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Volkswagen Suffers 24.7% Drop in Unit Sales

December 02, 2015

HERNDON, Va. — The effects of Volkswagen’s diesel engine scandal are beginning to sink in, with the manufacturer’s November unit sales dropping 24.72% from a year ago. Kelley Blue Book and Autotrader analysts said they aren’t optimistic about the company’s future performances, even after it initiates its plan to fix the nearly 500,000 diesel vehicles sold in the United States with the emmissions software cheat.

Analysts with the two firms said they were surprised by Volkswagen's ability to holds its own despite the scandal, noting that the automaker was able to squeeze out a 0.24% sales increase in October. But based on the automaker's November performance, that grace period might have come to an end.

“Obviously, VW is facing some pretty tremendous challenges right now, and a 24% drop is certainly something you can’t ignore,” said Alec Gutierrez, senior analyst for Kelley Blue Book. “I think once the fix is in place and the vehicles are available for resale, there’s still a big question whether or not they permanently impacted consumer perception of their diesel cars.”

Volkswagen and Gutierrez attributed much of that drop in unit sales to the manufacturer’s decision to halt sales of vehicles equipped with its TDI diesel engines. Gutierrez noted that TDI vehicles accounted for 20% of Volkswagen’s sales prior to the scandal.

“There’s the possibility that the negative perception from consumers will extend beyond TDI. I think that’s the most apparent that we’re seeing right now,” Gutierrez said. “We do know that they had ramped up incentives to clear out some of the '15 model-year gas engine cars, which help to potentially offset and mask the potential impact to their gas engine cars.”

Looking toward the future, Michelle Krebs, senior analyst for Autotrader, said that the manufacturer’s mostly small-car portfolio could also hamper its recovery. Even before the scandal, she said that the manufacturer was on a downward trend because of its product mix. One of Volkswagen’s only bright spots in November was its Tiguan, with sales of the compact sport utility vehicle increasing 87.7% from a year ago.

Not having a wider portfolio of sport utility vehicles means they’re missing out on that valuable market, Krebs said.

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