The VW emission scandal hits Canada – will it impact brokers?

After Canada learns that it too will be affected by Volkswagen’s downfall, brokers learn whether or not the scandal will affect the industry

The Volkswagen Jetta may have been the 15th best-selling car in Canada for the first half of 2015, according to Autofocus, but brokers may want to prepare for a sudden downturn in sales – as well as the potential industry shift that could accompany it.
 
Volkswagen Canada has halted sales on several of its diesel models following the automaker’s admission that it falsified pollution reports for about 500,000 diesel cars in the United States, according CBC News. It did this by programming the motor vehicles to detect when tests were being conducted, and then activating a “defeat device” that would circumvent emissions controls during those evaluations.
 
This resulted in the cars producing ten to 40 times more pollutants on the road than the U.S. legal limit allows, according to Jalopnik.
 
"Volkswagen Canada has issued a stop-sale order to our dealers for all of the affected vehicles pending resolution of this matter," company spokesperson Thomas Tetzlaff told the outlet. Affected models include the 2009-15 VW Jetta, 2010-15 VW Golf, 2013-15 VW Beetle, 2012-15 VW Passat and 2009-15 VW Golf Wagon/Sportwagon.
 
While the Volkswagen brand has suffered - Bloomberg reports that the carmaker’s parent company has already lost almost a quarter of its market value – it’s possible that so has the reputation of diesel automobiles.
 
22% of Volkswagen sales in Canada are comprised of diesel sales, and all cars affected were TDI diesel models. Since diesel cars are more expensive to insure, this may cause more consumers to choose gas or hybrid vehicles instead.
 
This could have an impact on Canadian auto insurance policies, albeit a small one.
 
“Diesel cars are more expensive to repair and replace,” said James Black, president, Black and Insurance Associates. “I would estimate up to 5% difference in Physical Damage premiums.”
 
He admits that this is minor, but new doubts about VW “might cause consumers to favor gas cars.”  As reports indicate that the Audi A3 and other models could be potentially at risk, many brokers await further investigation and whether the backlash will be reflected in the P&C market.

Keep up with the latest news and events

Join our mailing list, it’s free!