Cars and Drivers

US Volkswagen Dealers Want VW to Pay

Paul Ausick

Published: March 22, 2016 10:45 am

Last Updated: January 13, 2020 11:39 am

U.S. Volkswagen dealers told VW corporate executives last week that they want the company to pay reparations for damage to their businesses caused by the VW’s diesel emissions scandal. Volkswagen did not commit to making any such payments, however.

Diesel-powered vehicles accounted for about 20% of U.S. dealer sales before the company instituted a freeze on sales following revelations that VW had fiddled with the cars’ emissions control systems.

Dealers are expected to raise the issue again next week at the National Automobile Dealers Association convention in Las Vegas that at least two VW corporate executives are scheduled to attend. Volkswagen has about 650 dealers in the United States, and many claim that their franchise values have suffered from the decline in sales.

According to a report at Automotive News, VW has been sending dealers “discretionary” payments of tens of thousands of dollars a month for the past six months. One dealer said:

If an average dealer is getting $20,000 a month in discretionary money, that’s $240,000 per year. If they deem this to be a four-year process, that’s going to be just south of $1 million for that particular dealer.

VW already has backed away from a plan to adopt what has been called a “near-premium” U.S. brand strategy, under which dealers would see lower volumes but higher profits per vehicle. The company said it would stick with its mass-market approach and prioritize compact and midsize sedans and crossovers as the core vehicles for U.S. sales.

Dealers reportedly have gotten the company to agree that a new, entry-level crossover vehicle needs to be introduced into the U.S. market, positioned below the redesigned Tiguan that will be launched next year.