Additional VW fall-out

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The VW diesel scandal will affect more than just sales at the dealerships, but the Australian industry watchers are predicting 10 percent falls in the used values and leasing residuals.

Residual values (before scandal/after scandal)

Volkswagen Passat Wagon 130TDI Highline

New Car Price $46,990

3 yr Residual (before) 46 percent

Value in 3 yrs (before) $21,612

3 yr Residual (after) 36 percent

Value in 3 yrs (after) $16,916

Loss $4696

This will produce problems for those with a leased diesel who as per the table above, were expecting a minimum of $21,000 for their vehicle, but if the residual is only $16,000 they may be paying $5,000 to the financiers just to get out of the lease.

New cars on the dealership floor will see the prices that they can get from the buying public are falling as well, depressing the second hand market even further.

Head office has begun a cost-cutting program, getting ready for the billions of dollars VW will have to pay to correct the diesel vehicles, plus fines.

What I have not seen commented on is “why” did they get around the emissions test? My belief is that to have the engines comply, this lowered the performance of the engine. So what is going to happen when they “correct” the ECU? My guess is that the owners will find their cars do not perform as well as they did.

Now while VW is being held up as the ‘criminal’ in this case, I am quite sure they are not the only manufacturer fudging results. Expect more in the next few weeks.