Back in October 2016, Volkswagen announced a plan—supported by the U.S. Environmental Protection Agency—to correct the automaker’s rigged diesel vehicles which utilize cheat software to skirt emission laws in the U.S.  Under the plan, Volkswagen has agreed to:

  • Buy back, terminate leases, or provide approved emissions modifications for nearly 475,000 2.0-liter TDI diesel cars in the United States
  • Provide cash payments to owners/lessees
  • Pay for environmental remediation
  • Promote zero-emission vehicle technology

Owners of affected 2.0-liter TDI diesel vehicles have one of two options to alleviate vehicle value and/or emission woes:

  1. Buy back of affected unit (or early lease termination) plus cash
  2. Modification of affected unit to improve emissions, keep vehicle plus cash (modification must be approved by EPA and CARB)

The purpose of the analysis was to discern if there have been any marked changes in used VW prices since the brand’s 2.0-liter diesel repurchase program was initiated in late November 2016. According to a recent article in the Chicago Tribune, as of February 14, 2017, VW had provided buyback offers to more than 300,000 owners and lessees of the 475,000 affected vehicles covered in the 2.0-liter diesel emissions settlement. The article also states that nearly 250,000 offers had been accepted by VW diesel owners (and of those, 125,000 repurchases had been completed).

As might be expected, it appears new VW brand sales received a shot in the arm from the spike in demand generated by the repurchase program. Volkswagen’s new vehicle sales were down substantially over the 13 months after the diesel scandal became public in September 2015. In fact, sales dropped by an average of 21% per month over the period. However, new VW brand sales have now increased by an average of 21% per month in the three months since the repurchase program went live last November.

While it appears Volkswagen’s 2.0-liter diesel repurchase program is supporting new vehicle sales, there is little indication it’s affecting prices of used, gas-engine-powered Volkswagens—at least so far. Below is an analysis of recent Volkswagen and competitive model wholesale price movement. In order to facilitate a valid comparison, the most prevalent trim level of each model was used.

Since the scandal’s outbreak, gasoline-powered VW model wholesale pricing has more or less followed similar trends compared to their segment counterparts. For example, 2014 model year Jetta prices have declined by 26.5% since August 2015 (one month prior to the September 2015 EPA stop-sale of VW new and CPO 2.0-liter TDI diesel models). For context, average compact car segment prices have fallen by an even worse 27.8% over the period. Honda Civic and Toyota Corolla prices have declined by a combined average of only 16.7% since August 2015, however, these vehicles typically earn higher retention scores than the Jetta.

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Looking at the mid-size car segment—similar to the Jetta—Volkswagen’s Passat also performed better than the segment average. Since August 2015, gasoline-equipped 2014 model year Passat wholesale prices have declined by 21.9% compared to 23.8% for the segment. The Passat’s decline in price landed right between segment peers. Honda’s Accord and Toyota’s Camry experienced losses of 20.4% and 22.3%, respectively.

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Volkswagen’s compact utility wholesale prices didn’t fare nearly as well at the Jetta or Passat. Tiguan wholesale prices fell by 31.1% since August 2015, while compact utility segment prices declined by an average of only 21.1%. Honda’s CR-V saw a 23.2% drop, while Toyota’s RAV4 managed lesser 20.8% decline in price.

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In addition, used VW price relative to those of competitive makes and models haven’t changed much since the repurchase program was launched in November 2016. For example, used 2013-2014 model year VW Jetta wholesale prices fell by an average 1.7% per month from November 2016 through January 2017—a decline similar to those recorded for the Chevrolet Cruze (-1.9%) and Ford Focus (-1.7%). Prices of other competitive compact car models—like the Honda Civic, Hyundai Elantra and Nissan Sentra—fell much less over the period as well. Similarly, VW Passat and Tiguan wholesale price movement was close to (Passat) or slightly worse than (Tiguan) movement for competitive models over the period.

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Auction sales volume trends are more or less similar to those of competitive models as well.  Late-model VW Jetta auction sales volume grew by 20% over the four-week period ending January 23, 2017 versus the prior four-week period. The Jetta’s auction volume growth was less than the Nissan Sentra (26%), but above the 15% increase in Toyota Corolla volume. VW Passat and Tiguan auction volume trends also fail to stand out from the segment crowd.

While used prices don’t appear to have been affected, J.D. Power Information Network data shows that the number of days it takes for a VW dealer to move used Volkswagen models up to six years old has improved marginally. On average, it took VW dealers 53 days to turn a used VW vehicle in January 2017, down from 55 days in January 2016. By comparison, average days to turn for all used vehicles sold by the same franchise dealer was flat at 57. Volkswagen dealer used vehicle days-to-turn figures in Q4 2016 were also an improvement versus year-ago levels (54 versus 55 days), while figures for used vehicles overall were slightly worse over the period (58 versus 56).

To summarize, it appears the repurchase program has done little to affect prices of used gas-engine equipped since going live last November. While the diesel repurchase program is likely helping new VW sales, the jump in demand driven by 125,000 or so former VW diesel owners has yet to move the needle much on used VW prices. That established, with roughly a third of anticipated buybacks completed so far, it’s possible used Volkswagen prices will strengthen over the coming months as VW dealers seek to keep former diesel owners in the brand fold one way or another.