A lot of repairs: Race is on – kind of – to get recalls fixed
A huge parking lot north of the Pikes Peak International Speedway is filled with vehicles — even on days when race cars aren’t speeding around the oval.
Thousands of Golfs, Beetles, Jettas, Passats and Audi A3s have been brought there since the federal government cracked down on Volkswagen for cheating on emissions tests two years ago and had the German carmaker buy back its cars.
As of June 15, Volkswagen had reacquired 275,601 2.0-liter TDI vehicles and terminated leases on 10,027 cars. Some of them are being stowed at the parking lot south of Colorado Springs, waiting to be repaired and sold, or recycled for parts and scrap.
According to the Environmental Protection Agency, VW violated the Clean Air Act by selling approximately 590,000 diesel vehicles that were equipped with “defeat devices” designed to cheat on federal emissions tests. On the road, the engines emitted almost 40 times the permitted levels of nitrogen oxides.
To settle the claims, VW pleaded guilty to the allegations and was fined $4.3 billion in criminal and civil penalties. The company also must spend $4.7 billion to mitigate pollution and invest in zero-emission vehicle technology. About $61 million of that sum will flow to Colorado projects, including construction of a zero-emissions vehicle charging network.
Volkswagen agreed to buy back or modify more than
487,000 2.0 liter TDI vehicles and pay up to $10 billion to compensate customers.
A similar deal VW agreed to later requires the carmaker to pay at least $1.2 billion to fix or buy back 80,000 larger 3.0 liter TDI vehicles such as the VW Touareg and the Audi Q7.
On Friday, Volkswagen engineer James Liang was sentenced in Detroit to 40 months in prison and a $200,000 fine for helping the company game the system. He was head of diesel competence in the U.S. and pleaded guilty to conspiracy last year, Bloomberg News reported.
The German citizen is among eight VW executives criminally charged for their alleged roles in the scheme, but he is the first to be sentenced.
According to the EPA, VW cannot resell or export any of the affected cars without first making approved emissions modifications. The carmaker so far has obtained regulatory approval for more than 98 percent of the eligible 2.0 liter TDI vehicles in the U.S.
But it takes time to repair so many cars. And that is why Volkswagen needs parking lots such as the one near the speedway.
It is one of several storage facilities in the U.S., a Volkswagen spokeswoman said. Others are at the Port of Baltimore, Md., and the decommissioned Norton Air Force Base in San Bernardino, Calif. The most prominent — and perhaps the most symbolic — facility is in the parking lot of the crumbling Pontiac Silverdome, former home of the Detroit Lions.
The vehicles at all of these locations “are being stored on an interim basis and routinely maintained in a manner to ensure their long-term operability and quality, so that they may be returned to commerce,” the spokeswoman said. “Vehicles that are not modified because of their age or condition or for other reasons will be responsibly recycled.”
The spokeswoman declined to say how large the storage lot near the Pikes Peak speedway is or discuss how many cars are parked there. But if you have a look at Google Maps, you can at least take a guess. Using special software, The Denver Post calculated that the gravel lot, built specially to store the cars, is about 4 million square feet. There is enough space for at least 15,000 cars, although the lot is not yet filled.
And it may never be, as the cars are being repaired and sold — very slowly, since Volkswagen doesn’t want the market to be flooded with second-hand vehicles.
Fred Emich, general manager of Emich Volkswagen in Denver, said it takes anywhere from 45 minutes to nine hours to modify a single car — the latter for 2009 models, the oldest in the buy-back program.
But the time is worth it, Emich said. The dealership has already bought back 45 cars from the storage lot using an auction platform VW offers to its dealers.
“The pricing (there) is good”, he said. “There seems to be a decent demand for these cars.”
Nationwide, VW had performed modifications on roughly 10,500 cars as of June 15. The task ahead remains big, though. The company must buy back or fix 85 percent of the affected 2.0 liter vehicles by June 30, 2019. According to a court report, Volkswagen had reached a recall rate of 61.6 percent by mid-June.
Missing the goal could lead to more costly penalties from the EPA — an additional $85 million for each percent short it falls.
The company now needs to get the remaining customers to hand in their cars for free emissions modification, additionally offering $5,100 to $10,000 in cash. But is that a good deal?
So far, the buyback option has been the more attractive option for owners. A 2009 Jetta brings them $12,475 to $14,025; a 2015 Audi A3 Prestige, that used the same software as VW cars, is worth up to $44,176, according to settlement documents.
VW dealer Emich said customers contemplating a repair are most concerned about the loss of power and fuel efficiency. “They don’t want to lose performance or economy with their vehicle.”
But he isn’t worried. “Customers who haven’t sold their car yet are very loyal with diesel technology.”