With the summer road trip season upon us, it seemed timely to bring up a car topic that has moved out of the spotlight:  The Volkswagen TDI Settlement. Initially, it seemed like writing about this would be pretty straightforward, but within the buyback experience, a larger issue was exposed:  VW allowing opportunists to exploit the settlement process.

The Settlement Process, First-hand Experience

The buyback process was quick and easy.  The agent who did our closing, Mark, I had met previously.  Though professional, on initial interaction, his job appeared unpredictable and stressful.  Mark seemed nervous, hands shaking and out of sorts. As it turns out, the buyback role requires the agent to constantly drive between VW and Audi dealerships in the region, for closings with individuals who select their local dealership, resulting in an inconsistent base of operations. Plus, the demeanor of the sell-back individual is unpredictable.  Some are still confused and stressed by the process when there is a loan closing involved, and others feel they are cheated and want to be heard. My impression from speaking with him is that “Don’t kill the messenger”, has not been observed by sellers.

Our buyback experience wrapped up quickly:  we went out and demonstrated the vehicle turned on and could drive backward and forward 10 feet, then we were handed over a check.  The reason for us selecting the buyback instead of emissions fix was described previously.

The Volkswagen & Audi brands, which I will collectively reference VWGoA (Volkswagen Group of America), documentation process, that preceded the buyback, was extensive.  It was 19 steps, providing various paperwork, declarations, and scheduling.

After wrapping up our quick buyback meeting, I inquired to the VWGoA agent how the process is going overall.  He mentioned that Volkswagen dealers recently began accepting the buyback checks as a trade-in, which was a good deal for customer retention, as it eliminated some sales tax.  The process remained anxiety-inducing for some claimants who have a loan on their vehicle.

The Dark Side

It was freely shared that individuals are taking advantage of the system.  One story particularly bothered the VWGoA agent:  

Two brothers unabashadely took $10k out of their 401(k) to fund the purchase of salvaged TDI’s that are in the qualifying age of vehicles for the buyback. In January the brothers showed up to a buyback appointment with 3 Audi TDI on a flatbed.  Each one turned on, which at the time was the only requirement for qualifying a vehicle as being operational, and that day they walked away with a check for $140,000.  The VWGoA agent refused to sign off on this buyback because the vehicles had salvaged titles, which are explicitly excluded, per the Terms of the Class Action Settlement.  

Stepping in for the buyback agent’s objection, VWGoA Corporate indicated they would accept the vehicles, and also informed him these two guys have 37 more vehicles they are selling back. Rough buyback estimate, $1.2 million!

So Many Questions…

This is where my thoughts and speculation began!

My Question:  Why would Volkswagen accept these, as they clearly exclude salvaged vehicles in the Buyback Terms & Conditions?

My Guess:  There is a bounty and this adds to the headcount.  VWGoA needs to remove or modify 85% of the affected vehicles, per the EPA website:

Volkswagen must remove from commerce in the United States or perform an approved emissions modification on at least 85 percent of the affected 2.0 liter vehicles by June 2019. 

A salvaged vehicle has no visibility of being removed from the road, with respect to VW proving to the EPA they are indeed removed.  Sure, they could scan all vehicle registrations in every state and count the number of TDI that are no longer registered and cross-reference those that are claimed for buyback or modification.  That would be an expensive undertaking for VW. The states have no reason to do that VIN registration search for free, particularly on behalf of an offending corporation, and a car no longer being registered does not prove it is any longer being driven, which is the whole point, removing these vehicles from the road [or modifying them] to eliminate the excess emissions.

This was a passing discussion with the VWGoA agent during our buyback process and it caught me off guard. I imagine someone could investigate this further and validate if people are taking advantage of the buyback, or found some loophole despite the vehicles not passing the clean title.  It is also surprising if this story is true, of a VW owner stripping down their Golf before turning it in, and being denied.  After Volkswagen’s poor conduct resulting in the TDI scandal, it seems they would want to stay clear of any transactions which are in conflict with the Terms of the Class Action Settlement.  If they are  accepting salvaged vehicles as buybacks, to ensure they reach the 85% threshold, such a move would be customer-centric, but again is lacking in transparency, which does not build customer confidence. 

https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement