Scandal drives Volkswagen to a 25% US sales drop

Volkswagen’s emissions scandal has devastated US sales. On Tuesday, the company announced a 25% drop in November compared with last year. The total number of units sold last month was 23 882, down from 31 725 in November 2014.

The German carmaker has laid the blame for this drop in sales on the emissions-cheating scandal that broke in September when US researchers found Volkswagen engineers had deliberately gamed software to fool US emissions tests.

The company halted sales of the diesel turbocharged direct injection (TDI) models affected after the scandal broke. VW has made much of its “greener” credentials in the US, and the scandal has tarnished its reputation with US customers.

“Volkswagen is working tirelessly on an approved remedy for the affected TDI vehicles. During this time we would like to thank our dealers and customers for their continued patience and loyalty,” said Mark McNabb, chief operating officer of Volkswagen of America.

VW also announced on Tuesday that it was recalling 324,000 cars in India to remove devices linked to emissions cheating. This comes a week after VW was ordered by South Korea to recall more than 125,000 diesel vehicles.

In October, VW group saw its global sales slip by 3.5%.

“There is caution in buying. The CO2 issue has triggered a greater crisis of confidence [in VW products] than the nitrogen [emissions] issue,” Bernd Osterloh, chief of VW works council, told reporters last week. “Employment is safe provided we are selling cars. If we sell no cars, it will get relatively difficult.”

At a time when VW is struggling to sell cars across the world, carmakers in the US are gearing up for what seems to be a record year for car sales. According to Autodata Corp, the selling rate for 2015, adjusted for seasonal trends, is on track to reach 18.2m vehicles. The last record – a selling rate of 17.4-million cars – was set 15 years ago in 2000.

Many Americans have held off buying a new car during the recessions, leaving large portions of populations with old cars. The US unemployment rate has dropped to 5% and the average gas price, according to American Automobile Association, is set to fall below the $2 per gallon benchmark by Christmas.

“It’s cheap to run ’em, it’s cheap to buy ’em and there’s more people with jobs, so more people need ’em,” Mark Wakefield, managing director and head of the automotive practice for consultant AlixPartners, told Bloomberg. He pointed out that low gas prices have already saved Americans about $98bn.

Last month, Fiat Chrysler’s sales reached 175,974 – a 3% rise.

“Despite having two less selling days this November, Fiat Chrysler Automobiles US still recorded its best November sales since 2000 and our 68th consecutive month of year-over-year sales increases,” said Reid Bigland, head of US sales for Fiat Chrysler. “The favorable IOU environment of low interest rates, oil prices, and unemployment, coupled with our strongest product lineup ever, continues to be a significant driver of Fiat Chrysler Automobiles sales.”

Hyundai Motor America, which saw a 11.8% rise, said it had its best November ever with 60,000 vehicles sold.

Toyota sales were up 3.4%. Nissan North America sales were up 3.8%. Ford sales were up 0.4%. GM sales were up 1.5% in the US. Chevrolet sales were up 4.8%. America Honda Motor sales were down 5.3%, due to a drop in Acura brand sales.

“Automakers are in a very healthy position after the close of Black Friday promotions, with nine of the top 12 manufacturers experiencing notable revenue gains,” said Eric Lyman, vice president of industry insights at TrueCar. “Revenue in December should also be strong as it’s historically a huge month for luxury brands, ranking as the top-selling month for premium vehicles for the past six years.”

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