The Uncontrolled Implosion at VW

volkswagen_logo_bleeding_by_greenbob1986VW has been embroiled in a massive controversy. Here is the summary:

  1. VW has been marketing “clean diesel” technology on the basis of being environmentally friendly while also being fun to drive.
  2. Independent testing done by West Virginia University revealed that VW diesel cars were not in fact clean when compared to competitors, and exceeded EPA regulations governing emissions.
  3. VW asserted that the tests were inaccurate and offered to perform voluntary recalls to address specific issues.
  4. The EPA threatened to withhold certification for 2016 models – meaning VW would not be able to sell them.
  5. The company then admitted that they had engineered a defeat device which detected when the vehicle was undergoing emissions testing. In normal driving, the required emissions equipment was turned off.

The EPA has threatened the company with $18b in fines, which won’t come to fruition. BP paid just a 1/3 of that for their massive environmental disaster in the Gulf. It is hard to see how VW would be subject to a fine that equates to $37,344 per vehicle affected.

Samsung

The damage to the VW brand is incalculable right now, but I predict it will be a death blow to them in the U.S. market. Their problem is twofold, the first is that their market share here has been stuck in perpetual single digits across categories. With the U.S. being the most competitive car market globally, every point of share comes at great cost.

The second problem is that they are now on record admitting to a conspiracy to deceive regulators and consumers alike. They have been marketing a clean diesel product that they knew was not, and worse, had engineered components in the vehicles themselves to perpetuate that deception.

This scandal is spreading, fast. The company has already admitted that they know 11 million vehicles globally have this defeat mechanism installed. Countries are opening up their own investigations daily, the damage to the brand is no longer contained the U.S.

For the foreseeable future every news story about VW will be about a scandal, every car review, even in the bought off automotive media, will be compelled to append articles about VW cars, and current customers will have to navigate recalls and sarcastic comments about their choice of vehicle.

What reason does anyone have to buy a VW in light of these revelations? While not alone in the annals of recent car company scandals, the VW one is the most brazen in concept. Toyota and GM have both suffered scandals of incompetence with air bags and ignition switches respectfully, and in all fairness a lot of people died as a result of those failures, which is not the case with VW. Toyota and GM also have market leader positions while VW is a third tier player in the U.S. market, which doesn’t provide the company with much inertia to ride this out.

I think they are done. Call the moving company and buy your tickets back to Wolfsburg. At least they still have Audi and, thus far, they have not been implicated in this scandal.