WASHINGTON -- Volkswagen of America has rolled out a series of financial assistance programs to compensate its U.S. dealers amid the company’s diesel emissions scandal.
The stop-sale order issued over the weekend for 2015 diesel vehicles and the EPA’s refusal to certify that VW’s 2016 diesel vehicles comply with emissions rules have effectively halted the sale of vehicles that account for more than a fifth of VW’s U.S. sales volume.
The scandal comes at a time when VW’s roughly 650 U.S. dealers already struggle with profitability amid a nearly 3 percent decline in new-vehicle sales through August. Relations with the factory are also on ice, as VW dealers have ranked at or near the bottom of the industry in the National Automobile Dealers Association’s biannual Dealer Attitude Survey.
According to a Sept. 21 memo to dealers from Volkswagen’s U.S. chief Michael Horn obtained by Automotive News, the company will guarantee bonus payments in September of $300 for each new car sold and $600 for each Passat.
The company also will offer floorplan financing reimbursement for diesel vehicles on dealer lots that are grounded under the company’s stop-sale order that was issued following revelations that the automaker had sold some 482,000 VW and Audi diesel vehicles with emissions control software designed to produce false emissions testing data.
The reimbursement plan will cover both new and certified-used TDI models affected by the stop-sale until repair instructions are released, according to the memo.
Dealers also will receive guaranteed payouts under the VW brand’s customer experience bonus program equaling 1 percent of sticker for each vehicle sold in the third quarter and fourth quarter.
“In light of recent events, we are committed to taking actions which will stabilize your profitability in the near-term,” Horn said in the memo. “We understand the pressure these recent events have put your business under and we are committed to providing you support.”
The actions were taken following conversations with VW’s national dealer council, and more could follow, according to the memo.
Alan Brown, who is chairman of the Volkswagen National Dealer Advisory Council and manages two large VW dealerships in suburban Dallas, says the scandal is a blow to the heart of VW’s lineup. Diesel vehicles have been a bright spot for many VW dealers nationally. Without a quick plan to resume sales, dealer profitability will be strained even further.
“Ever since 2012, the dealer network has had an issue with performance and now this is another hurdle we have to deal with,” Brown said. “It comes at a tough time.”