Holding tank for cars with uncertain futures
Thousands of diesel Volkswagens await their fate
in Baltimore parking lots after emissions scandal
Parked in lots spread around South Baltimore, thousands of late-model Volkswagens and Audis stand unwanted — blue, red, black, gray, silver; sedans, hatchbacks, coupes and wagons; some personalized with bumper stickers and fancy wheels.
These are Volkswagen's so-called dirty diesels, stuck in limbo as the German automaker sorts out with the U.S. government what it can do to possibly repair them.
These private lots near the port of Baltimore's auto terminals in Fairfield offered Volkswagen a place to store some of the tens of thousands of cars it's begun buying back from consumers following the massive emissions scandal involving its diesel engines.
Volkswagen, which, in addition to VW and Audis, makes Porsches, Bentleys and Bugattis, admitted in 2015 that it had installed “cheat devices” on its diesel cars from 2009 to 2015 that allowed engines to emit substantially fewer pollutants during emissions tests than during normal road driving.
Following the scandal, Volkswagen's stock plummeted, its CEO stepped down and last year the company settled the case for nearly $15 billion, the largest auto-related settlement in U.S. history. Volkswagen agreed to repair or offer buybacks and additional cash compensation up to $10,000 to 475,000 owners of the affected diesel vehicles.
Nearly 100,000 of the 2-liter turbocharged direct injection (TDI) diesel engine vehicles are expected to have been bought back by the end of January, Volkswagen spokeswoman Jeannine Ginivan said. The automaker had made more than 266,000 buyback and lease-termination offers as of last week.
“Overall, we are encouraged by the customer response to the 2.0L TDI settlement program and the exceptional participation rate so far,” Ginivan said in a statement.
Volkswagen hired more than 1,300 contract employees following the scandal, stationing them at dealerships to assist customers with returning their vehicles.
Once the cars are bought back at dealerships, Volkswagen takes them to a regional facility — such as the AmPorts private auto terminal in South Baltimore — to await whatever will happen to them
AmPorts officials declined to comment, not even saying how many vehicles it was storing.
Lauren Sarchiapone's 2014 Volkswagen Jetta is among the cars stuck on one of AmPorts lots.
When she bought the car new, it proudly sported a license plate holder touting its diesel engine, which she said got about 45 miles per gallon. The 28-year-old Arnold woman took it off the next year when the scandal broke.
When the company offered to take the car back, Sarchiapone said, she agreed and received $2,000 cash plus forgiveness for the $18,000 she owed on the car.
In her job as an insurance account manager, she said, she has spoken to several people who have switched to Honda and Toyota due to the scandal.
“A lot of people are anti-Volkswagen now,” Sarchiapone said. “They feel like they were lied to.”
But she used her settlement check to buy a 1998 Volkswagen GTI outright.
“I'm still a Volkswagen lover,” she said.
The government has approved a fix for Volkwagen's third-generation diesel vehicles, allowing the automaker to begin modifying the engines of some customers who want to keep those vehicles, Ginivan said. The company is in the midst of a nearly yearlong, court-mandated process of proposing fixes to all affected models.
Any modifications to cars that have been bought back will be done after the automaker fixes the cars of customers who want to keep them, Ginivan said.
If all the modifications are approved, Volkswagen would be allowed to bring the vehicles up to legal standards and then potentially re-sell them in the United States, with proper disclosure given to the new owner. Those that aren't fixed must be scrapped, according to the consent decree. The company may also strip them for parts.
Many of them could be headed for scrap, said Will Northrop, an assistant professor of mechanical engineering at the University of Minnesota who researches engines and emissions.
“I wouldn't doubt that they would crush a good number of them,” Northrop said. “I don't think they're going to see the value of shipping or fixing a good number of them, especially the ones that are older.”
The others are more likely to be sold elsewhere than sent back to U.S. dealerships, he said.
“Right now the market for those diesel vehicles is really soft,” Northrop said. “They'd probably get a better price if they took them overseas.”
But George Hoffer, an economist at the University of Richmond who studies the auto industry, thinks Volkswagen will likely assess whether each vehicle is in good enough condition to be repaired and resold, scrapping those that aren't.
While Volkswagen has not offered a public estimate on what fixing the vehicles might cost, reselling them generally makes far more financial sense for the automaker than scrapping them, Hoffer said.
He also called the prospect of scrapping all of the bought-back vehicles “almost sacrilege,” because, despite the air pollution, the Volkswagen diesels in many cases are better for the environment than other vehicles routinely sold and driven in countries with looser emissions regulations.
If they can't be upgraded to U.S. standards, he said, many could be shipped to another country where they can legally be sold.
“Environmentalists should be upset if these vehicles are destroyed because the basic problem that every society faces is scarcity,” Hoffer said. “Here we are, destroying perfectly good vehicles that, no matter what their emissions are today, they would probably emit much fewer emissions than the vehicles they'd replace in another country.”
While that outcome might upset environmentalists, who think they should be taken off the road, he said, it would be far better than recycling them all.
“I'm really counter-culture on this,” Hoffer said. “This is totally not a politically correct perspective.”
The Trump administration has added more uncertainty to the mix, given the Republican businessman's denial of climate change and his appointment of Oklahoma Attorney General Scott Pruitt, a critic of the Environmental Protection Agency, as the agency's head.
“With the EPA now on lockdown, my colleagues are wondering what's going to happen,” Northrop said.
Although Volkswagen has been vilified in the eyes of environmentally focused consumers, Hoffer said, the automaker hasn't been tainted in the way it would be if the vehicles had a safety issue, such as the engine fires or malfunctioning brakes.
While the buyback and settlement costs were astronomical, he said, the scandal likely won't keep most customers from buying new Volkswagens. Safety recalls in the past have hurt new-car sales, but studies have been unable to find any hit to sales stemming from environmental violations, Hoffer said.
“Volkswagen took a financial hit, but I would argue the brand itself has not been impugned,” he said. “I'm sure if they had to do it over again, they wouldn't, but they maintained their spot as the No. 1 producer of motor vehicles in the world through all of it.”
If the cars in Baltimore aren't scrapped, Hoffer said, it would make sense to repair them here.
“Baltimore may get the job of bringing these vehicles up to the environmental standards,” Hoffer said. “There's a great distribution system in Baltimore. It's logical to do the fix in one place rather than shipping them around the world to be fixed.”
The port of Baltimore is the nation's No. 1 port for vehicle imports, and the city hosts several firms that modify imported vehicles for the U.S. market plus expansive, secure lots for storing cars as well as the highway and rail infrastructure to move vehicles to market.
“I think this has more long-term economic impact in Baltimore if these things get the approval,” he added. “Whoever does it, VW or a VW contractor, the logical place to do it would be Baltimore, where the vehicles are.”
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