Show me the money
All about VW’s upcoming Dieselgate settlement
Due to be confirmed early next week — July 26th to be exact — Volkswagen’s Dieselgate settlement. It is a complicated affair that has to take into account no less than six years of production, 45 models and countless options.
It is, however, an agreement that owners of 2009 to 2015 Jettas, 2012 to 2015 Passats, 2013 to 2015 Beetles and 2010 to 2015 Golf TDIs — not to mention 2010 to 2015 Audi A3s — should give thanks.
In fact, it’s so complicated that I can’t even fit all the facts here; for a full rundown on all the numbers, visit Driving.ca, but here is a synopsis that gives you a broad oversight of the situation.
HOW MUCH MONEY ARE WE TALKING ABOUT?
The big number that’s been bandied about is $14.7 billion (all figures are in US dollars, a Canadian settlement has yet to be offered). But that includes the $2.7 billion for an “environmental remediation” trust that the U.S. government wrangled out of Volkswagen and a further $2 billion in Zero Emissions Technology that Volkswagen will have to spend on electrical infrastructure and education to prove their clean air bona fides. In other words, it will cost Volkswagen about $10 billion to buy back or fix every one of the 480,000 or so TDIs confirmed to have a NOx-spewing defeat device. That works out to about $20,900 for each and every emissions-spewing TDI.
HOW DID THEY DETERMINE THE COMPENSATION?
There are actually two parts to the compensation Volkswagen is offering. And, if that’s not complicated enough, those two parts are divided into two choices, either an offer to buy the afflicted TDI back or to refurbish it so that it would then comply with current emissions standards.
Let’s look first at what you’ll get if you sell your car back to VW.
There are two parts to the compensation being offered if you choose to return your TDI. The first part is buying back your used Golf, Jetta, Beetle or Passat. That amount you will receive is determined by the “clean trade” value — set by the North American Dealer’s Association (NADA) — on September 18, 2015, the day the EPA dropped its defeat device bombshell that sent TDI values into a tailspin.
The second part of the moneys you’ll get is something called an “owner restitution payment,” basically the EPA’s penalty for Volkswagen cheating on its emissions standards and, more importantly, embarrassing it in public. It is important to note that no matter what you decide — whether you give back the car or choose to have it fixed — you will receive this compensation; that $20,900 average payout noted above is a combination of the resale value and the owner restitution penalty.
HOW IS THIS ‘OWNER RESTITUTION PAYMENT’ DETERMINED?
This restitution is based on a complicated formula that basically adds a further 20 per cent of the vehicles resale value (again, as of Sept. 18, 2015) and a further penalty of $2,986.73. To complicate this just a little further, Volkswagen has put a floor on this penalty of $5,100. If the total of the 20 per cent of resale value and $2,986.73 is less than $5,100, Volkswagen will top up the total to reach that minimum of $5,100. So, no one gets less than a $5,100 “bonus”: Most people get more. And to reiterate once again, even if you choose to keep your TDI, you are eligible for this owner restitution payment.
WHAT IF MY CAR WAS LEASED INSTEAD OF OWNED?
If you’re leasing a 2009 to 2015 VW — or an Audi A3 — you are eligible for a complete payout of your lease without penalty and half of the owner restitution payment. Thus, you’ll get 10 per cent of the car’s value and $1,529. According to the current information, the minimum restitution payment — for a 2011 Jetta — is $2,634; the maximum is $4,052 for a fully-loaded 2015 Beetle Convertible.
WHAT IF I SOLD MY CAR?
If you sold your TDI after Sept. 18, 2015 — but before June 28, 2016 — the restitution payment is split evenly between the previous owner and the new buyer. In other words, both are eligible for exactly half of the owner’s restitution: 10 per cent of the car’s value when you sold it plus $1,493 with a minimum of $2,550.
Even if you totalled the car — after Sept. 18, 2015, of course — you are still eligible for restitution. Unfortunately, there are simply too many oddball cases to list. Starting July 26th, you’ll be able to go to VWCourtSettlement.com, enter your VIN number and find the exact buyback/restitution payments your car is eligible for.
SO, DAVE, WHAT SHOULD I DO? GET MY TDI REFURBISHED OR JUST TAKE THE MONEY AND RUN?
When you look at the individual compensation packages, it becomes clear that the best deal is to take the buyback. For instance, if you turn in a 2014 Passat TDI SEL, you will receive between $28,847 and $28,967. A brand new Passat SEL, complete with a way cool Fender audio system and VW’s improved 1.8-litre (gasoline-fuelled) turbo, goes for $30,495 (again, all numbers are American). Anytime you can trade in a two-year-old vehicle for an equivalent new one is a good day.
Even if your car is older, the best bet is still to take the buyout. A 2012 Jetta sedan will net you $18,317 to $20,867. The 2016 model starts at $17,680 and even a well-equipped Jetta 1.8 T Sport is only $20,895.
WHAT IF I DON’T TAKE THE BUYBACK?
That gets more complicated. For one thing, Volkswagen and the EPA have not agreed to a fix yet and there’s no indication as to what might actually be involved in retrofitting the errant turbodiesels. Will it affect performance? Will it affect fuel economy? No one knows.
WHEN WILL THE WORK BE COMPLETED?
It could be almost two years till they get around to your car. Worse yet, some cars — essentially all 2015s — need a two-step repair, meaning owners will have to go to the shop twice to eliminate their tailpipe’s errant toxins. If you do choose to get your 2015 TDI fixed, you will get two thirds of your compensation on the first visit and the remaining third — and a free oil change and filter — when the work is completed.
WHAT DOES THIS ALL MEAN FOR CANADIAN TDI OWNERS?
As of this writing, no details have been offered as to the compensation that will be offered to Canadian diesel owners. Officially, Volkswagen Canada’s position is that “class action proceedings in Canada follow their own process within Canadian courts and therefore the process differs from that in the United States.”
That said, unlike European TDI owners — who are not receiving the same compensation as Americans — we Canadians should expect the same basic package. If that proves true, my advice remains the same. If the agreement differs from that offered to American TDI owners, you should raise holy hell with Volkswagen Canada.