When the automotive crap hits the fan, it is always on a Friday. And so it was today we learned that Volkswagen admitted that it had sold 482,000 diesel cars in the U.S. since 2009 by writing vehicle software to only activate anti-pollution controls during EPA emissions testing. U.S. officials allege the German car company installed a cheating software defeat device in diesel cars sold in America that permitted the vehicles to emit 10 to 40 times the allowable pollution. These 2.0-liter diesel models include:
- The 2009-15 VW Jetta TDI
- The 2009-15 VW Beetle TDI
- The 2009-15 VW Golf TDI
- The 2012-15 VW Passat TDI
- The 2009-15 Audi A3 TDI **
**Volkswagen is the parent company of Audi.
What makes this alleged brazen deception by the world’s largest car maker so stunning is the sheer stupidity of this short-sighted plan. I would have loved to have been a fly on the wall when this “technical innovation” was approved. Because this violation has recently come to light, it has yet to be determined who approved this plan or when it was devised. And you don’t have to be a fortune teller to predict what will most likely happen next. Here’s my best guess.
- The value of the affected cars will plummet
- There will be a class action lawsuit filed against VW by the customers who purchased these cars
- There is (and will be) more legal action filed by both state and federal governments
- VW will have to sincerely apologize
- It is likely that Michael Horn – President and CEO of Volkswagen Group of America, Inc. will be fired even though he has been on the job for about a year
- After more time and more finger pointing it is also likely that Martin Winterkorn, the long standing Chairman of the Board of Directors of Volkswagen AG, will be forced to move on
- VW will have to pay fines and settle law suits in the billions of dollars
- Diesel car sales in America will fall from the current 3 percent of the U.S.market
- Hybrid sales will increase from the current 3 percent of the U.S. market
- Lawyers, ad agencies, spin doctors, and did I mention lawyers, will make hundreds of millions of dollars over the next several years in professional fees
VW’s reputation as an honest manufacturer of cars will be severely damaged and the company will struggle to sell diesel cars in America. I can easily foresee that the amount of money lost in just potential car sales in the coming decade will easily exceed the revenue that was made from selling those 482,000 diesels since 2009. The lost income does not include the billions in potential law suit liability, and state and federal fines. In America, a company’s reputation is king. Example.
- Dozens of years after FIAT left and returned to the United States, FIAT still stands for Fix It Again Tony to many new car buyers
- Jaguar and Land Rover build exceptional cars today, yet the residual value of those cars still plummets based on a reputation for unreliability born from decades ago
It is no secret that VW has been struggling to sell cars in North America and compete head to head with other large car companies like Toyota and Ford. VW just wasn’t able to crack the code to sales success in the U.S. Perhaps that’s why someone (or multiple someones) at VW decided to take a shortcut that involved allegedly deceiving customers and Federal authorities. A shortcut that resulted in staggering financial penalties and enormous damage to VW’s reputation of this alleged and now exposed scheme seems to have been miscalculated and misunderstood. I believe there’s one undeniable lesson that VW of America will now most likely learn the hard way.
When the pendulum of public opinion swings in America it swings fast and far. Let me rephrase that using a more appropriate German term. Understanding the zeitgeist of America is key to any success in the United States. I would argue that this alleged disastrous plan only proves that Volkswagen still doesn’t get ‘Merica or Americans.
Here’s a walk down memory lane. It is my review of the 2010 VW Golf diesel.