Volkswagen is in trouble with just about everybody on the f'ing planet

[Spectre]

Speaking of which, they may not be able to fix the problems with the cars - at least not easily.

Volkswagen's cheating engines can't be easily fixed
Benjamin Zhang

Volkswagen is confronted with a monumental challenge.

The company has admitted that 11 million of its cars used illegal software to cheat emissions standards.

Now, many owners are demanding that the offending cars be fixed.

That's easier said than done, and Volkswagen has already tried ? and failed ? twice.

Here's the issue, according to the US Environmental Protection Agency: Cars with Volkswagen's 2-liter TDI turbo-diesel four-cylinder engines include software that detects when the car is undergoing emissions testing and turns on a suite of pollution-control systems.

But as soon as the test ends, the controls switch off, leaving the engine free to emit up to 40 times the legal limit of nitrogen oxide, a highly polluting gas. According to the California Air Resources Board, Volkswagen admitted to using a defeat device during a September 3 meeting with the agency and the EPA.

The problem for Volkswagen is that getting the engine's emissions in line with pollution standards probably means sacrificing something else.

"Building an engine involves balancing four factors ? performance, emissions, durability, and fuel economy," explained Jake Fisher, Consumer Reports' director of automotive testing.

Right now, VW has sacrificed emissions to create a TDI engine that offers great performance, incredible fuel economy, and solid reliability.

"Whatever the fix is, it will likely sacrifice fuel economy and probably durability as well," Fisher said.

Two failed attempts

So fixing the cars won't be as simple as changing the software to turn on all of the vehicle's emissions-control systems.

"We aren't sure what the exact fix will be," Matt DeLorenzo, Kelley Blue Book's KBB.com managing editor, told Business Insider. "We also don't know what kind of performance or fuel economy the car will return when the emissions control is turned on."

Volkswagen actually tried to fix the problem using a software patch in December 2014 and then again in April 2015.

Neither attempt was successful.

Other options range from the recalibration of pollution-control systems to the installation of a Urea injection system that neutralizes NOx and particulates in the exhaust.

And even the installation of a Urea injection system ? known commonly as AdBlue ? can't guarantee the cars pass emissions. In a letter to VW, the CARB noted that even 2015 model-year cars equipped with AdBlue failed the agency emissions tests in May.

The nuclear option

As disquieting as the recent revelations have been, Fisher claims that Consumer Reports research shows that many owners are still happy with their TDI diesels.

But this is not the case with everyone.

Those who purchased their TDI with the belief that they were taking ownership of an environmentally friendly vehicle feel deceived.

On the other hand, those who appreciate the performance, reliability, and fuel economy of the TDI will likely not accept a fix that would materially change the characteristic of the car they purchased.

This could lead to the nuclear option ? a buyback of all the offending cars.

"Buybacks and forced buybacks enforced through a judgment are highly unusual," attorney Eric Gibbs, who has filed a lawsuit against Volkswagen, told Business Insider.

Buybacks are exceedingly rare in the automotive world because they call for the car company to spend millions if not billions to "buy back" defective cars from owners.

Manufacturers typically avoid this route due to the exorbitant upfront costs and the negative publicity generated by the action.

According to KBB.com's DeLorenzo, there's a 50-50 chance a buyback happens in this case, and it all depends on the fix VW comes up with.

"If the change in performance after the fix is minimal, then it's not a problem," DeLorenzo said. "But if the change in performance is great, the likelihood of a buyback increases."

If there is a buyback of the 482,000 cars in the US, it would be the largest in industry history and cost VW billions of dollars.

Class-action lawsuits

VW owners aren't standing idly by. They're taking action through the legal system in the form of class-action lawsuits.

"Volkswagen owners feel like they've been misled and deceived," Gibbs told Business Insider. "They thought they were getting a clean diesel and paid a premium for it."

Gibbs, founding partner of Girard Gibbs, is one of the many lawyers representing owners of the 482,000 cars in the US affected by VW's emissions scheme.

According to Gibbs, more than 50 class-action lawsuits have been filed around the country, and that number could reach into the hundreds.

In the suit, owners are demanding a buyback or a repair that would not compromise performance, emissions, and fuel economy.

But the likely outcome here isn't going to be a buyback.

"Typically, settlements involve rebates and certificates that would give owners a discount on a new VW or protection from a drop in resale value," DeLorenzo said.

Either way, there's no easy fix to this problem.

There are links in the original article to citations, etc.

 

[LeVeL]

Sounds like it's a buyer's market out there.

 

[Shentar]

Sounds like it's a buyer's market out there.

I suggested to my g/f, who wants a GTI, that this might be a good time. I bet they will make a deal to sell a car at the moment.

 

[rickhamilton620]

Sounds like it's a buyer's market out there.

I suggested to my g/f, who wants a GTI, that this might be a good time. I bet they will make a deal to sell a car at the moment.

This. Kinda wish I had the coin to drop on a Golf Sportwagen - i got used to driving a new car over the past week and miss it. :lol:

 

[MacGuffin]

Mac I respect your viewpoint on many things but in this case and to borrow a mis-speak from a British TV sports reporter I think you may be looking at things through rose-cunted spectacles.

Maybe I am, I don't know. Maybe I underestimate the biggest risk in all of this, the civil actions in the USA. But it will take years for that to come into effect. How long did it take until BP had to pay for Deep Water Horizon? 5 years? Enough time to prepare for the worst. And what if it comes to the worst scenario and the financial reserves of VW are being drained so massively that VW is threatened in its existence? Well, then they'll probably sell Bentley or Lamborghini or Seat or Skoda (some say that VAG has too many brands anyway).

Or the German state jumps in. I wouldn't like that, we all wouldn't like that but the argumentation will go like this: "If we can pump billions into Greece, we can also pump a fraction of it into the survival of VW and if America could save its car industry from bankruptcy, we can also save VW from the Americans." Not my argumentation but in 3 or 4 years that is what people will think.

In contrast to Opel, VW isn't on the brink of bankruptcy and is considered relevant to the car industry, no only in Germany but in Europe. Of the 600,000 VW employees, roughly two thirds are located outside of Germany. VW has factories all over the world and politics is always very sensitive when it comes to jobs. I wouldn't exclude the possibility of massive structural changes in VW management, though. As a matter of fact I hope for them to happen and so do most of the VW employees.

As I said: The biggest danger are the financial risks in the USA. The rest will be solved on a political level. I am not defending or justifying it, I am just trying to be realistic and not to be a doomsday prophet in this matter. I would make a bet with you for a crate of Flensburger at the next Ringmeet but I have a feeling the issue won't be solved until then

Also Toyota is a very different brand from VW, Toyota buyers buy Toyotas because they are Toyotas. At least stateside VW buyers are generally not brand loyalists and get them because "German Engineering". This will certainly hurt them quite a bit here because they've been exposed as frauds.

Well, I often have the feeling that the Americans don't have a grasp on how big VW really is in the rest of the world. The US market is still the black sheep in the VW family, if you forgive me that comparison. The brand loyalty is really high here, I suspect much higher than with any car brand in America. Most people who own a VW now, have been owning one in their families since the 1960's or longer. The cars are good and competitive, no matter the current exhaust manipulations.

To give you an idea: The worldwide revenue of the Volkswagen AG (the whole corporation, including Audi, Porsche, etc.) was about 202.5 billion Euros in 2014. Of that only 27.5 billion Euros were made in the USA. I don't know the numbers of Toyota over there but I guess it's higher many times over.

 

[Spectre]

Maybe I am, I don't know. Maybe I underestimate the biggest risk in all of this, the civil actions in the USA. But it will take years for that to come into effect.

That depends on how fast each suit gets through the court systems. They could start having to pay millions within 90 days, for example.

How long did it take until BP had to pay for Deep Water Horizon? 5 years?

See above, they had to start paying within 90 days when the first judgements began coming in.

Well, I often have the feeling that the Americans don't have a grasp on how big VW really is in the rest of the world. The US market is still the black sheep in the VW family, if you forgive me that comparison. The brand loyalty is really high here, I suspect much higher than with any car brand in America. Most people who own a VW now, have been owning one in their families since the 1960's or longer. The cars are good and competitive, no matter the current exhaust manipulations.

To give you an idea: The worldwide revenue of the Volkswagen AG (the whole corporation, including Audi, Porsche, etc.) was about 202.5 billion Euros in 2014. Of that only 27.5 billion Euros were made in the USA. I don't know the numbers of Toyota over there but I guess it's higher many times over.

Yes, we do know how big it is. We just don't care; doesn't help that their attempts in the US are often pretty bad.

[video=youtube;CESVgaeD-nI]https://www.youtube.com/watch?v=CESVgaeD-nI[/video]
As the poster of the video says: "Fahrvergnugen...the ad campaign that made America NOT want to buy a Volkswagen."

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Something else - Americans have learned that "Largest Automaker In The World" often means the products are crap. Given VW's history in the US? Yup, more of the same.

 

[prizrak]

Well, I often have the feeling that the Americans don't have a grasp on how big VW really is in the rest of the world. The US market is still the black sheep in the VW family, if you forgive me that comparison. The brand loyalty is really high here, I suspect much higher than with any car brand in America. Most people who own a VW now, have been owning one in their families since the 1960's or longer. The cars are good and competitive, no matter the current exhaust manipulations.

But how are those people going to feel about it after this? Thing is BP, GM, Toyota all had issued due to engineering mistakes, this is very different in that it was a conscious decision by the VW management. Put it to you this way, if you were to kill a person with your car because you were distracted you will be getting a very different punishment than if you purposefully ran them over.

 

[Spectre]

But how are those people going to feel about it after this? Thing is BP, GM, Toyota all had issued due to engineering mistakes, this is very different in that it was a conscious decision by the VW management. Put it to you this way, if you were to kill a person with your car because you were distracted you will be getting a very different punishment than if you purposefully ran them over.

Exactly. The big difference between what VW did and most of the other hugely infamous automaker cases is that VW decided to deliberately cheat the system from the beginning. All of the other high profile cases in post-war history that I can recall were honest mistakes or unintentional defects (often compounded by poor/tonedeaf consumer relations, beancounterism, poor legal advice and cover-ups.) Even the Pinto fire issue, the GM ignition switch case and the Ford Explorer rollover debacle didn't start out with the company in question consciously deciding, "Hey, we're going to build this thing to flaunt the law and damage/injure people." In this case, that's exactly what VW did. Then they covered it up. Then when they couldn't do that, they stonewalled and it took the threat of a complete import and sales ban for them to finally own up to it.

This is quite probably going to be the worst smackdown of a car company in US history, whether or not they settle with the US and Cali government. The major damage done to Ford in both the Pinto and Explorer cases wasn't done by the large fines - it was done by the astronomical damages granted by courts and similarly large settlements they paid out of court. Those reportedly dwarfed the fines levied by the appropriate bodies by hundreds of times at a minimum.

This is something that even the more rabid tort reform advocates in the US generally agree on - while there should be limits on damages awarded based on mistakes or non-criminal negligence, there should be NO limit on damages levied against a corporation who actively and intentionally broke laws. Knowing how judges work, especially in California, don't be surprised if one of the awards in a class action suit is "All of your profits, worldwide, for the period in which you were cheating." Yes, they can in fact award that as damages.

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Lest you think I'm kidding, a California jury awarded $28 billion, with a B, to one woman who sued a tobacco company for negligence, strict product liability, and fraud. Not even a class action suit, just a single plaintiff suit.

Fraud is, by the way, one of the crimes that VW committed and has admitted to committing. So is product liability.

Then think about this; that was just ONE person. There's almost 500,000 cases that could be brought here.

As the article notes, there was a 2000 award of $145 billion in a class action suit in Florida.

So, how much money does VW have, again?

 

[MacGuffin]

But how are those people going to feel about it after this? Thing is BP, GM, Toyota all had issued due to engineering mistakes, this is very different in that it was a conscious decision by the VW management. Put it to you this way, if you were to kill a person with your car because you were distracted you will be getting a very different punishment than if you purposefully ran them over.

Let me make a prediction (and please don't mistake this for my own opinion). What people think here is this:

The American judicial system is bad and unjust. It is considered corrupt, because prosecutors are elected and therefore fight for their election with dirty methods and only those who can afford the best lawyers have a good chance of winning. It's not about getting justice but about winning over the other side in court. Also the police is a bunch of bullies who have nothing better to do then arresting or shooting people for ludicrous reasons.

And most of the verdicts are being made by amateurs who are easy so influence and the whole system is ravingly mad because some people can get millions for a coffee burn or when they put their hamster into the microwave. Also the American prisons are overloaded with people, many of them being sentenced innocently or by racial factors. On the other hand: When Americans do crimes abroad, the Americans always value their own judicial system higher than those of foreign countries. Because the self-conception of the USA is that they are the best in everything and that only what they think is right, is the paragon the rest of the world should shape itself after, and Americans are better people anyway.

That is overstated a bit but it's how the general public here perceives USA as a state and its U.S. judicial system. It is considered not much better than that of China. Again: Not my opinion but what is perceived here by the general public. All you need to do is check the anti-TTIP protests here in Europe to understand that it's true. It's the downside of being the dominant power in the world.

So in a few years, when things will have calmed down here, when the technical and personell issues are settled, when the only thing that is still to settle are the lawsuits in America, the public opinion will turn towards VW and against the USA, because America "is trying to lecture and punish a foreign carmaker in order to gain an economical advantage". There will be no distinction being made between the lawsuits agianst Toyota or General Motors, which in contrast to VW resulted in tangible and immidiate deaths and who got away rather cheaply with it. The whole concepts of "Well, there might have been some people who may have had a health risk from breathing in more NO2..." is too abstract in comparison. It can only work in a court where you can influence an amateur jury on an emotional level.

Will the image of VW suffer from it on the long run? In the USA for sure but in the rest of the world? I doubt it. And from what I posted above you can see, that the VW brand doesn't really need the US market. As a matter of fact, if VW is clever, they bury VW as a brand in America and sell everything under the Audi badge in the future, because Audi is not so much effected by the whole mess I'm only speculating now of course.

 

[Spectre]

So in a few years, when things will have calmed down here, when the technical and personell issues are settled, when the only thing that is still to settle are the lawsuits in America, the public opinion will turn towards VW and against the USA, because America "is trying to lecture and punish a foreign carmaker in order to gain an economical advantage". There will be no distinction being made between the lawsuits agianst Toyota or General Motors, which in contrast to VW resulted in tangible and immidiate deaths and who got away rather cheaply with it. The whole concepts of "Well, there might have been some people who may have had a health risk from breathing in more NO2..." is too abstract in comparison. It can only work in a court where you can influence an amateur jury on an emotional level.

People will be going to jail long before this 'calming down' occurrs.

Will the image of VW suffer from it on the long run? In the USA for sure but in the rest of the world? I doubt it. And from what I posted above you can see, that the VW brand doesn't really need the US market. As a matter of fact, if VW is clever, they bury VW as a brand in America and sell everything under the Audi badge in the future, because Audi is not so much effected by the whole mess I'm only speculating now of course.

1. Many people here think of Audi as jumped up VWs. Especially older people, i.e., Audi's target demographics with their larger cars.
2. Rebranding as Audi will not save them from enormous civil court awards.

 

[MacGuffin]

People will be going to jail long before this 'calming down' occurrs.

1. Many people think of Audi as jumped up VWs. Especially older people, i.e., Audi's target demographics with their larger cars.
2. Rebranding as Audi will not save them from enormous civil court awards.

I was just speculating

I have no idea about the image of Audi in the States but it surely will be better than VW in the future, that I guess we can agree on. And that there is no way to prevent the civil court awards, is also my opinion. I only predict that it will be perceived as unjust and crazy here and that people will rather turn towards VW in the process than move away from it.

 

[MWF]

I truly believe this will ultimately turn into two giant entities going head to head.

No not VW v USA, Mac v Spectre.

 

[MacGuffin]

I truly believe this will ultimately turn into two giant entities going head to head.

No not VW v USA, Mac v Spectre.

No, I think that Spectre and I mostly agree in this matter. Just because I believe what I described will happen doesn't mean that I like it.

I believe that the whole European conglomerate of car industry, politics and lobbyism has to be untangled, otherwise there is a clear and present danger that the European car makers sleep-away the future. The current VW affair is not a matter of non-existing technical prowess, it's a matter of corruption, a lack of control and financial considerations. I'm actually quite appalled and shocked that a corporation with such brilliant engineering abilities had to resort to such trickery and fraud.

EDIT: I only think it would be easier to discuss this with him, if he left his personal anti-VW stance out of the discussion for a moment

 

[rickhamilton620]

if the VW brand were to leave the US, they could introduce Skoda as a low cost competitor.

 

[Spectre]

I was just speculating

I have no idea about the image of Audi in the States but it surely will be better than VW in the future, that I guess we can agree on. And that there is no way to prevent the civil court awards, is also my opinion. I only predict that it will be perceived as unjust and crazy here and that people will rather turn towards VW in the process than move away from it.

I think I'd agree with you in part on this. Audi's not been associated with 'diesel' the way VW has been (through VW's own efforts). They'll probably be hit by the splash on the entire VAG conglomerate and I wouldn't want to be a US Audi dealer for the next decade - but being a VW dealer in the US is going to suck a lot worse.

As for being perceived as unjust and crazy? Well, Harry Turtledove has a great line in one of his novels: "They can think of me however they like-as long as they do it from a great distance." And in this case, pay up.

If nothing else, VW's legal department has the next decade-plus' worth of work laid out for them at this point.

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if the VW brand were to leave the US, they could introduce Skoda as a low cost competitor.

Yeah, about the whole introducing a new brand thing... How's Daewoo's US operations doing these days? Because that's the best VW could hope for out of that, as they'd have no dealers and if it gets associated with VW it's going to be dead.

At this point, you would have to be a total idiot to sign a dealership agreement with VAG.

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I believe that the whole European conglomerate of car industry, politics and lobbyism has to be untangled, otherwise there is a clear and present danger that the European car makers sleep-away the future. The current VW affair is not a matter of non-existing technical prowess, it's a matter of corruption, a lack of control and financial considerations. I'm actually quite appalled and shocked that a corporation with such brilliant engineering abilities had to resort to such trickery and fraud.

I'm not nearly so enamored of their 'technical prowess' as you seem to be. Especially given VW's reliability (or lack thereof, rather) in the US. Given that the 2015s with urea injection (not just the Passat with the tiny urea reservoir, but others) didn't pass emissions either, there's a very good chance that they *can't*.

If VW was smart, they'd get out in front of this (on the civil and PR side) and do the following:
1) Buy back every single affected car at original MSRP/what the buyer paid for it. On the condition, of course, that they sign a release agreeing that they can't sue.
2) Every customer bringing their car in for the buyback would get a huge discount off a new petrol powered model.
3) *Don't* export the cars to some other country, just crush them all. Publicly.
4) Dump all the relevant emails into the public domain, because you know they have them. Name names, publicly. Fire everyone responsible, right down to whatever low-level engineering idiot thought this was a good idea - publicly. Hand over the evidence to the US authorities, publicly.

Sadly, they're probably not smart enough to do this.

 

[MacGuffin]

I guess it will depend on what their lawyers recommend them to do. They have charged the same lawyers that defended BP in the past years after the Deepwater Horizon debacle, so I suppose there is some cleverness there...

 

[prizrak]

And now the Swiss banned VW http://abcnews.go.com/International/wireStory/latest-german-car-shares-rise-vw-board-meets-34029842

 

[argatoga]

Will the image of VW suffer from it on the long run? In the USA for sure but in the rest of the world? I doubt it. And from what I posted above you can see, that the VW brand doesn't really need the US market. As a matter of fact, if VW is clever, they bury VW as a brand in America and sell everything under the Audi badge in the future, because Audi is not so much effected by the whole mess I'm only speculating now of course.

Do they need the Chinese market though? China has begun to (finally) go after smog producers. Although I'm not sure how many Diesels they sell there.

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if the VW brand were to leave the US, they could introduce Skoda as a low cost competitor.

Worked great for Rover! Introducing a new brand is also expensive, very expensive, massively expensive.

 

[93Flareside]

And now the Swiss banned VW http://abcnews.go.com/International/wireStory/latest-german-car-shares-rise-vw-board-meets-34029842

A country can ban a brand?

 

[Spectre]

A country can ban a brand?

Yup. If it is imported, it can be banned at the border.