Advice to VW dealers from a damages expert

Advice to VW dealers from a damages expert

Here are four (4) recommendations to Volkswagen dealers at this early stage of dealing with the fallout from the emissions scandal, from Patrick L. Anderson, an auto franchise damages expert at Anderson Economic Group:

1. Do not jump to conclusions about the scope of the scandal, the remedy for the affected parties, or the way that dealers will be treated. The evidence that VW violated U.S. law appears incontrovertible at this point. But a few key facts remain unknown, such as these:

« Will more vehicles be found noncompliant? Already, the EPA has expanded the list of affected vehicles to additional diesel-engine models of VW, Audi and Porsche. More may follow, and their compliance may be disputed.

« What will be VW ownersê reaction to VWês noncompliance? Public reaction has been swift, negative and harsh. VWês response will affect the way future buyers perceive the companyês products and dealer network.

« What will be the mechanical fix proposed by VW, and how will it affect vehicle performance? A substantial share of owners may refuse to have a –fix” installed if they perceive that it would improve emissions but reduce the vehicleês performance.

The answers to these questions will affect VW dealers as well as owners.

2. Start keeping records on any –stop sale” vehicles: related floor plan, storage and other costs; and any reimbursement from VW.

3. Be prepared to identify any changes in value of new- or used-car inventory or service revenue that appear to have been caused by the VW emissions scandal. It is possible that dealers may ultimately be compensated for loss in inventory value, and if so, it will be important to be able to demonstrate that loss.

4. Represent the brand and the products your local customers want, consistent with laws and franchise agreements. This imperative will mean different decisions to different dealers. Dealers must take action to ensure they serve their customers and stay in business. For some dealers, that will mean moving quickly to reduce diesel vehicle inventory and focus on other vehicles; for others, their customers may just want the diesel problem fixed.