Fred Emich, general manager of Emich Volkswagen in Denver, says VW's preliminary agreement in April to buy back the affected 2.0-liter diesels and provide owners a "substantial" payout has stalled customers as they await the official rollout of the offers. "They're essentially frozen in the market because they'd be stupid to trade the car because they're going to get significantly more from VW when they buy it back," Emich said.
He says new-car sales at his dealership, where diesels accounted for more than a third of his sales pre-scandal, fell 40 percent last month. He's selling an average of about 75 new cars a month this year, down from 100 last year.
Emich also says defections are on the rise. He estimates that between 10 and 15 customers each month are exiting leases without leasing or buying a new VW, compared with one or two a month last year, including both gasoline and diesel customers.
"More than anything, they just don't seem to have as much interest in the brand that we've seen before," Emich said. "The TDI thing has given them a reason to shop elsewhere."
Shannon Harper, vice president of Harper Auto Square, says customers at his VW dealership in Knoxville, Tenn., have remained mostly loyal and patient but the uncertainty has affected his service department. Gross profits from service are down about 9 percent this year as both gasoline and diesel vehicle owners postpone major maintenance work, he said.
"They're afraid of putting money into their gas VW for fear that VW won't be around," Harper said, noting his surprise at how "misinformed" some customers have become.
Going forward, says Jessica Caldwell, senior analyst at Edmunds, VW's rebuilding challenges will be compounded by a lineup that is heavy in cars and counts just two crossovers, giving it few tools to attract new customers amid slumping car sales industrywide.
"It's going to take awhile to regain their position," Caldwell said. "Their brand awareness is very high, but it may be a slower rebuilding process than they hoped. People may say they have a plan to turn around in a year, but it may well take longer."