VOLKSWAGEN RECALL

Volkswagen admitted in September, 2015, that millions of its four cylinder diesel cars were fitted with technology that cheated on emissions tests. The company said roughly 11 million cars are affected worldwide but just 3% of these cars are in the United States which still adds up to 330,000 vehicle in the United States.

According to an article in The Westchester County Business Journal on December 7, 2015, by Evan Fallor, the US Environmental Protection Agency and the California Air Resources Board found in September, 2015, that Volkswagen cheated on emissions requirements. This scandal has had a wide scale impact on the Volkswagen automaker and also affected by the scandal are local dealers. Volkswagen operates three dealerships in Westchester County, three in Fairfield County Connecticut and another four in the Hudson Valley. Managers of Lash Volkswagen in White Plains, Prestige Imports in Pleasantville, Mohegan Lake Motors, Inc., Compass Volkswagen in Middletown, Volkswagen of Kingston, Hudson Valley Volkswagen in Wappinger Falls, Danbury Volkswagen and Curran Volkswagen, Inc. in Stratford, Connecticut all would not comment on the scandal.

Woody Woodward, General Manager of Prestige Volkswagen in Stamford, Connecticut said business has not yet slowed down by the scandal. They are still on pace for a 40% increase in sales for 2015. Woodward said an overwhelming amounts of its customers want to keep their Volkswagens. Bob Vail, President of the Vail Auto Group in Bedford Hills and Chairman of the Greater New York Automobile Dealers Association has been in contact with several Volkswagen dealers who said 6% of sales involves cars listed in the emissions scandal report. Mr. Vail stated “VW is such a reputable brand and they have such a loyal customer base, so I don’t think in the long run it’s going to have a tremendous effect”. According to the Greater Automobile Dealers Association which represents the auto industry in Westchester County as well as Rockland, Dutchess, Putnam, Orange, Nassau and Suffolk Counties and the New York City, new car sales for the metropolitan New York increased for the fifth consecutive year in 2014. Recent reports show Volkswagen of America, Inc., a subsidiary of Volkswagen Group of America, Inc., saw U.S. sales drop 25% in November, 2015.

Paul Bracken, a professor of Management and Political Science at Yale University, School of Management said he expected the scandal to hit the German automaker hard in the U.S. Bracken said “customers will demand bargains, suppliers will be squeezed on costs and sales, people will be under the gun to make larger profits to pay for the huge fines that are coming”. Forty-eight Attorney Generals including New York Attorney General, Eric T. Schneiderman, announced last month a joint investigation into the import and sales of VW cars including Audi & Porsche.

VW announced in November, it would provide the 2.0L 4 cylinder TDI vehicle owners with a “goodwill package” containing a $500 Volkswagen dealership card and no charge for roadside assistance for three years. VW has recalled its 4 cylinder diesel engine cars at the center of the scandal as well as some 6 cylinder models. Michael Horn, President & CEO of Volkswagen Group of America said “we are working tirelessly to develop an approved remedy for affected vehicles. In the meantime, we are providing this goodwill package as a step to regaining our customer trust”.

Luckily the scandal does not involve personal injuries like the Takata airbags. However, we are sure VW will pay dearly for the scandal through fines and the cost of fixing the emissions requirements.