Lawsuit

How The Heck Are Volkswagen Cars Retaining Their Value After Dieselgate?

Perhaps US consumers didn't really need that buyout after all.

The news about Volkswagen's post-Dieselgate woes keep pouring in. Consumers are angry about their cars, and have even resorted to stripping them of parts before turning them in for the buyback. US consumers are happy to turn in their cars for a cash buyout, but European owners were not offered the same program, and for good reason. The whole reason why VW has been forced to buy back cars is because the diesel models were supposed to lose residual value due to the scandal. Automotive News Europe says that might not be true.

Citing a report from independent market tracker Schwacke, the used prices for VW's diesel cars are progressing far better than the automaker's financial division originally projected. Schwacke analyzed data for Germany as well as the rest of Europe to show that the cars have not lost as much value as VW predicted. It's important here to delve into some boring accounting to see why. Volkswagen has written down the value of its entire diesel lease portfolio by around $600 million. This means that the company assumed the diesel cars' residual values would drop by 3 percentage points and the gas cars' values would drop by 1 point as collateral damage.

If the use-value data turns out to be true, VW might be able emerge from the scandal and reclassify the $600 million as profits over the next two years. Since the values of the diesel cars continue to hold up, and customers have suffered no monetary disadvantage because of the recall, VW might not owe them anything for compensation. It may seem like a small win, but any positive news for VW seems pretty good right about now.

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