In addition to the negative impact on new VW sales, which will run into the billions, one can only imagine the damage that this cover-up will have on residual values. The world can scrap last month’s ALG lease residual guidebook.

At lease termination, the current lease portfolio will experience significant losses. While, predicated on supply and demand, there is a buyer for every vehicle, what deeply discounted price will dealers pay?  There will be much blood running on the floors in those auction lanes.  In 1986, subsequent to the “60 Minutes” segment on Audi’s sudden acceleration problem, Audi experienced the same dynamic, albeit on a much smaller scale.  It took Audi years to recover. For VW, the world’s largest automaker, the losses will be exponential. 

Repossessions will experience similar losses — affecting both captive and non-captive financers of the VW product.

To overcome the emissions issue VW will need to retool the entire drive-train at a significant cost. Moreover, they will be unable to sell their product line in the U.S. until the emissions standards have been met.  In the interim, single-point VW dealerships will close in the states.  The problem will be exacerbated by the prospect of the residual effect on VW’s ability to hire new talent and retain existing employees.

How can they remediate the problem when their most valued team members — those who have options — flee the mother ship?

Stay tuned.

Editor's Note: Stuart Angert was the chief executive officer of Remarketing Services of America from 1991 through 2006.