer be sold.

Further, new VW models aren’t making it to showroom floors. Here’s why.

Making Amends

Dealership owners pay interest on loans that are used to purchase VW models (these are called “flooring costs”). When everyone plays by the rules, these costs are relatively easy to recoup by selling popular models (like VW diesel). Right now, though, a number of cars on showroom floors can’t be sold. As a result, dealerships are losing money.

In response to the flooring cost dilemma, VW spokespeople have told the press that dealership owners will be compensated for the storage of the cars that can’t be sold. But those are muddled and vague words. Exactly how VW plans to compensate dealers still remains to be seen as VW takes its time to explore the emissions scandal.

What’s known at this time is that VW has allotted a certain amount in order to make repairs to cars currently owned by consumers, and (presumably) some of that money will also go towards helping dealership owners with flooring costs. Whether or not that money will spread as far as VW needs it to remains to be seen.

But there’s another issue here too - VW dealerships may not get any new 2016 diesel models to sell either.

A Future Problem

Volkswagen recently detracted an emissions application that had been submitted to the Environmental Protection Agency (EPA). Prior to the on-going scandal, emissions certifications for 2016 Passats, Beetles, Jettas, and Golfs (all diesel models) would have meant a lot of new diesel cars for dealerships to sell. Instead of making it to dealership showrooms, these models are now sitting at ports across the U.S.

The move to withdraw the application also has many wondering whether or not the 2016 models include the same emissions rigging device that previous models included. Needless to say, none of this is good news for car dealership owners that were hoping to put the scandal behind them by offering new, EPA approved, 2016 diesel models.

Dealership Compensation

It’s a difficult situation for VW dealership owners all across the U.S. to be in. The alternative to not offering new models (and trying to gain back public trust by selling models that haven’t been impacted by this scandal) is to take a massive financial hit - an option that might not be a choice at all if VW doesn’t hurry to alter its now tarnished public image.

With the holiday season approaching, these dealerships will have to find a way to get around the VW emissions crisis - including making sure that VW is held accountable for the company’s actions.

If you own a VW dealership and would like to have your case reviewed, contact the Dellutri Law Group today. We will sit down with you and go over your options as a VW dealership owner. You can reach us at (800) 391-4337 or schedule a consultation online.