As the resale price of their diesel cars decline, U.S. Volkswagen AG (ADR)(OTCMKTS:VLKAY) owners are stuck, reluctant to sell their polluting cars at a loss but lacking updates on what solutions may be in store. Nearly a month after company admitted to regulators that its diesel vehicles were rigged to clear U.S. emissions tests, no real answers are coming on how Volkswagen will compensate its diesel car owners, nor how its dealers should communicate with them.
The details
Volkswagen reported that it will commence fixing the first batch of nearly 500,000 called back Golfs, Passats and Jettas from model years 2009 to 2015 in January 2016, but earlier models will need hardware changes and thus, could take longer. One of the Golf Owner, Janet Kornblum said that it is frustrating and he feels like stuck in limbo.
Expert view
Auto segment consultant Edmunds.com stated that the price of used Volkswagen diesel cars sold at auction by car dealers to other dealers declined 6.5%. The average price of these vehicles declined to $10,586 after September 18, 2015, the day the disturbing scandal broke, from previous price of $11,319. This decline suggests a lot of the speculation and uncertainty that is out there. It contrasts with healthy used-car resale prices, which were 7.6% higher YOY in the second quarter.
The highlights
As regulators and lawmakers seek answers on how all this happened and how it will be rectified by the company, Volkswagen’s reputation has been hampered, clearly evident by data of online searches. Automobiles-buying site ‘TrueCar’ found a 57% decline in searches for Volkswagen diesel cars since the scandal was disclosed on September 18, 2015. The overall brand reputation was affected, with total online searches for company’s vehicles down 9%. Swapalease.com stated that VW lease transfers have declined 50% so far in October 2015.
Volkswagen AG (ADR)(OTCMKTS:VLKAY) has been in a strong downtrend over the last couple of months. The stock has been forming lower lows and lower highs which is a bearish signal. The stock currently trades below all important daily moving averages at the current moment. Traders on the street believe the stock could head to levels of $22 in the near term. The momentum indicators for the stock are on the verge of giving a sell signal which is indicative of the shift of momentum towards the sell side. Traders believe the resistance for the stock comes near the $30.50 level.
