What to do if You Own an “Affected” VW Diesel?

A worried owner of a diesel-powered VW wrote to ask me whether or not he should accept the buyback offer announced last month by VW.

The first thing to know is that the VW diesel 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. 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 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, 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 no renewal for you.

Will this happen?

On the one hand, this 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.

Comments?

www.ericpetersautos.com

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