The firm appointed by the court to make sure Volkswagen adheres to the rules outlined in the $14.7 billion Dieselgate settlement just issued a progress report detailing the struggles the automaker has had accommodating customers who just want this disaster over with. And that report confirms that all the frustrations owners have had with the buyback are legitimate.
Last month, I wrote a story about how VW TDI customers—who had been duped by Volkswagen cheating on Federal emissions tests—were outraged with the way Volkswagen has handled the buyback claims process. Many owners complained about long telephone hold times for the claims hotline, VW missing deadlines, and the automaker giving preferential treatment to owners with paid-off cars.
It turns out they were all right. The good news now, is that Ankura Consulting—the firm supervising VW’s buyback proceedings—has confirmed these problems and voiced the concerns to the court, and has also described why VW is having these issues.
The report mentions VW’s problems to the court right off the bat, saying:
Despite significant progress in launching the Claims Program, Volkswagen has experienced some challenges in meeting timing requirements in processing the influx of initial claims.
It goes on to say the timetable laid out in the FTC order—which gave VW five days from the final rule to prepare, ten business days to approve documents, and another ten days to send out an offer letter— was “aggressive,” and that it strained Volkswagen’s capability.
Ankura said the primary reasons why Volkswagen has been struggling to meet deadlines are because VW:
(i) did not initially have the requisite staffing and infrastructure in place to administer a program of this size and scope;
(ii) did not have prior experience processing mass claims on this scale and within such accelerated timetables;
(iii) did not have the benefit of any off-the-shelf IT solution to support such a high-volume and intricate claims program;
(iv) had to address a significant volume of submitted claims at the outset of the Claims Program;
...(v) did not have much time to test certain components of the operations and technology systems and troubleshoot issues before launch.
As a product of these issues, Ankura says, class members should expect to “encounter certain challenges in the initial months of program administration.”
Further down in the document, in the section “Volkswagen’s Claims Program Performance Metrics,” Ankura shows quantitative evidence that VW has failed to meet timing, particularly the second 10-day deadline.
Volkswagen’s first deadline was to ensure that all the documents sent in by owners were complete. The consulting firm said VW did that just fine.
But the second 10 business day-deadline, the “Offer Letter Phase,” is going poorly, with only 52 percent of owners receiving offers within the required time, and the rest considered “untimely.”
The document says part of the issue is a disagreement between Volkswagen’s staff and claims supervisors, as some documents are being deemed complete by Volkswagen, but the claims adviser disagrees, and the owner then has to be notified that they’ve still got more work to do.
The report goes on to say that of the 38,638 owners who received offers by November 20, only 2,390 of those were owners with loans—that’s only 6 percent of the total.
The reason for this is that VW has to account for the amount still owed on the loan to come up with the offer. To do this, VW has to contact the lender to get a payoff statement, and that takes time.
The positive news is that Ankura and Volkswagen are aware of the problem, and changes are being made.
That Owners without loans constitute 94% of offers issued to Owners through November 20, 2016, aligns with a recent uptick of consumer complaints by Owners with loans... Volkswagen has recently indicated that it is shifting resources in an effort to accelerate issuance of offers to Owners with loans.
Then there’s the issue of long hold times, which Ankura acknowledges, saying:
...in the period leading up to and following the Court’s approval of the Resolution Agreements, call volume spiked and the Hotline became overwhelmed with consumer calls.
On November 14, the report highlights, the claims hotline got 10,000 calls, and hang-up rates were close to a staggering 70 percent.
Ankura says Volkswagen has upped its agent count from 67 to 109 after the court approval on October 25, and now that number is up to about 300, reducing wait times to an average of eight minutes.
So Volkswagen has been missing deadlines (particularly with those who have loans on their vehicles) and its claims hotline has been struggling, but it’s worth noting what the company has done so far.
Ankura says VW’s development of the operations and technology needed to handle almost half a million claims was “a significant undertaking,” noting:
The company was required to build out a claims operation, develop detailed processes and workflows, and staff an organization with hundreds of individuals. In addition, Volkswagen had to develop complex and integrated technology systems to provide information to consumers, allow for application intake, and facilitate back-office claims processing.
I don’t think any VW owners doubt the magnitude of what Volkswagen has had to do, but many will say exactly what Ankura’s progress report mentions:
Among the foremost recent complaints from consumers are that Volkswagen should have been better prepared to handle the sharp influx of claims at the outset of the Claims Program
It’s not like they didn’t see this coming.