On April 21, Volkswagen announced a “concrete plan” supported by the U.S. Environmental Protection Agency to correct the automaker’s estimated 600,000 rigged diesel vehicles, which utilize cheat software to skirt emission laws in the U.S.

The U.S. District Court in San Francisco overseeing the proceedings indicated the proposed deal would give owners of affected 2-liter diesel vehicles one of two options to alleviate vehicle value and/or emission woes:

  1. Vehicle will be fixed to meet U.S. pollution standards.
  2. Vehicle will be bought back by Volkswagen (or lease cancelled).

The Judge also indicated the agreement included “substantial compensation” for the owners of 2-liter diesels, totaling $5,000 per affected car. However, this agreement doesn’t cover the roughly 100,000 3-liter VW, Porsche and Audi brand vehicles also equipped with cheat software. In addition, VW will establish a fund for any environmental damage caused by the affected vehicles.

All of the negative information surrounding the diesel scandal has contributed to a detrimental impact on used VW diesel and gasoline vehicle values. Using the 2013 model year Jetta as our proxy, data shows us that since the EPA’s announcement of violation last September, diesel models have lost $4,650 of their average trade-in values. Gasoline-powered Jettas have lost $1,733. Both diesel and gasoline Jetta losses are higher than the model’s competitive set* average decline of $1,123 over the same period, however gasoline losses are not nearly as steep.

The $3,279 premium the diesel Jetta commanded over its competitive set the month prior to the EPA’s announcement is now gone. As of May 2016, the average trade-in value for the diesel Jetta is now $580 less than the competitive set, while gasoline-powered Jettas are $1,224 under the same competitive set average. The gap between diesel and gasoline Jetta average trade-in values has been almost entirely eliminated — what was once a $3,742 spread in August 2015 has been reduced to $644.

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*Competitive Set includes 2013 model year Honda Civic, Toyota Corolla, Chevrolet Cruze, Hyundai Elantra, Ford Focus, Subaru Impreza, Mitsubishi Lancer, Mazda Mazda3 and Nissan Sentra.