What Will VW Do With The Diesels It Buys Back?

Now that the terms of the buyback regarding diesel-engined cars that polluted too much (and that VW cheated emissions testing with) have been determined, hundreds of thousands of cars will be returned to VW. But, what will VW do with the diesels it buys back?

What will VW do with the diesels it buys back?

2014 VW Passat TDi

Well, that kind of depends. According to the agreement negotiated between VW and the United States government, VW may legally do several different things with the diesel cars it buys back from U.S. owners:

  • modify and resell them as used cars (if the proposed modifications to make the cars emissions-compliant are approved in the future), with proper disclosure to the prospective buyer
  • export the vehicles for resale abroad
  • render the vehicles inoperable and recycle them, or disassemble the vehicles for parts that may be subsequently sold in the U.S. or exported

It was thought by many that VW was going to start parting out most of the cars immediately after purchasing those vehicles from their owners, but that does not now seem to be VW’s strategy. What will VW do with the diesels it buys back in the next months/year?

It now appears that VW intends to store most of the vehicles until it gets word on whether or not the modifications proposed by the company to bring the cars into emissions compliance will be approved by the EPA and CARB (California Air Resources Board).

This means that VW is going to need storage facilities all over the U.S. that can accommodate the hundreds of thousands of used diesel cars it’s going to temporarily own.

what will VW do with the diesels it buys back?

2010 Audi A3 TDI

And, if the modifications are approved, then VW will need to process these vehicles through service facilities all over the U.S., and then sell those vehicles to dealers (both VW and non-VW dealers) through dedicated sales or through vehicle auctions. That is a logistical nightmare.

Not to mention that wholesale values of used VW diesels will just fall off a cliff. Even if the cars run perfectly (very unlikely!) after the extensive modifications required to bring them into emissions compliance, there will just be too many of them in the secondary market at once, and additionally, all of these vehicles will be tainted by the suspicion that that there will be problems with the cars going forward. These concurrent factors will drive the price of “factory reconditioned” VW diesels down into the ground.

On the other hand, if it becomes clear that the “hold and wait” strategy isn’t viable, and VW starts disassembling hundreds of thousands of late-model VWs all at once, well, all I can say is that used parts for most VWs are going to be very cheap, and very plentiful, for a long, long time. Which will hurt VW’s parts business, but be a boon for individual consumers with any VW model (diesel or gas). Want some nicer wheels for your base Golf? Should be pretty reasonable soon.

Lastly, there’s the option of selling the diesel cars outside of the U.S. This is a viable option if the value of the car is high enough to justify the combined “get ready” costs (standard prep for used cars) and shipping costs. As an example, a 2009 VW TDi (diesel) with 100,000 miles on the odometer and the usual issues a car with 100,000 miles on the clock would have is not worth taking anywhere. Even if the presumed destination was right across the border in Mexico, it’s probably a better deal for VW to part that car out, or, just crush it outright.

By the way, if large numbers of these buy-back vehicles do end up en masse in Mexico, I’ll point out the obvious, and state that the U.S. will still be impacted by the extra emissions being pushed out of the exhaust systems of these vehicles in the future. It’s not that far away, folks.

So, what will VW do with the diesels it buys back? That is very much an open question right now.

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