VW residuals unaffected by 'defeat device' scandal
16 October 2015
Author: Daniel Puddicombe
Vehicle valuation experts believe the Volkswagen emissions scandal has so-far had little impact on the residual values of the group's cars despite fleets reportedly queuing up to seek compensation.
Last week, Volkswagen confirmed that around 400,000 vehicles in the UK fitted with the company's 1.6-litre diesel engine would need new fuel injectors as well as a software fix to address emissions concerns.
Paul Willis, Volkswagen's UK managing director, told the Transport Select Committee that vehicles fitted with the 2.0-litre engine would only need software fix, with recalls starting in January.
"It really is too early to be making any substantive calls on the market. Our team of editors are monitoring values in real time," said Derren Martin, Cap Black Book senior editor. "Any naysayers in the market seem to be jumping the gun, but it is important to remember overall values across the industry are likely to decrease in the last months of the year due to seasonal supply and demands trends," he added.
In the longer term, the scandal is expect to have minimal impact. "We've not made any changes to RVs and have no immediate plans to do so," said KwikCarcost's Mark Jowsey. "At this point there is nothing to give us any real concerns about where values will be in three or four years' time."
Law firm Leigh Day told BusinessCar it has been contacted by around 2500 public and business claimants - including a fleet with more than 2000 Audi vehicles on its books - seeking compensation from the German vehicle giant.
"Leasing companies are going to accrue a significant loss," Bozena Michalowska Howells, partner, consumer law and product safety at Leigh Day, told BusinessCar. "If a business model is based on turning around cars quickly at auction, these cars are going to be hard to shift at auction, and they could end up selling these vehicles at a loss," she added.
According to Michalowska Howells, fleets could sue VW on the grounds of misrepresentation, but she was unsure of the possible compensation.
"We don't know what the impact will be yet - we're working on the level of compensation thanks to a change in the performance of the vehicles," the lawyer added.
Meanwhile, another law firm is currently looking into the possibility of processing a group lawsuit against VW.
"We have been contacted by a number of fleets and rental companies that are looking to seek compensation," David Niven, partner, commercial dispute resolution, at Penningtons Manches told BusinessCar.
He said the companies that have contacted the firm so far have between 15 and 100 cars on their books.
"People have bought the vehicles on a breach of fraud, misrepresentation and a loss of residual values," he added.
Niven suggested the lawsuit could run into the millions, while he added that the scandal could have a more lasting effect on Volkswagen than other previous high-profile debacles.
"I think there's a bigger stigma attached to this [the VW emissions scandal] than the Toyota airbag saga, as it will affect large-scale purchases of Volkswagen vehicles in the future."