Volkswagen's U.S. sales are already slumping
Auto analysts are projecting that U.S. new-car sales will hit a pace in September not seen in 15 years, but Volkswagen won't be joining the party. Instead, the German automaker is expected to be the sole major car company to take a hit in September, as the fallout from its rigging of as many as 11 million diesel vehicles to cheat emissions tests continues in the U. S. and overseas.
And the pain will spread to people who already own any of the affected diesel-powered VWs if they try to unload their new problem on the resale market.
With VW dealerships prohibited from selling the wide variety of 2-liter diesel engine vehicles, Volkswagen Group of America is on track for a sales drop this month, even though sales are otherwise on track to be extremely robust, according to projections released Thursday.
Sales by VW brands will fall a combined 5.2 percent in September, while overall industry sales will advance 12.6 percent from the year-ago month, TrueCar projects. And Edmunds.com estimates that VW and Audi sales will fall 2 percent, versus a projected a 13.9 percent gain in industry sales overall from September 2014. "This will make this month's sales volume the biggest September since 2004, and the sales rate will be the biggest September (seasonally adjusted annual rate) since 2000," Edmunds.com said in a release.
On the resale side, consumers who are trying to sell the Volkswagen diesel-powered vehicles that are at the center of the growing emissions-cheating scandal should expect to sell them for less than they would have gotten just a week ago.
Data from Craigslist.com cited by the Wall Street Journal indicated that resale values for some of the affected Volkswagens have slumped 20 percent since the scandal broke last week. That's leading Edmunds.com to urge sellers to hold off until VW decides how it will fix the issue, which affects around 11 million vehicles worldwide.
The vehicles remain on the road because the Environmental Protection Agency says they're safe to drive.
"Of course, owners who bought these diesel vehicles in part because of any environmental benefits may have moral objections to driving them, and they may feel they have no other option but to keep their cars parked for the time being," Edmunds.com director of industry analysis Jessica Caldwell said in a press release. "It is in Volkswagen's best interest to publicly address steps to fix this mess as soon as possible before it loses its customer base for good."
At Volkswagen headquarters in Wolfsburg, Germany, fixing that mess is the top priority. The company's 20-person supervisory board is scheduled to convene on Friday to make a final decision on a CEO following Martin Winterkorn's resignation.
Likely candidates include Matthias Mueller, the head of the company's Porsche sports car business who has the backing of the family that holds a majority stake in VW, and former BMW executive Herbert Diess, who has led the VW car brand since July. German media reports Thursday suggested Mueller would be chosen.
In stepping down, Winterkorn, 68, expressed confidence that the company would survive the scandal that now has the European Union urging its 28-member nations to launch their own probes. Germany itself is vowing to test the cars of multiple manufacturers.
Winterkorn isn't likely to be the only high-ranking VW exec to take the off-ramp. The top engineers at Audi and Porsche and the head of VW's U.S. business are said to be goners, according to Reuters. However, losing VW's top U.S. exec, Michael Horn, may not go over well with dealers in this country, who credit Horn with improving Volkswagen's domestic performance.
"Unless there is evidence being withheld from us showing some form of direct complicity or creation of this issue, we must state that if he is removed as the CEO, it would be nothing short of catastrophic to our market and our relationship," according to the National Dealer Advisory Council, an independent group of dealers.
Meantime, the global crackdown continues. The Berlin government said it would conduct spot checks on VWs as well as cars of other manufacturers. "Our commission will investigate if the affected vehicles were built and tested within German and European guidelines," Alexander Dobrindt, German transport minister, said.
The U.S. Department of Justice has confirmed it's working with the EPA in investigating Volkswagen, which has acknowledged nearly 500,000 diesel cars are in the U.S. are outfitted with software that circumvents EPA emission tests. "We take these allegations, and their potential implications for public health and air pollution in the United States, very seriously," Wyn Hornbuckle, a spokesman for the agency, said.
These moves make sense, "especially with what we've all discovered over the last week, it seems an appropriate action for Germany and other countries to do more testing," including in real-world conditions, Drew Kodjak, executive director the International Council on Clean Transportation, or ICCT, told CBS MoneyWatch.
Road tests of 15 new diesel cars found emissions to be about seven times that allowed in Europe, according to a research conducted by the ICCT and released in October.
The council's study was instrumental in leading the EPA and California regulators to investigate the disparities between how VW diesel cars performed on the road and in testing facilities.
The European Automobile Manufacturers Association, or ACEA, said in a statement that there was "no evidence this is an industry-wide issue."
Standard & Poor's on Thursday said it was weighing whether to reduce VW's long-term credit rating one or more notches, a day after rival rating service Fitch said it was considering doing the same.
Jon Berr also contributed reporting for this story.