“Drivers Wanted” has been replaced by “Drivers Wandering Away” at VW USA. As reported to the court supervising the TDI buyback and “fix”, about 10,000 drivers a week are turning in their TDIs at VW dealerships. That’s about 40,000 a month, and VW can only wish they could sell that many cars a month these days. VW’s U.S. sales for 2016 were a hair over 322,000, picking up only slightly in December. December was also the month where the TDI buyback finally got going after initiating the week of thanksgiving. Drilling down in the data, around 40,000 TDIs were returned in december and VW’s sales went up by a paltry 6,000 odd cars. If we assumed those 6,000 sales were to the newly ex-TDI drivers, which I wouldn’t by and of itself, that’s a 15% owner loyalty rate. But given that an online VW forum survey found that only 15% of TDI owners would stick with VW and the december increases tended to be of models like the Golfs popular with TDI owners, that 15% may be close to the real loyalty rate.

Meanwhile Ford, GM, and Toyota sold around three million cars each, and about tow thirds of them to repeat buyers. That meant that two thirds of their sales were “in the bag”, repeat buyers who only needed to be treated decently and reminded of the new models occasionally. Thus while enjoying the revenue from 3 million or so sales a year, they only had to spend money to bring in a million or so new customers a year. Used to be like that for VW with the TDI buyers, an reliable army that consumed a hundred thousand TDIs a year with little need for advertising or rebates.

For VW, the situation is grave… The most loyal chunk of their customer base will have dropped off their TDIs and picked up their buyback checks at VW dealers in a mere year or so, and a mere 15% or so will spend those checks on another VW. No surprise, a lot of us TDI drivers would have stuck with VW even after the TDI scandal, but throw in VW’s dropping Consumer Reports reliability scores and indifferent dealers, and we’ve had it. Before the TDI scandal, VW talked of a reaching a million U.S. sales a year. That’s about the number of new sales Ford, GM, and Toyota have to make here every year, and they’ve got 10 times the volume to afford the advertising and incentives to do it. VW USA? The death spiral may only be just beginning…