Photo: AP/richard bowmer art by Jason Torchinsky

Volkswagen’s buyback offer to owners of cheating diesel vehicles is a generous one, including payment of the vehicle’s pre-scandal trade-in value plus a hefty cash payout of between $5,100 and about $10,000. Now, some “hoarders” say they’re using this deal as a way to make some serious coin, so they’re out rushing to buy up every TDI they can get their hands on.

In this Reddit thread, a number of people say they’re buying VW TDIs in droves to later sell back to VW and pocket that sweet, sweet Dieselgate settlement cash. It works like this: buy low, sell at buyback prices, profit.

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After reading through a number threads like that one, and being awed by the enormous profit figures claimed there—tens of thousands of dollars, potentially—I decided to give two of the Redditors a call to learn more.

Both requested anonymity, one fearing negative publicity from what could be seen as gaming the system, and the other requesting anonymity for tax reasons. But here’s what they had to say.

TDI Hoarder #1

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The first person I called said he’s bought 10 used TDIs expressly to resell to VW to make money. He told me he expects a 55 percent return on investment, with a total projected buyback (based on VW’s online claims portal) netting him $60,000 in pure profit. That’s a lot of money from just buying and storing 10 vehicles.

His two most profitable cars, he says, were a 2011 and 2012 Jetta. He bought the first for $7,900 after tax, title, registration and insurance costs, and it is slated to fetch him $15,300 from VW, for a profit of $7,400. Thanks to the cheating scandal’s toll on the cars, those who got in early got the cars for cheaper than they would have pre-Dieselgate.

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The 2012 Jetta cost him $10,400 all in, and should make him nine grand on top of what he’s put into it. On the bottom end, he told me over the phone, there’s a 2012 Passat, for which he splurged $15,327, but which he expects will still help him rake in a $5,600 bottom line.

The East Coast-based Redditor told me he’s been buying up TDIs since July from as far away as Washington and Nevada, and has been averaging returns of about $5,000 to $6,000 per car. He told me most of his purchases are from dealerships who he says are “in [the] business of selling cars, and not holding them.”

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As I was a bit skeptical that he was really hoarding up TDIs to make money off of this scandal, I asked the anonymous Redditor to send me the receipts after he’d sold his cars back to VW. And sure enough, a few days ago, he texted me the papers for six cars he had dropped off at the dealer earlier that week.

TDI Hoarder #2

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The second person I called, with the username SoloNoMore, also chimed into one of the threads saying he was “sitting on 25 or so [TDIs] now” (he lost count).

So far, it seems it’s working well for him, as he wrote in another thread:

I also right now am rolling with more of them than I can even keep up with, turned in the first batch last week and all went smooth. You’ll reap you reward! No quicker way to double or triple your net worth than a nice ol fashion TDI buyback in your life.

After talking with him on the phone, I learned that “25 or so” has actually grown quite substantially, as he told me he’s been buying up to 10 TDIs per day on big dealer auction sites like Adesa and Manheim. Speak of which: in the background of our conversation, I could hear a live auction taking place; SoloNoMore told me he was literally bidding on TDIs as we spoke.

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He said it all started in July of 2016, when he went off a “hunch” and began liquidating assets to buy a few $5,000-$6,000 used TDIs. It didn’t take long to pick up steam, though; he eventually took out loans, and before you knew it, he’d “used every dollar [he and his wife] had to [their] name.”

SoloNoMore told me he’s already sold back a number of cars, making between $5,000 and $15,000 in profit from his early TDI purchases. His advice to people trying to get in on the action “Follow your gut, be smart, and the V6 buybacks are right around the corner.”

Speaking of V6 buybacks, both he and Redditor #1 say they’re planning to take their profits and invest in 3.0-liter V6 diesel TDIs, which are also slated to be bought back in a similar manner as the 2.0-liters. Redditor #1 says he’s already bought up nine of those cars, and SoloNoMore told me he already has five of them in his name, and that he’s even eyeing Fiat Chrysler 3.0-liter diesels as potential moneymakers. (No recall or buyback has even been announced with those engines.) Clearly, these guys in this for the long haul.

It’s worth noting that the Redditors only wanted to talk to me under conditions of anonymity. They’ve got a lot riding on this working (hundreds of thousands in loans), and the first Redditor told me that, after seeing how our coverage of the stripped VW diesel led a judge to bar that activity, he’s taking no risks and doesn’t want his name out there—even though he’s definitely not the only one doing this.

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There’s also tax issues at stake, Hoarder #1 told me.

“VW is not reporting this, so there is an element of unknown revenues here as an individual taxpayer,” he said. “Put this into perspective. I now have a stake in 25 cars. If I average $5,000 to $6,000 each that’s a lot of taxable income.”

At the same time, there’s questions over whether this even counts as income, he added.

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“The other problem is no one is sure how these dollars should be taxed,” he said. “My CPA has an opinion, my attorney has an opinion and the general public has theirs. At the end of the day the government already received billions. Is it really fair that the consumer is getting billed again on these?”

A Network Of VW Hoarders?

Photo: Rick Bowmer/AP

The first anonymous Redditor mentioned that he’s just one of many in a large, but somewhat hidden network of people snatching up TDIs, saying he knows of someone in Tennessee who owns 20 or 30, and that there’s a dealership in Atlanta storing over 200. He then went on to say he’s helped a number of people find and round up their local TDIs, and that some people have sent him booze or even offered equity stakes in their collections to thank him for his assistance.

SoloNoMore also told me about dealers hoarding cars, but in even more ridiculous quantities, saying:

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Some dealers have a few, others tens, hundreds, and there is a specific someone who I was great-full to chat with that reached into the thousands.

Redditor americazero added in a Reddit thread that he knows of a local Chevy dealer that purchased 80 TDIs and is turning them in at a rate of 10 per week; and there is also a slew of posts on TDI Club forum where a number of people say they’re also tempted to buy up TDIs to make some of that Wolfsburg money.

And can you blame them? Stories abound of people making cash off these buybacks. A quick look on the VW TDI Diesel Scandal Forum on Facebook shows a recent thread that includes quotes like this one from Tim Gilbert:

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Bought my car used last year for a good price (thinking even with the scandal I’d keep it). Did the buyback option instead, and the offer was more than what I paid...Yup. Basically worked out that I got paid $7500 to drive the car for a year. No complaints here...

In response, Dusty Weter wrote:

Same here. Paid 16,5 for the car a year ago. Getting 23,5 with restitution money.

And further down in the thread, Jamil Mahmoud wrote:

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Paid 17k a few months after the scandal broke out for a ‘12 passat sel with 29k miles. Getting almost 24k back plus a little for cancelling my extended warranty.

So it’s really no surprise Dieselgate profiting thing isn’t isolated to just a few individuals.

But recently, this network, it seems, has grown too large, and now the cat’s out of the bag. Finding a privately-owned TDI for sale has become much more difficult lately, and on the big auction sites, dealers are bidding so high and leaving only $1,000 in profit margin, SoloNoMore told me. A $15,000 investment plus time for only $1,000 in profit? That’s not worth it.

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Redditor WillSkiGT agrees, saying:

They’re going a lot faster than they were a month ago, that’s for sure. The deals were great in early July when no one had figured this out yet. I bought about a half dozen cars with over 100% ROI.

Our anonymous Redditor also chimes in on one of the Reddit threads, saying:

I am competing against other buyers and most of the new listings are gone in a matter of hours. I have had a couple sellers contact me about other TDI”s but the prices were magically inflated now that they knew what I was doing.

Still, some people like SoloNoMore got in the game early, and stand to make a bundle:

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For those that caught onto the game early, profit margins will be between $5k -$15k per car depending on model and mileage. First mouse always gets the cheese no?

So yes, this whole Making Money Off The Buyback thing seems to be widespread; perhaps too widespread now. But despite that, there’s not much news on this, because, as our anonymous Redditor told me “nobody wants to popularize it. Breeds competition.”

Still, with the fiercer competition of late, the network of TDI shepherds that got in on this early is going to be rolling in dough when it comes time to bring in the livestock.

It’s Technically Legit

Still a bit skeptical, I looked into the settlement documents to see if buying used TDIs and selling them for a profit was even legit, and—in short—the answer is yes.

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The VW settlement requires the company to buy the cars back from the eligible owner (defined as the “owner of the vehicle at the time of the buyback”), regardless of who it is.

I reached out to VW asking about buyback eligibility for people who buy up used cars, and the company responded with this:

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Am I included in the Class Action Settlement?

You are included in the Class Action Settlement if you are in the class, which is defined as: All persons (including individuals and entities) who, on September 18, 2015, were registered owners or lessees of, or, in the case of non-Volkswagen Dealers, held title to or held by bill of sale dated on or before September 18, 2015, an Eligible Vehicle in the United States or its territories, or who, between September 18, 2015, and the end of the claim period, become a registered owner of, or, in the case of non-Volkswagen Dealers, hold title to or hold by bill of sale dated after September 18, 2015, but before the end of the Claims Period, an Eligible Vehicle in the United States or its territories.

So yes, it’s totally legit to buy a TDI now (before the claims period ends in December 2018) and still be eligible for the handsome buyback. And remember, that buyback figure not only includes a nice buyback valuation based on the NADA trade-in value, but also a cash restitution.

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Even if you buy the cars for a few grand over that NADA value, the restitution numbers alone are between $5,100 and $10,000—multiply that a few times, and the figures start to become gargantuan.

Seller Restitution

If you recall reading something about how people who bought TDIs after the scandal wouldn’t be eligible for the full restitution amount, you’re not mistaken. That’s because, for a while, anyone who bought a used TDI between September 18, 2015 (the day the scandal broke) and June 28, 2016 (when VW reached a settlement agreement) had to split the restitution payment with the seller.

The idea here, was to provide a “seller restitution” sum to cover the money former owners lost in the sale from depreciation associated with Dieselgate.

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But those “eligible sellers” had only 45 days from the Preliminary Approval Order to file claims for their restitution, meaning as of September 16, 2016, people who had sold their TDIs post-scandal were no longer eligible for cash to make up for depreciation.

That 45 day deadline existed because the owner restitution (how much cash the buyer would get from VW) included a calculation based on “a proportional share of any restitution not claimed by Eligible Sellers.” The court says:

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Thus, in to accurately calculate the amount of Owner Restitution for those who purchased after the fraud disclosure, the parties must first know which Eligible Sellers will seek Restitution.

In addition, the settlement specifies that anyone who sold their car after June 28, 2016, the day VW reached the settlement (and thus, the day owners learned they’d have to hold onto the car to get full benefits), would not get a “seller restitution.”

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In short, what this means is that people who bought TDIs after the scandal broke (September 18, 2015) but before the June 28th settlement announcement had to split their winnings with whichever eligible sellers managed to file their claims by September 16. (Multiple buyers in this category wrote on forums that they still scored about 80 percent of the restitution amount).

But if you bought a car after June 28th, you don’t have to split your winnings with a seller at all, as the seller is no longer eligible. I confirmed that this is the case with the Federal Trade Commission, whose representative told me:

...a consumer is an “Eligible Owner” if he or she is the registered owner of an Eligible Vehicle on June 28, 2016, or the registered owner or owners who acquire an Eligible Vehicle after June 28, 2016, but before the deadline to submit a claim under the Settlement Program. . . .” So, if a consumer buys an eligible 2.0-liter TDI after June 28, 2016 and is the registered owner, he or she is eligible for a buyback.

The representative then told me that this indeed means if you buy a TDI today, you’ll get the full benefits of the class action suit (the full restitution and the buyback).

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This sort of makes sense from VW’s perspective. If there’s no eligible seller, and VW can’t hold onto the money anyway, they may as well give the entire restitution to the buyer. The company has already set aside money for the buyback, and they don’t really care to whom the money goes, but they do care that these vehicles get off the streets. Indeed, they are required by law to fix or buy back at least 85 percent of all affected cars.

A Good Deal?

I asked the FTC what they think about the practice of buying up TDIs to sell back to VW for a profit, and their group sent me a link to a notice they posted on their website aimed at VW owners. In it, they say:

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Potential buyers may offer what sounds like a good deal, but it’s still less than you can get for a buyback under the FTC’s settlement with VW. Whether it’s a private purchaser or an unscrupulous dealer, those buyers are just going to turn around and sell the car back to VW for more money through the court-approved buyback program.

For his part, our anonymous Redditor #1 says he purchased most of his cars from dealerships that just wanted those damn TDIs off their lots, as they were taking up space. He also says that in all the cases where he purchased from individuals, he mentioned the buyback.

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Why would anyone sell their car when they know they’re eligible for a big payout? Well, the anonymous reader admitted that it does have a lot to do with people not knowing what they have, saying:

I still consider the whole deal specialized information. Most just don’t focus on details like this. I speak to dealers and [salesmen] all the time that have no clue what is going on.

But there are other reasons as well. For one, some people might be intimidated by the paperwork involved in the buyback process. And second, if you think about it, the scandal broke in August of 2015, and buybacks only started happening in November of 2016 (and they’ve not been going particularly smoothly). Expecting everyone to hold onto something worth perhaps tens of thousands of dollars for over a year isn’t reasonable. Some people need cash now. “A dollar in the hand is better than two in the bush,” TDI Hoarder #1 texted me.

Regardless of how they got the cars, the TDI entrepreneurs who decided to buy up TDIs and take advantage of the buyback are, according to the sources we spoke with, making a lot of money, and who knows how much more when they turn in their stash of V6 cars.

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Part of me wants to warn people not to sell off their TDIs for cheap. But I think a bigger part of me wishes I had thought of this idea months ago, as I am known for my hoarding abilities.