It’s been more than six weeks since the Environmental Protection Agency (EPA) accused Volkswagen of violating the federal Clean Air Act by installing “defeat devices” software on nearly 500,000 diesel-equipped vehicles sold in the U.S. The Sep. 18 notice of violation (NOV) accused VW of utilizing engine management software on its 2.0L four cylinder diesel engines to trick pollution-testing devices by detecting when a vehicle was undergoing emission checks and turning on pollution controls. When not connected to a testing device, the emission controls would be switched off. As a result, affected TDI models could potentially emit 40 times the allowed amount of nitrogen oxides.

On November 3, the EPA also accused VW of using illegal emissions software on its 3.0L six cylinder diesel engines. VW denies the use of such software in the 3.0L diesel engines and has pledged to “fully cooperate with the EPA to clarify the matter unreservedly." Models covered in the Nov. 3 NOV include the 2014 VW Touareg, the 2015 Porsche Cayenne and the 2016 Audi A6 Quattro, A7 Quattro, A8, A8L and Q5. We will monitor pricing of these models closely as developments unfold.

Models Covered in the Sep. 18 Notice of Violation

  • Audi A3 TDI (Model Years 2010-2013 & 2015)
  • VW Jetta TDI (Model Years 2009 – 2015)
  • VW Jetta SportWagen TDI (Model Years 2009-2014)
  • VW Golf TDI (Model Years 2010-2015)
  • VW Golf SportWagen TDI (Model Year 2015)
  • VW Beetle TDI and VW Beetle Convertible TDI (Model Years 2012 – 2015)
  • VW Passat TDI (Model Years 2012-2015)

The 2.0L TDI Fix

To-date, there is no remedy available from Volkswagen or Audi. According to www.vwdieselinfo.com, a website setup by VW to update consumers, the nameplate states, “We cannot offer a firm date now because we need to work on the remedy and review it with the government. We are proceeding as quickly as possible.” Audi has a similar message on its website www.audiusa.com/about/diesel-information, which notes, “Audi is committed to finding a remedy as soon as possible. We are working to develop a remedy that will meet the expectations of the government agencies. We ask for your patience as we work to get this done right.”

VW Wholesale Auction Performance

Gas-powered Jetta and Passat prices for model years 2011-2013 have generally fallen by amounts similar to those of their respective segments. Six weeks post-notice of violation, 2011-2013 gas-powered Jetta prices declined by a range of 5% – 10% compared to the four week period prior to the EPA’s NOV. During the same period, compact car prices overall fell by an average of 4%.

Similar to the Jetta, 2012-2013 gas-powered Passat prices have declined by 2% – 6%, whereas average midsize car prices declined by 4%. Prices of some models within the compact car and mid-size car segments have fallen by amounts equal to, or higher than, Jetta and Passat prices.

Interestingly, prices of older Jetta diesels appear to be holding up better than they are for later models. Model year 2009-10 Jetta TDI prices have fallen by an average of $384 (-6%), which is slightly less than the $500-plus dollar drop in gas-powered Jetta prices (-11%). VW diesel auction volume is currently running 21% lower on average than it was prior to mid-September. VW gas auction volume is up by 3%.

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