Emissions scandal takes wind out of Volkswagen Canada sales.
Canadian sales drive off a cliff, as buyers snub the diesel-rigging company in the second half of the month
TORONTO • Canadian Volkswagen sales fell off a cliff in September, plunging 19.6 per cent even though the company’s emissions-rigging scandal didn’t come to light until the latter half of the month.
“Sales are almost always backend loaded because of the incentive programs typically in play at the end of the month, so there’s a big lastweek push,” said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.
“I’m told that the last 10 days were pretty disastrous.”
On Sept. 18, the U.S. Environmental Protection Agency (EPA) accused Volkswagen of installing so-called “defeat devices” in some of its diesel-powered vehicles. This software turned on pollution-control systems only when a car was undergoing emissions tests, meaning some vehicles were spewing as much as 40 times more nitrogen ox- ides than allowed under North American law.
Up to 11 million vehicles worldwide were equipped with the software, according to Volkswagen.
The company responded by issuing a stop-sale notice to its dealers for the affected vehicles, which account for almost a quarter of its Canadian sales.
Sales of Volkswagen’s luxury brand, Audi, also took a hit, falling 13.2 per cent in September. Year-to-date, Volkswagen sales are up 8.6 per cent and Audi sales are up 12.4 per cent.
“They were tracking up 10 per cent and now they’re down 20 per cent and the only fundamental thing that changed was their scandal,” DesRosiers said.
However, the sales fallout will likely be contained if Volkswagen plays its cards right, he added.
“It’s no doubt very negative in the short term, but it typically is a shortterm impact, not a long-term impact,” DesRosiers said.
“It will also depend on how Volkswagen reacts: Will they have a fix on the vehicle, do they put money in the hood and can they motivate their car dealers and massage the negative consumer sentiment?”
The EPA said Thursday that a recall of the affected vehicles would “likely” take place. Volkswagen said it would announce its “technical solutions and measures” sometime this month.
In the U.S., Volkswagen’s sales unexpectedly rose 0.6 per cent, well ahead of the 6.7 per cent decline that was expected by analysts. Audi did even better, with sales jumping 16 per cent despite the scandal.
The Volkswagen fallout had little impact on overall Canadian auto sales, which rose 3.7 per cent to the seventh monthly record so far this year.
Ford Canada was the topselling automaker last month with an increase of 3.9 per cent, although its sales are still down 4.9 per cent year-to-date. FCA Canada is still in first place for the year with 15.6 per cent of the Canadian market.
“Despite slumping global equity markets, Canadian auto sales climbed to record highs in September,” Carlos Gomes, senior economist and auto industry specialist at Scotia- bank, said in a note. “The gain reflects improved credit availability, especially for vehicle leasing which has boosted lease volumes 16 per cent this year. Excluding the surge in leasing, overall sales have actually declined marginally through September.”
Meanwhile, U.S. auto sales soared 15.8 per cent in September to a seasonally adjusted annual rate of 18.17 million units — the highest rate since July 2005, according to Autodata Corp.
The U.S. auto industry is now in a position to achieve its best sales yea r since 2000 as consumers continue to buy record numbers of pickup trucks and SUVs, according to TrueCar Inc.
Canadian auto sales climbed to record highs in
September