Allison Dugdale spends six hours a day behind the wheel, so when the time came for a new car in 2014, she focused on comfort, efficiency and durability. Volkswagen ads that promoted “really clean diesel” spoke to her, and she bought a new VW Jetta.
Not long after, Volkswagen’s diesel scandal came to light, dealing a huge blow to the company and leaving car owners like Dugdale in the lurch.
“I loved it up until the time I realized I wouldn’t be able to keep it because they broke the law in a huge, immoral, scandalous kind of way,” said Dugdale, a sales representative for a produce supplier whose car loan was paid off in a buyback. She received an additional $6,631.73 in restitution.
In 2015, the U.S. government said VW was in violation of the Clean Air Act after it had used “defeat devices” in its diesel vehicles to cheat on pollution tests. In the end, after paying huge fines and seeing key executives head to prison, VW agreed to buy back nearly 380,000 of the offending cars in the United States, to fix or scrap.
If Dugdale ever felt nostalgic, she could have driven her new gasoline Jetta to an acres-large lot about 12 miles from her house where, in all likelihood, her old Jetta was parked along with a reported 23,000 other VW diesels. They are a fraction of the repurchased Jettas, Jetta SportWagens, Golfs, Audi A3s and Beetles similarly awaiting their fates in nearly two dozen lots scattered around the country.
Nearly three years after Volkswagen started its buyback program, the automaker said it had approximately 100,000 of these diesels left to sell, after which it will abandon diesel cars in the U.S. market. Demand is surprisingly high, dealers say.
Why would anyone want a disgraced diesel? For the same reasons they wanted one before the scandal: economy.
“I was looking for a car that got decent gas mileage,” said Sid Heilbraun, a nurse in Asheville, North Carolina, who replaced a Lexus SUV that was “kind of a gas hog.” His friends suggested he look at a VW diesel.
Heilbraun found a 2015 Golf with 38,000 miles on it for about $11,500, a huge savings over what it would have cost new. He now understands the cultish appeal of the cars, known for their turbocharged direct injection diesel engines. “It seems all of the TDI owners have the same opinion: ‘I don’t want to give up my TDI,’” he said.
Diesel engines have a reputation for lasting hundreds of thousands of miles and for good fuel economy; Heilbraun gets more than 41 mpg on his daily 30-mile round trip to work, he said.
Before the fixed Volkswagens can be resold, the cars have to be modified to meet the terms of the consent decrees with state and federal agencies. The software that disguised the cars’ pollution levels has to be removed, and in many cases some parts may be replaced as well.
Part of what sold Heilbraun on a refurbished Golf was the warranty, which is a minimum of four years or 48,000 miles from the emissions repair. It covers parts, labor and taxes on repairs to many crucial systems. “They get good warranties,” Heilbraun said. “Volkswagen kind of has to do that, you know.”
The warranty program may be lifting demand, but just as was the case before the scandal, people looking for a midprice diesel sedan or wagon have few other choices.
“In these segments, VW was the only diesel player in the game,” said David Paris, executive analyst at J.D. Power Valuation Services. Outside of Volkswagen’s TDIs, diesels remain largely the territory of trucks and luxury vehicles.
Volkswagen’s singular position among diesels has paid off for the company’s certified pre-owned sales numbers.
“When you look at what Volkswagen is doing in certified pre-owned sales, they have added more share in CPO cars than any other brand,” said George Augustaitis, director of industry analytics for CarGurus, an online car marketplace. In June, 15% of Volkswagen buyers’ inquiries to sellers were for the diesels.
Which comes back to economy. When new, a VW diesel costs substantially more than a comparable gas model. But the calculus has now shifted. In 2014, a base Jetta diesel started at $23,195, while the gasoline model started at $16,720. Now for used Volkswagens there is little difference. “In terms of post-fix,” Paris said, “you can get a diesel at prices similar to a gas model.”
Even at a previous job as a Volkswagen technician, Alex Cieslak couldn’t find a VW diesel in his price range before the buyback. “They were just the perfect little car to me,” Cieslak said. “Quick enough to be fun, big enough to carry things, comfortable, safe, fuel-efficient. I liked them then, but I couldn’t afford one.”
Dealers are eager to get the diesels before the stockpile runs out.
“We’ve sold more TDIs back into the market than we took in as buybacks,” said Chad Probst, general manager of Vorderman Volkswagen in Fort Wayne, Indiana. He said his dealership was selling 50-60 of the diesel VWs a month, close to 1,000 total since the buyback.
“Last year we sold TDIs to all but 12 states. We have people flying from Texas, Florida, the Eastern states,” he said. “We definitely don’t have to guide customers to the car. They come in asking for TDIs.”
Probst, who said he served on Volkswagen’s Certified Pre-Owned board, questioned Volkswagen’s official count of 100,000 TDIs.
“There’s about 70,000 left at this point,” he said. “More than half the cars left are Passats. I can get as many Passats as I want to.” The looming scarcity is “driving the price up for me as a dealer, but it’s not for the customer,” he said.
Consumer prices may yet rise, said Augustaitis at CarGurus. Volkswagen said it intended to sell the last of the diesels by mid-2020.
But the prices are subject to countervailing forces. On one hand, as the diesels become scarce, around January 2020 prices will rise, he said. On the other hand, the rising prices will slow demand, especially as the better, low-mileage cars are sold. Then dealers will see the diesels sit on their lots for longer, pushing prices down. “Dealers will not continue to increase prices as they attempt to offload this inventory,” he said.