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VW owners wait for recall fallout

Trade barrier: Glass’s Nick Adamidis says Volkswagen owners should find out early next month if a controversial recall of VW-badged models will hurt them come trade-in time.

July sales figures to show if VW owners can expect a slug come trade-in time

17 Jul 2013

VOLKSWAGEN owners shoud have a fair idea next month if a widespread recall to fix transmission problems in VW-badged passenger cars is likely to hurt them come trade-in time.

Nick Adamidis, the national sales and marketing manager for used-car pricing group Glass’s Information Service, said it was still too early to say what long-term effect the Volkswagen recall was likely to have on the brand.

The Volkswagen Group, which includes Audi and Skoda-badged cars, has issued a recall for 34,000 vehicles in Australia to fix transmission problems that may either dramatically slow or bring the car to a halt in traffic.

The recall is in response to a customer backlash after the Victorian coroner launched an inquest into an incident that resulted in a woman being killed after a truck slammed into the back of her slow-moving Golf on the Monash Freeway in 2011.

The truck driver claimed the Golf, which had a manual gearbox that is not the subject of the VW recall, had slowed dramatically. The coroner is expected to hand down a finding in the case this month.

However, Mr Adamidis said there had already been a small wobble in used Volkswagen values.

“There’s been a slight effect on them at the auctions, but not significant – maybe a two or three per cent reduction, but it is not significant yet,” he said.

However, Mr Adamidis said next month’s sales figures would be the telling ones for the German premium brand, especially if new-car showrooms struggled to connect the cars with buyers.

“The new-car passenger sales (in June) dropped off, so you’d expect of that continues, that the dealers will start to pull back from buying.

“The would expect a discount for buying, so you might see an acceleration in the residual value fall-off,” he said.

“But this is just a one-off, one month. We can’t see a trend, it’s too hard in terms of sales reduction to make a call, but if it continues next month – it is still 30 per cent down on the year or the last six months – then you know it is a longer term issue.” Mr Adamidis said a reduction in demand would force dealers to drop prices.

“It’s not as though they (buyers) will come in and say ‘Oh, I saw an article, so drop the price of it $5000’, but what you’ll find is that there will be more and more stock sitting over in dealership land and they won’t pick up any new stock at the auction until that clears.

“If it does continue, the best indicator will be the new-car VFACTS sales for Passat and Golf,” he said.

“If they continue to be weak next month, then we will see some residual value drop-offs.” Mathew (Mathew) McAuley, the head of communications and public relations for used-car trade auctioneers Manheim, said his company did not disclose information about its sales.

“As you would appreciate, results of closed manufacturer auction results are confidential so I can’t provide any commentary around them,” he said.

“As far as public auctions (go) there is no evidence to suggest any indicative price movements (for Volkswagen Golf and Passat models) over recent months.” The next round of VFACTS sales figures for the month of July are due for release on August 5.

The data tracks new vehicle registrations for most of the car, truck and bus brands sold in Australia.

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