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I believe the US settlement announced today was that they would repair the car OR repurchase it.
"Kelley Blue Book, a research firm, has estimated the cost of buying back all the cars in the United States at $7 billion."
Apparently this is a much bigger issue in the US because
Many more European cars, over 10 million, are also affected by the Volkswagen cheating. But the company’s financial fines and any consumer liabilities in Europe are not expected to be nearly as high because of differences in air-quality regulations and consumer-protection laws.
Something to do with NOx vs SO2
The New York Times below says
Volkswagen has set aside only 6.7 billion euros, or $7.6 billion, against the eventual global costs from the scandal.
and
Volkswagen faces a theoretical maximum government fine of $18 billion in the United States.
and
Analysts at the investment bank UBS had estimated the total cost of the scandal for Volkswagen at 38 billion euros, or about $43.1 billion, of which €14 billion was for expenses outside the United States.
Right - the repurchase is offered for all affected cars. That was confirmed yesterday.
The damage paid per car for a US consumer will be $1000 first time offer (not $500 I mentioned)
plus the $5000 now for every buyer - even the ones who had not taken profit from the first $1000
offer.
But was will be the total cost of all retaken cars? Where will they be moved / sold to?
Finally VW has set back for 2015 a sum of 16.4 billion Euro. That means the costs for US car owners without
the lawyer's costs, repair, reselling etc. costs are nearly covered.
Not to forget about the NON-sold affected cars that rest still in USA - those will sum up as well.
Now to Europe:
One german plaintiff VW car owner was rejected by a judge - he will not get any refund - only
a repair...
That might be ok after german jurisdiction. BUT: the repair NEEDs to be done within a short period after
the consumer complains. So far we know - VW has still not really started to repair the cars in Europe.
If they are too late with all stuff (10 million cars will need time) - the complaints might explode.
Means instead of having rebuilt confidence into the company - they will suffer by many many individual
complaints from every VW owner with affected cars in Europe. That will be even worse than US deal!
To resume - I would not count on "total costs at the lower end of the estimation" for the whole process.
Even worse - as now Mercedes Benz in in the light of US regulators...
This thought may not be an actual contribution to the discussion, but as I was reading the recent posts I thought that we really can't know, right now, in advance, what the costs to VW (and potentially any other carmakers) will be, nor what they will end up being, other than something like "Real Bad."
This is kind of clear, but what "bad" will be is not really clear right now, no matter how interesting it is to speculate about it. (Sure, I'm interested too.)
Also, I asked myself if the many governments involved will really be willing to drive major manufacturers under....
Because:
1. All their workers vote.
2. All the people who would be impacted also vote. Since the impact could be on the large side to the German and European economy, that could be a lot of people who vote.
3. Governments know this.
Point 3 is not something to be ignored, in my view.
Also, it is not just a matter of governments pandering to economic interests or to voters who may be affected. (Not that either of these could not possibly happen. ) Governments also, quite responsibly, do care about the health of their country's economies, and they should.
So I do think that the likely impulse of governments to limit the damage, along with our present inability to know the future anyway, should give us pause while we try to figure out what the damage will be.
This is in addition to the fact that, yes, important rules were broken, and yes, someone has to pay for that or there will be no rules.
What the government(s) - I mean ALL - did NOT do:
They could have taken all cheating cars out of service since October last year.
No permission - no plate - no insurance.
Point.
They did not.
As they were told that the "repair" will start from January this year on every
affected car.
The red line in some countries (I am speaking here from my country too) has been scratched. We do not have VW production here. Some Swiss companies are selling
products for VW models but this is not well known here anyway.
The first fact is that at some point VW loses now all confidence given from the governments
and suddenly the winds are turning.
Second fact is that European clients seem to be double cheated as US clients get a
guaranteed refund and the rest of VW clients do not have ANY money back or extra guarantee.
One can be sure that many longtime clients in Germany - no matter having a cheating
diesel or another VW - will never again want to be double cheated: they will simply buy
some other car.
That market-value should be considered by any investor of VW short- to longterm.
According to Spiegel.de German electronic company Bosch has sent manipulating
devices for more than 630000 cars in Europe.
The car makers Audi, Mercedes, Opel, Porsche and Volkswagen were clients for those.
Selling these special devices goes back many years.
Those affected cars need to be "repaired" as well in the very next time.
) Governments also, quite responsibly, do care about the health of their country's economies, and they should.
