Guest Post by Eric Peters
If you own a VW diesel guilty of “cheating” Uncle, you’d better scuttle on down to your local VW store. Not to “fix” it (they’re not broken) but to get your money before there’s none left.
On Tuesday, Uncle announced the most draconian punishment ever meted out to a car company over the TDI “cheating” scandal: $15 billion in forced buyback/loan forgiveness offers and funding for “environmental programs” and the promotion of electric/hydrogen fuel cell vehicles.
On top of this, VW has agreed – been forced – to pay out another $600 million in separate settlements with 44 states plus the District of Columbia and Puerto Rico.
The cost of pending civil litigation – not covered by the above – hasn’t yet been calculated. But it could be the biggest and most expensive class-action payday ever. There are at least half a million potential litigants.
It could be curtains for Volkswagen.
No joke.
$15 billion is a staggering sum. An impossible sum.
It dwarfs the cost borne by Ford back in the late 1970s over the Exploding Pinto fiasco – a mere $127 million (later reduced to $6 million, or about $24 million in today’s dollars). In the early 2000s, Ford had to pay out about $2.4 billion to settle claims arising from the Ford Explorer/Firestone tire rollover debacle.
Chump change.
And Ford is a major automaker, one of the Big Three. Its cars account for about 15 percent of all cars sold in the U.S.
VW has – had – a market share around 3 percent.
The math is very, very bad.
Ford would have trouble dealing with a $15 billion dollar hit (probably more like $20 billion once the civil litigation is figured in).
And VW is not Ford.
Where will all the geld come from?
Maybe VW has a geldscheisser. You know – like the private banking cartel that controls the money supply.
The good news is that owners of the “affected” vehicles won’t be forced to turn in their cars (to be destroyed) but VW will be forced to buy them back if they do.
Well, so long as VW has the funds available to do so.
Which could be not for long.
Each owner will get (if he hurries) the pre-scandal “clean” Blue Book value of his car, plus a cash award in addition ranging from $5,100 to $10,000. Or, the owner can elect to keep his car and wait for VW to “fix” it (the details of this have yet to be determined). These people will still get the $5-$10k payday. People who still owe on a loan may have the balance due forgiven and people who are leasing an “affected” model will have the opportunity to turn the car in early without penalty.
About half a million cars are “affected,” dating back to the 2009 model year. Under the terms of the agreement with Uncle, VW must either buy back or “fix” 85 percent of these cars by June 30, 2019. If it fails to do so, Uncle will hit the company with another $85 million in fines for each percentage point below 85 percent.
That alone is four times what Ford had to pay out to make amends for the Exploding Pintos – which actually hurt (actually killed) actual people.
Who has been hurt by VW’s “cheating”?
The fact is no one’s suffered so much as a bad hair day.
Uncle is aggrieved because VW dodged his increasingly unreasonable exhaust emissions fatwas. But what’s the Big Whoop, really?
The “affected” cars emitted fractions of a percent more NOx (oxides of nitrogen) than Uncle decreed permissible. That’s it. The harm allegedly resulting from this is purely hypothetical. It is claimed a few dozen people – hypothetical people – might experience asthma-related symptoms. But no actual victim has yet been trotted out. And the “affected” vehicles would have easily passed muster with Uncle’s edicts of the early 2000s.
Were those cars “dirty”?
Who was harmed by them?
It’s interesting to observe that Uncle is much less aggrieved about the lethal airbags it has mandated be placed in front of all our faces every time we get behind the wheel.
These actually kill actual people.
Where are the double-digit billion fines and massive buyback offers?
Uncle won’t even allow people who own cars equipped with known-to-be-lethal air bags made by Takata to have the got-damned things disabled pending a fix. See here.
It shows what Uncle really cares about.
Which isn’t our “safety” – much less our lives.
It is obedience to Uncle.
VW sin was disobedience – and the punishment for that is severe.
If the automaker had merely sold defective cars, it would be no big deal. Or much less of one. When people get killed, the payouts and other consequences are trivial. Big numbers, by the standards of you and me, perhaps. But nothing a major corporation can’t handle.
But $15 billion? That’s a whole lot of money – even for a major corporation.
At the very least, it will cripple VW’s ability to update its cars for the foreseeable future. Expect stagnation for the next several years – which will be devastating to its competitiveness. Market share – already dwindling – is likely to continue to dwindle. Even though there is nothing functionally wrong with any of the “affected” cars, the taint of scandal has already caused their value to depreciate by double digits. See here. This will continue.
How does VW survive?
It will take years of profitability to recover the $15 billion; years (VW has openly admitted this) of VW not making any profit at all.
The Explorer/Firestone Tire debacle nearly killed Ford – and it was a much smaller debacle (for a much larger automaker).
Better get in line soon.
And don’t wait to cash that check, either.
Pull out of the U.S., tell Uncle Sam to lick sack. Ban all american made cars in the EU before it dissolves.
What a bunch of horseshit.
Yeah, why not?
If the Germans had any brains they would sell returns to Russia 20 cents on the dollar.
D.B. Cooper, Germans can’t do that cos Uncle Sam and EU has forbidden trade with Russia
CA,
100%
Top notch post by E. Peters.
Yes. He has had the best commentary on this subject anywhere.
When VW anounced to the world word of their 200 mpg water injected diesel, the next day the Tianman (sp) port in Japan was hit with a hi tech weapon that destroyed 3000 VW cars in storage.
Don’t piss off the rottinfellar oil gang .
Germany is getting the Royal Screwjob, by the Great Wise, Dead Broke, Deadbeat Uncle. We must be very Very Close to the End Game or will The Wise Uncle take us all to WWIII?? Stay tuned!!
Compare the “emissions” from a well-maintained diesel car, and the emissions from the diesel locomotives owned by the “Well-Connected”, where the level of “maintenance” is just enough to keep it running – and so “making a profit”.
Seems “Pollution” may be “less important” if the “Polluter” has the right connections – and money.
How much Jet fuel and CO2 were burned/created with Michael Obama’s Hawaiian vacations on taxpayer dollars?
I have owned six VW TDI vehicles over the last 20 years or so (4 jettas, 2 passats)…..my current 2015 Passat TDI with manual transmission hit 67.1 on a road trip last week; a record for the six cars…..the hotter the outside temperture; the better the mileage…..VW should have come out fighting on this one….2 wheeled vehicles have essentially no emissions standards…..is that Harley in front of you causing you breathing problems?…..these increasing standards are meant to bring an end to all Otto cycle powerplants….by the way, the above 210 mile round trip ended at 66.5 for the trip and was run at 65mph and under with few stops….this whole thing is political BS and needs to be stopped….if they want the car, they’ll have to take it!
“.2 wheeled vehicles have essentially no emissions standards…..is that Harley in front of you causing you breathing problems?…”
Modern Harleys use closed loop fuel injection and catalytic converters. There are plenty of emmissions standards for Motorcycles, despite they are barely used as basic transportation here in the US
So WTF are you talking about?
My father who owns a late model VW TDI is looking forward to his compensation for this so-called problem, despite freely admitting that he loves the car, believes it gets very good mileage and has exceeded his expectations.
I’ve owned several VW cars over the past 15 years (4 Passats, 1 Audi), (although the 2010 VW Passat CC proved to be the VW people warn you about) I can’t help but ask, if you weren’t harmed and suffered no definable loss by purchasing a late model VW TDI car, why are you entitled to any compensation at all?
GM killed people with their known but late acknowledged ignition switch issue, and was able to use their BS bankruptcy to get out of any culpability. No one died because VW cooked their diesel fuel efficiency numbers to meet BS CAFE standards, (CAFE standards that have also proven to kill people by encouraging them to drive fuel efficient, but will-kill-you-if-you’re-in-a-crash cars). If you can’t prove any one was harmed by violating arbitrary government requirements, why is VW being punished?
The cynic in me says it’s because, like Microsoft in the 90’s, VW just didn’t employ enough lobbyists to keep the government off their back. Sure VW lied, but I’ve yet to see anyone harmed by the lie, other than hipsters whose egos were bruised because they thought they were morally superior for buying a diesel car. Other car makers have had issues recently that did kill people and their punishment was not as severe as that being forced on VW.
Who was hurt? Any competitor following the rules.
Business must obey laws, stupid as they might be. Business intentionally circumventing laws need their nuts cut off. VW got off lightly in my book.
As a businessman trying hard to obey the law, the, most despicable thing is a competitor benefitting by intentionally avoiding those same laws. A level field is at the heart of capitalism. And VW screwed with the field, intentionally.
If I were in charge, they would have gotten much worse than they did.
That’s a great post llpoh. I never thought of it from that angle. I don’t think anybody else sells little diesal cars in the US. Maybe it can’t be done.
Chevy Cruze Diesel was a recent competitor the the Jetta TDI. GM has pulled the car from their Site
“Business must obey laws, stupid as they might be. ”
But laws must be able to show an injured party in the violation of those laws or the law isn’t a law at all, it’s a money trap for the government.
“A level field is at the heart of capitalism.”
If so, then every business must be left totally alone by government to pursue business unless that business is committing fraud, theft, or violent crime, such as assault or threats of violence. They must be victimizing some person or they haven’t committed an actual crime.
All the rest of the federal regulations on business simply tilt the playing field in one way or another.
From the VW website
========================================
Due to difficult market conditions in 2015, the number of Group vehicles delivered to customers dropped to 9.931 million (2014: 10.137 million). The share of the world passenger car market amounts to 12.3 percent.
In Western Europe, nearly one in four new cars (24.4 percent) is made by the Volkswagen Group.
The Group comprises twelve brands from seven European countries: Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.
The Group operates 119 production plants in 20 European countries and a further 11 countries in the Americas, Asia and Africa. Every weekday, 610,076 employees worldwide produce nearly 42,000 vehicles,
========================================
Sure, let’s put SIX HUNDRED THOUSAND people out of work because of Uncle. Let’s destroy lives and economies because of Uncle.
How the German people can have ANY loyalty to this shitfuk interfering demon — aka, Amerika — is beyond me.
But, Llpoh says he would have done even worse to them. Amazing. I think some kangaroos must have stomped on his face and then ate his brain. He wasn’t always this, ummm, vindictive.
Stucky said:
“Sure, let’s put SIX HUNDRED THOUSAND people out of work because of Uncle. Let’s destroy lives and economies because of Uncle.”
That’s the name of the game right now Stuck. The elites need to tear down anything of value in the west to make the proles beg for the salvation of the NWO.
Makes you wonder if this is payback for failing to unionize their plant in the US…. with this administration, nothing is impossible to imagine.
This is the same play the uncle did to toyota with their “gas pedal” problem early in the bust days of 2008. Uncle decided to take the top spot away from toyota to help GM recover market share.
uncle is a bitch.
now he wants kieser to quit making efficient IC engines and move to battery operated, wi-fi connected, self driving, devices, that you will not own, you will lease/pay for the privilege, similar to the way you don’t really own your smart phone.
Stuck – yes I was. Companies simply cannot be allowed to act illegally.
But what if the law is asinine? If daddy gov passes a law stating that all CEOs must shove undercooked lima beans up their asses, must all corporations obey that law? How about that, L?
In a fantasy world that would be true. It’s funny (to me) that you’re getting all huffy and puffy and righteous about companies keeping laws. In the real world many companies, especially the big boys, act illegally whenever 1) it benefits them and, 2) they feel they can get away with it. Don’t make things worse by disputing that.
You simply must know in your heart of hearts that the punishment VW received — and you want it to be even more severe — simply does not fit the crime.
I think you must have lost a business deal with VW. Or, some other agenda/vendetta against VW.
Me above
Star – possibly it cannot. They stole those sales – 11 million cars illegally world wide. They stole those sales from other makers. Fuck them.
I can’t argue your point. I just never thought of it that way. I know obongo wants things a certain way, picking who gets to win, i assumed that was what was going on, as eric argues. You make a great point.
No way did VW “steal” any sales from anybody. That claim is unsupportable.
Ed – you are a fucking moron. VW sold 11 million cars illegally it could not have sold otherwise, as they were unable to meet the regs in the US and Europe.
People would still have bought the cars, just not from VW.
Re Stuck’s moronic assertment that 600,000 would lose their jobs – no, those jobs would simply go elsewhere, to other corps. That is the way these things work. And rightly so.
Re me defending big corps – I have spent a fucking lifetime running businesses by the rules. If you allow companies to cheat, where does it end? How can an honest businessman compete? They cannot.
You fucking shit for brains want to make it so no one can be an honest businessman. Your bullshit about everyone does it is extraordinarily unethical and childish. Not everyone does it. And if it is allowed, it will create a totally corrupt system.
VW not only sold cars that did not meet the regs, they created internal computer systems for those cars that falsified the data so they would not be caught during performance testing. That is unbelievable.
Those fucks should be bankrupted over this. This crap simply cannot be tolerated if you want an honest, incorruptible system.
You dickheads know nothing about running a business with honesty and integrity. Without that, the entire economy is going to crash. Dishonest economies fail and flounder every time. The US has previously been successful because it has a relatively honest system. You fucks want to make it corrupt by allowing corporations to ignore laws they disagree with. That is insane.
They did not sell 11M TDI diesels in the US.
Go vote for more gangster Gov’t and see where that gets you.
You are a fucking Imbecile.
BTW Stuck – I believe that all corps need to follow the laws. Your bullshit that others do it is grade school horseshit.
The punishment does not fit the crime. Intentionally selling 11 million vehicles with hidden chips that hide the defects should rightfully send the fucks bankrupt.
11 million vehicles that others would have made.
That is a high crime.
I don’t disagree that they should be fined/punished. However, it is the size of the fine that is suspect to me. The fact that it threatens to bankrupt a company that size tells me that there is probably more to it than just breaking the law, and it has to do with politics of some sort (corruption, protectionism).
I don’t recall any other company, whether in the industrial or financial sector, receiving this type of punishment for something of this nature where there are no fatalities or widespread environmental damage. And there are plenty out there who have done some bad stuff…
“I believe that all corps need to follow the laws. Your bullshit that others do it is grade school horseshit.” ——- Chief Loopy
I didn’t say VW should get away with it because other companies also break laws. If I said THAT, yes, it would be bullshit.
I simply stated a fact.
But, you and your Holy Roller Righteous Crusade wants to permanently damage VW for its transgression. If you wish to remain consistent, then you MUST wish the same for EVERY law-breaking company, no matter what. That’s really fucking brilliant, Einstein. What would that do to the economy, and to millions of lives?
The government says it’s a bad chip. OHHHH!!!! AHHHHH!!! The government is always right!! We must obey!! When did you become such a statist asshole? You need to move back to America – you were smarter here.
“Intentionally selling 11 million vehicles with hidden chips …. 11 million vehicles that others would have made.” ———- Chief Loopy
Fucking moran.
You’re assuming 11 million people WOULD NOT have bought VW’s with the correct chips. How stupid can you be? Seriously. You competing for village idiot?
99% of VW buyers could give a flying fuck about the “bad” chip — in fact, from what I’ve been reading, most LOVE it. VW wouldn’t have even lost 50k cars.
“Re Stuck’s moronic assertment that 600,000 would lose their jobs – no, those jobs would simply go elsewhere, to other corps. That is the way these things work.” —– Chief Loopy
Really?? Bwaahahahahaha!
Mr. shit-for-brains hits a grand slam!
You massively ignorant statement would only be true if all those VW owners buy their next car from ONE car company. Of course, that’s insane to think that. However, Einstein, there are hundreds of car companies around the globe for people to chose from. So, those 600k jobs are pretty much gone.
“I have spent a fucking lifetime running businesses by the rules.” —-Llpoh
You’ve reminded us often enough. Post your picture here — that way I can print it, frame it, and bow down and worship you every Sunday.
“You fucks want to make it corrupt by allowing corporations to ignore laws they disagree with.” ——Loopyfuk
How about those stories of you beating the shit out of people? Isn’t that breaking the law? Ever gotten a speeding ticket? If Australia says you can’t own the type of dog you have … you gonna kill it? You act like you’re so high and mighty, a saint, a keeper of all laws, just and unjust. Hypocrite.
A liar too. For NOBODY here said VW should get away with it. So, quit making shit up.
Fuck you Stuck. You are an imbecile re business. You have no clue.
They could not sell the cars legally – they fail the emissions requirements. Without the illegal chips the cars were unsaleable – 11 million of them.
The lost VW business would be spread over myriad competitors. No net jobs lost.
Stuck – any beatings I delivered were self defence or under immediate threat.
I repeat – go fuck yourself.
Stuck – you now have my attention. It is going to get ugly.
Stuck – you made it personal, not me. I am restraining myself.
Llpoh
Today is too late. I was willing to entertain the folks with a good old fashioned shitfest yesterday but, you did not engage … I suspect due to time zone differences.
I’m going to make one final “baffle” post (no one is reading this thread anyway), and you can have the last word in response.
1. You are ignoring Tom Peters’ points entirely, or so it seems. The main one being no one HUMAN BEING was hurt with what VW did. You turn this around and say — well, other COMPANIES were hurt (cuz they couldn’t sell their cars). This logic baffles me, and nothing you can say will un-baffle me ….. probably cuz I’m stoopid when it comes to business.
2. Your pro-government stance baffles me —- “THEY MADE A LAW!!! YA GOTTA OBEY EVERY LAW THE GOVERNMENT MAKES OR THE WORLD IS DOOMED!!!” —– The complete idiocy of this law is spelled out clearly by Peters, so I won’t repeat them here. But, I am 100% positive you don’t hold that same stance in your personal life. Why? Cuz you have a brain, a very smart one, and you fully realize that the government is not some “God” whose every edict … no matter how unfair and unjust — is something that “must” be obeyed. We are NOT sheep! Why doesn’t that belief also carry over to corporations?
——–
Side note, and not having to do with the VW issue.
Every law the government makes is an infringement of some sort on freedom, whether to a person or a corporation. It’s ironic that you cry out “Laws must be obeyed!!” … yet, you left America and moved to Australia. Why? Because, as you have indicated often enough here, you were sick and tired of the government fucking with your …. freedoms.
Not all of us have the resources to move to Oz. Some of us have to fight government tyranny on our soil. For example, by willingly purchasing eeeevil VW cars the government is against.
================
.
Looking forward to your response, if you want to give one. Call me names and ream me a new asshole … it’s all good. I’ll read it gleefully, but will remain silent. You WILL have the last word.
I see both sides. Llpoh is a straightforward, honest businessman approaching the VW fiasco from a practical manner regarding the law. It appears that VW did engage in deception.
Stucky seems to be approaching the matter from a “common sense” philosophical viewpoint regarding overreaching government intrusion and is obviously siding with the author’s take on the matter.
I didn’t mean to interfere here on the potentially burgeoning shitfest, but I was starting to feel like Charlie Sheen in Platoon again while watching William Dafoe and Tom Berringer in the battle.
Commenting helps me work it through. Again, TBP is a process for me. More of a “means” as opposed to an “end”, if you will.
Obviously, Llpoh get’s the last word should he choose to re-engage. Thank you and good day too all of the monkeys in the jungle.
Stuck – dumb as most laws are, if commercial laws are ignored, or if one business is allowed to act illegally, then the rot will spread. The US has been successful economically due to the rule of law. VW acted abhorrently in my opinion. It simply cannot be tolerated. They are neither the first nor last. None of it should be tolerated.
Some of your comments lead me to think you do not know exactly what VW did. You should research it. It is astonishing. We cannot allow it. Wrist slaps will not cut it.
The VWs are not evil. They cannot pass emissions tests and still function as consumers want. VW cheated around that little issue. 11 million times world-wide.
So what … it is normal – Uncle Sam got weapons so it steals cash from Germany, via gold in Fed Reserve which aint there and Volkswagen, Swiss banks fines etc. There aint no law – who has might is always right