Resale prices have dropped about 13 percent for the used Volkswagen diesel-powered vehicles at the center of an emission-rigging scandal, new figures show.
But, a Chattanooga auto dealer is predicting hefty incentives for buyers of VW diesels once a stop-sale order is lifted on new cars.
"VW has to move those cars," said Jeremy Holsomback, general manager at Village Volkswagen.
Kelley Blue Book, the used-car pricing guide, said sale prices for the diesel models affected by the emission-rigging scandal fell 13 percent in dealer auctions from Sept. 1 to Oct. 2 to an average of $11,160. Comparable gas-powered VW vehicles dropped just 2 percent, the company said. The scheme was revealed more than two weeks ago.
The resale price for the Chattanooga-made Passat diesel sedans fell 8 percent in the period to $15,253, according to KBB.
Eric Ibara of KBB said that while early readings suggest the used 2009-15 model year TDI vehicles are affected by the news, it's possible they could return to normal price levels within a year.
"This will depend on how Volkswagen handles this crisis and what they announce the fix will be for the U.S. market," he said.
As it stands now, the price difference between the diesel and gas-powered VW model has fallen from around $2,700 to just $1,300, KBB said.
Holsomback said business at the Highway 153 dealership is "OK" since the scandal broke.
"This scandal has not devastated our business," he said.
The dealership's GM said diesel sales are not a big percent of its monthly sales.
"Does it hurt? I'm not saying it doesn't," he said.
While used-car values typically decline at this time of year, KBB said, the large price drop on the VW diesels stands out.
While gas-powered units haven't seen the same declines, vehicles could take a bigger hit should the negative response toward VW extend beyond their diesel models, the company said.
VW has put a stop-sale order on all 2.0 liter, 4-cylinder TDI equipped vehicles, new and certified pre-owned. The company is working with the agencies to obtain approval for the model year 2016 2.0 liter, TDI vehicles.
VW has been making a reduced number of diesel Passats at its Chattanooga plant and parking those vehicles until a fix is decided upon by the company.
The scandal was uncovered by U.S. environmental authorities and disclosed on Sept. 18, setting off criminal investigations and potential lawsuits in the U.S. and Europe.
VW faces hefty costs, fines and damage claims after U.S. environmental regulators said last month that the German auto manufacturer intentionally installed software in some of its cars that allowed the vehicles to perform better on emissions tests than they would on the road.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.