VW, U.S. dealers to hold talks on financial relief over emissions violations

WASHINGTON -- Volkswagen AG agreed to begin talks with VW dealers in the U.S. seeking compensation for financial damages caused by the company’s diesel emissions violations.

The move toward a settlement with dealers comes nearly six weeks after the National Automobile Dealers Association convention, where an off-the-books gathering of hundreds of VW retailers spurred a committee of six dealers, headed by Florida dealer Jason Kuhn, to press VW executives for a relief package on behalf of all 652 VW dealers in the U.S.

Volkswagen and Kuhn, president of Kuhn Automotive Group of Tampa, Fla., confirmed to Automotive News on Wednesday that they had agreed to begin discussions.

Formal negotiations with dealers are not yet underway. The form and amount of the settlement package sought by the committee is unclear, though dealers will likely be asked to waive scandal-related legal claims against the automaker in exchange for a payout.

In addition to financial compensation, Kuhn said dealers want more influence over VW’s U.S. market strategy going forward.

Kuhn, in a statement Wednesday, said the “dealer investment committee” and VW executives will “likely” meet in person for talks in the next few weeks.

“VW AG has been receptive to our committee, and like a vast majority of the dealers, desires an expeditious and reasonable solution,” Kuhn said. “The tone and tenor of our dialogue with AG to date makes the committee optimistic that we can achieve a positive result.”

The value of VW’s U.S. dealer franchises has plummeted along with sales and showroom traffic since the company admitted last September to rigging some 11 million diesel vehicles worldwide with illegal software to fool emissions tests, including more than 500,000 in the U.S.

The six-member dealer investment committee went public with its agenda after a nearly two-hour dealer-only meeting on the sidelines of the NADA convention in Las Vegas early last month. The next day, in Las Vegas, VW brand chairman Herbert Diess and North America chief Hinrich Woebcken addressed U.S. dealers for the first time at the brand’s annual make meeting.

At the time, amid growing dealer angst, it appeared VW’s make meeting would be contentious.

Some retailers were considering lawsuits against VW for damages, according to lawyers, and at least one potential class action was drafted and ready to be filed, pending the outcome of the make meeting. For some dealers determined to keep relations amicable, the formation of the committee represented a way to pursue financial relief without a court fight.

Turmoil at the make meeting was avoided but it was unknown whether VW executives were willing to compensate U.S. dealers for damages caused by scandal.

Nearly six weeks passed since the convention without any clear signs of progress, prompting frustration and disappointment among some dealers. Indeed, as of Tuesday, the committee had still not received word from VW that they were willing to engage in formal discussions, Kuhn said at the time.

“Volkswagen is committed to the U.S. market and appreciates the dealers for their continued loyalty and passion for the brand,” a VW spokeswoman said in a statement, echoing comments made by VW brand chairman Herbert Diess and North America chief Hinrich Woebcken at the NADA make meeting. “The company remains focused on cooperating with government authorities to resolve the diesel emissions issue and rebuilding trust among our dealers, customers, and employees.”

VW is also working with U.S. authorities to finalize agreements to compensate U.S. owners of the affected diesels. VW has until June 21 to present those final pacts to a judge overseeing VW litigation in U.S. District Court in San Francisco.