How Volkswagen Could Compensate Diesel Owners

Martin Winterkorn, in his statement announcing his resignation as chief executive of Volkswagen his week, said he was “shocked” and “stunned”that the company had programmed some of its cars to cheat on emissions tests.

But a few days before he gave up his post, he made a promise that Volkswagen would do “everything that must be done” to restore trust in it. Then, just for emphasis, he repeated that the company would do “everything necessary” to undo the damage the episode has caused all of the Jetta, Passat, Beetle, Golf and Audi A3 diesel owners.

Assuming that the company is telling the truth now, how might it try to define “everything” in the coming days? It isn’t an easy question to answer, given that no one can be sure what will happen to resale values even after Volkswagen fixes the affected cars. Performance is also likely to be less peppy once the company fixes the emissions.

Moreover, it isn’t at all clear how best to compensate people who chose these cars deliberately because they wanted their driving to be gentler on the planet.

Volkswagen isn’t saying much yet, so let’s consider the possibilities, from most generous to least.

The company could simply buy back all of the vehicles where the fix on the emissions test was in. U.S. PIRG, the federation of state public interest research groups, announced a campaign on Wednesday aimed at pressuring Volkswagen to write checks to owners for whatever price they paid for the vehicles in the first place.

Why not just ask for whatever the cars were worth on the day before news of the scandal broke? Ed Mierzwinski, consumer program director at U.S. PIRG, says that the drivers deserve more.

“In that case, the consumer is getting the value of the car but not being compensated for the harm,” Mr. Mierzwinski said. “They tried to buy a green, high-performance car and ended up being unwitting participants in a conspiracy to pollute the earth.”

Steve Wilhite, who worked for Volkswagen for much of the 1990s and was in charge of marketing in the United States when he departed, contends that a reasonable buyback offer would be the cars’ value right before the company confessed.

It is estimated that Volkswagen would need about $7.3 billion to buy back all 482,000 of the tainted vehicles in the United States at the price one private party would pay another for the cars. Coincidentally, that is the same amount as the company has set aside for now to deal with the scandal, which is not limited to the United States.

For owners who want to take their chances and keep their current vehicle, Mr. Wilhite suggests extending their warranty for two years with unlimited mileage and giving current diesel owners who buy a new one from Volkswagen someday a nontrivial amount of money to put toward a new one.

So now that Volkswagen has put half a million people in the position of polluting far more than they intended, it could give each of them $1,000 on a gift card and let them redeem it for donations to any environmental charity of their choice. Half a billion dollars could go a long way toward lobbying efforts that might lead to the kinds of rules that would scare auto company employees from ever pulling a stunt like this again.

Read more of the original article at The New York Times.

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