Volkswagen Passat sales drop again, but SUV is on track

Volkswagen of America on Friday posted a sharp drop in June sales over a year ago, but it confirmed that assembly of a much-awaited Chattanooga-made SUV is to start by the end of 2016.

“I see potential in Chattanooga,” said Jesse Toprak, chief executive of auto research site carhub.com. “It’s a good, viable, long-term strategy for VW to offer a variety of new vehicles.”

VW’s U.S. sales fell 21.7 percent in June over a year ago, with the Chattanooga-made Passat’s numbers dropping 14.2 percent in the month.

For the first six months, VW’s total sales of 149,014 vehicles were off 14.5 percent from the same period in 2015, the company reported. Passat sales in the first half of the year were down 22.2 percent from the previous year to 32,813 cars.

Still, VW’s small SUV, the Tiguan, posted best-ever June sales of 3,066 units, a 17.7 percent jump for the month over a year ago.

“The Tiguan continues to maintain a solid pace and bring activity into showrooms,” said Mark McNabb, chief operating officer for Volkswagen of America, in a statement.

An updated Tiguan is slated to go on sale next year along with the new midsize SUV, which will be made in Chattanooga following VW’s $600 million upgrade of the factory in the Enterprise South Industrial Park.

Toprak said the best way to get consumers to forget about VW’s diesel emissions scandal is to put out a revamped product line that appeals to Americans and includes larger SUVs and electric vehicles.

“The new Tiguan and midsize SUV will provide a much needed boost to VW sales,” he said.

The release of VW’s June sales numbers capped a week in which it announced a proposed record $15 billion payout for its dirty diesels. VW admitted it installed software to make it appear to regulators that the cars ran cleaner than they do on the road.

Up to $10 billion will go to 475,000 VW or Audi diesel owners. VW agreed to either buy back or repair the vehicles, although a fix hasn’t been unveiled yet. Owners also will receive payments of $5,100 to $10,000. In addition, the settlement includes $2.7 billion for environmental mitigation and another $2 billion for research on zero-emission vehicles. It also settles claims with the states for about $603 million.

Stan Houston of Ringgold, Ga., said his wife bought a 2014 diesel Passat and she loves the car.

But VW hasn’t announced a plan to fix the car and they don’t have enough information yet to make a decision on what to do, he said. If VW can make the repairs so the car can get the same mileage, they’d prefer to keep it, Houston said.

“It might still be a good deal,” he said. “It’s a shame somebody lied. I’m disappointed by the fact they lied about it.”

Red Bank Mayor John Roberts said the city continues to use four to six Passat diesels it bought in 2014 as police cars.

“They’re good vehicles. We’ve been somewhat pleased with them,” he said.

Roberts guessed that at this point the city will get the vehicles’ emissions system repaired.

Chattanooga attorney Gary Patrick, representing about 300 people in the class-action suit against VW, said he and fellow attorney Ellie Hill aren’t making a recommendation yet to clients over whether to accept the company’s settlement.

Patrick said the federal judge in California hearing the case is expected to decide if he will accept VW’s proposed settlement by July 26. He said if the judge gives his OK and a client doesn’t want to accept VW’s proposal, he or she can opt out and litigate their case in court.

Also Friday, VW announced it’s recalling certain model year Passats along with some Jetta and Golf vehicles because of possible fuel leak that could cause a fire.

Vehicles being recalled are 2016 Passat vehicles, equipped with 1.8T engines manufactured Nov. 13, 2015, to Dec. 9, 2015, 2016 Jetta vehicles manufactured Oct. 31, 2015, to Jan. 21, 2016, and 2016 Golf vehicles manufactured Nov. 5, 2015, to Nov. 11, 2015.

In the affected vehicles, the fuel rail may detach from the cylinder head and result in a fuel leak, and in the presence of an ignition source, that can result in a vehicle fire, the company said in a filing with the National Highway Traffic Safety Administration.

Contact Mike Pare at mpare@timesfreepress. com or 423-757-6318.