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The Herzog-Meier dealership on Friday, November 7, 2014 in Beaverton, OR.
CAP Images/Craig Mitchelldyer)
Make me an offer.
EVERYTHING MUST GO

This is a sign of how desperate Volkswagen is getting

Jason Karaian
By Jason Karaian

Global finance and economics editor

Volkswagen is in the midst of one of the biggest car recalls in history, after it was caught cheating on emissions tests last month by US regulators. Nearly 500,000 diesel-powered cars in the US are affected, and the scandal is tarnishing the carmaker’s reputation in a market that it was just starting to crack.

Pity the poor VW dealership. Although only certain diesel models have the offending emissions-cheating software installed—and have since been taken off dealers’ lots—it’s increasingly tough to shift any car from the Volkswagen stable in the US. Amid accelerating car sales across the industry, VW’s sales are expected to be flat.

To entice wary buyers, Volkswagen is hiking the incentives it gives to dealers, and dealers in turn are slashing prices for buyers. TrueCar, an online platform that collects sales data from 10,000 dealerships across the country, shared weekly retail discount data with Quartz. It’s easy to spot when the desperation kicks in:

Volkswagen dealers already gave customers more generous cash rebates than average, in hopes of enticing more buyers to opt for VW’s newfangled “clean diesel” engines. But in recent weeks the average discount to Volkswagen’s suggested retail price has grown to nearly double the industry average. Add slimmer margins to the regulatory headaches and stock market turmoil that is already roiling the German auto giant.

What will it take to turn things around? Volkswagen’s dramatic shift towards electric cars earlier this month suggests that it thinks a decisive break from the past is the best way forward.

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