Volkswagen sales take a beating amid cheating scandal

Sales In United States Plunge 25 Percent In November

Car shoppers took notice of Volkswagen's flagrant emissions cheating. In November, Volkswagen sales plunged nearly 25 percent in the United States, according to data released Tuesday morning, even as overall industry sales continued at a record-breaking pace.

In short, it was a bloodbath for the beleaguered German automaker. Volkswagen sales fell 24.7 percent overall, led by a 60-percent decline for the company's flagship Passat sedan. Sales for the Volkswagen Golf, the reigning Car Of The Year in many automotive circles, were worse. They fell 64 percent.

The cheating scandal surrounding more than a half million of Volkswagen's diesel cars, which were intentionally equipped with "defeat devices" that helped the cars circumvent emissions testing and pollute beyond standards allowed by law, first broke in late September. On November 2, the Environmental Protection Agency slapped Volkswagen with a second Notice of Violations that impacted 3.0-liter diesel cars in the Volkswagen, Audi and Porsche brands.

"We don't even know the end game here," said Michelle Krebs, senior analyst for AutoTrader. "Nothing is going to improve, in my view, until a very clear, comprehensive plan for taking care of customers is outlined by Volkswagen, and that doesn't seem to be coming any time real quickly."

Despite its growing footprint in the cheating growing in November, Audi's sales remained relatively unscathed. The brand's sales rose 0.4 percent.

It may have been more than just the diesel scandal that hurt Volkswagen. Alec Gutierrez, senior analyst at Kelley Blue Book, said the scandal has only underscored the fact Volkswagen has been selling older-model cars that aren't competitive in the hot-selling crossover and SUV segments. Combined with the company's voluntary stop-sale on certain models affected by the cheating scandal, the drop in sales was easy to project.

Diesel sales had accounted for approximately 20 percent of the company's sales mix in the United States when the cheating surfaced.

"They're getting hit by the double whammy of the emissions scandal and they're still relying on cars no one really wants," he said. "Long term, there's definitely going to be some challenges because of the amount of weight they put into that TDI engine and brand. I don't know that those sales are going to come back. It's a rough outlook in my eyes."

Globally, Volkswagen sales declined 3.5 percent in October, the latest month for which global data is available. Revelations in Europe about carbon dioxide emissions have hurt the company's brand there, a development that one Volkswagen executive tells Reuters has "triggered a great crisis in confidence."

The sales drop comes as the industry flirts with its first-ever push to eclipse the 18-million units sold mark on an annual basis. With one month remaining in the year, the Seasonally Adjusted Annual Rate is projected to finish between 18 and 18.2 million units sold. In a written statement, Volkswagen chief operating officer Mark McNabb tells MarketWatch, "During this time, we would like to thank our dealers and customers for their continued patience and loyalty."

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