It's not just Volkswagen owners who are outraged over the Volkswagen dirty diesel scandal, dealers are angry too. In fact, the dealers were already fed up with slow sales that they blamed on VW's plodding pace in bringing new models to market, and many are right behind consumers in filing class action litigation against the company.
It might sound strange to consumers, but dealers stand to lose a lot more in the Volkswagen scandal than their customers do. After all, what's the worst that will happen to a VW owner? The cars aren't safety hazards and can still be driven; they stand to lose resale value and may take a performance hit when the emissions systems are straightened out, but no individual car owner is going to be wiped out financially.
Dealers, on the other hand, argue that they have already taken multi-million dollar hits in lost sales because VW was slow to update its model line-up. And now they stand to lose much more if consumers turn their backs and head over to the Kia or Nissan dealer.
There's also the little matter of inventory. Volkswagen sales have been sluggish the last few years and if you look carefully at VW dealers' lots, you'll see they are bulging with unsold cars that appear as a huge liability on dealers' balance sheets.
Bargain hunter's dream
Not to be crass, but there is one bright spot in the entire mess -- anyone looking for a new or used car should be able to drive a hard bargain and then drive off with lots of change jiggling in their pockets.
Dealers live from month to month. Between now and the end of September, anyone who walks into a VW showroom with cash or good credit should be able to knock thousands of dollars off the going price for most models.
Admittedly, this is not the time to buy a VW diesel, since no one knows what the emissions modifications will do to the cars' performance and fuel economy, but gas-powered Volkswagens are the same precision-engineered, fun-to-drive cars today that they were yesterday.
Consumers too often make buying decisions based on morality instead of their own self-interest. Whether you buy a VW or not doesn't really matter to Volkswagen, but if you can do so at a fire-sale price, it matters a lot to your bank balance.
Headed for court
The mess that VW has made for itself also presents a sterling opportunity for the legal profession, which is letting no grass grow under its feet. Lawyers who specialize in the auto trades are tuning up their word processors and getting ready to head for the courthouse, Automotive News reports.
“If I’m a VW dealer and they’ve made intentional decisions either in Germany or in Virginia, and those decisions damaged the brand, that hurts me as a dealer,” said Mike Charapp, a partner at Charapp & Weiss in McLean, Va., a McLean, Va., a firm that represents dealers, the trade journal reported. “I’m going to be looking at some potential recourse unless VW steps up and helps me with my business.
VW's U.S. subsidiary is headquartered in Herndon, Va., near Washington Dulles International Airport. The proximity to Dulles makes it easy for executives to fly back and forth to Germany.
It also makes it convenient for lawyers to shuttle into Dulles and head for the Fairfax County courthouse or the U.S. District Court in Alexandria. Reuters estimates that at least 25 class-action cases have already been filed, representing dealers in all 50 states.
Besides lost sales, dealers will argue that the value of their franchises has been decreased -- even wiped out -- by Volkswagen's skirting of U.S. emission laws. The damages sought by dealers could easily exceed those sought by consumers and could even rival the $18 billion in potential fines.