FOOL ME ONCE SHAME ON YOU; FOOL ME TWICE SHAME ON ME

VW SHAMED  TWICE SHAME FOR EMISSION CHEATING

Thus far Volkswagen AG, Audi AG and Volkswagen Group of America, Inc. and Volkswagen (VW) as a whole has gone through the mill for the EPA emissions scandal that broke on the 18 September 2015. They have suffered massive third-quarter financial losses. Legal injunctions have compelled them to recall 11 million vehicles fitted with the now notorious 2.0L TDI engine. They are obliged to repair them entirely at their own cost which could take at least two years. They had to set aside some 7 billion Euros as restitution and compensation to VAG vehicles owners whose vehicles will, as a result of the "cheat device", have  diminished performance and poorer fuel economy. They fired their heads of Research and Development and launched an internal investigation into the “rogue software engineers” responsible for fitment of "cheat device". They have even instated a new CEO, Matthias Mueller, the former  boss of Porsche to the helm, to steer them out of the arse mousse  that Volkswagen find themselves sinking into deeper day by day.

The largest Automobile manufacturer in the World.

As if this isn't enough,  US’s Environmental Protection Agency (EPA) just notified Volkswagen Aktiengesellschaft of a second breach of clean air legislation. On the 2nd  November 2015, the EPA issued them with a second notice of violation (NOV) of the Clean Air Act. This NOV alleges that VW developed and installed defeat mechanisms in model years 2014 through 2016 VW, Audi and Porsche light duty diesel vehicles equipped with 3.0 liter V6 TDI engines. The harmful nitrogen oxide (NOx) emissions produced by diesel engines fitted in the 2014 VW Touareg, the 2015 Porsche Cayenne, and the 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5, appear to exceed the EPA’s standard by at least nine times. 

3.0 Liter V6 TDI Engine

In their own defence VW emphatically denied the charges of fitting the “cheat device” into its luxury brand of vehicles. However the following day  VW admitted that certain “unexplained inconsistencies” had been found during the testing process for CO2 emissions. VW added that approximately 800,000 vehicles are currently thought to be involved, most of them sold in Europe.  But some of the vehicles now involved have petrol engines, implying that the scale of the second  installment of the emission scandal could be much greater than initially assumed. 

Suddenly the “credibility” of the “rogue software engineers” argument just fades into obscurity. It is just to outlandish, flimsy and too incredulous now that Porsche and other luxury brand of vehicles are also involved. This boils down to down-right systematic manipulation and rigging of emissions test data by VW in order to gain themselves and unfair and an illegal  competitive advantage over its competitors. These latest developments just tarnished Volkswagen’s reputation and future sales even further, perhaps irreparably.  But to regain any sort of confidence and trust from both customers and investors, Volkswagen would have to make some radical changes to its management  and come clean. 

Considering that for the first time Toyota sales has overtaken that of VW.  And that Volkswagen  will forfeit all its CAFE (Corporate Average Fuel Economy)  carbon credits, and have to pay the taxation difference between the lower vehicle tax that  VW’s customers have unwittingly paid and what was actually due. Besides  getting grilled at COP 21 on the 7- 8 December 2015 for fooling the rest of the world twice.  And to add insult to injury, VW sales across all models, including petrol engines sales dropped by almost 10% since October 2015. Credit ratings agencies Moody’s and S&P have downgraded VW and three other major ratings agencies have VW on negative watch considering further downgrades. What a  deal breaker!

VOLKSWAGEN AG AFTERMATH

VOLKSWAGEN AG AFTERMATH

The Volkswagen emissions debacle is undoubtedly the greatest corporate catastrophe since the global financial crisis, and that even includes the BP oil spill of 2010.  It has been nicknames the "Diesel Gate" scandal and is the greatest controversy the carmaker experienced in its 78 year history. VW  is currently the largest car manufacturer in the world and it is no exaggeration to say that the company is in mortal danger. It is very likely that the VW group can survive the financial knock of the scandal but whether or not it can recover from the reputational damage it has suffered is extremely uncertain. The news of Volkswagen AG cheating in the global vehicle market space had a huge impact on its stock value / share price. Since December of 2014 Volkswagen's stock value / share price had steadily increased from €155 to as much as €247.55 depicting an average of €195.63. When the news of its impropriety broke, the stock value / share price plummeted and by Friday 2nd Oct 2015, it reached the all time low of €101,15 and is decreasing even further. Today  some 13 days later Volkswagen's share value has dropped to as little as €90.88, the same level it was at in September of 2011, a whole 5 years ago.  Just two days of down trading wiped out €25billion in VW market capital, placing it in an existence-threatening crises.

Emission Cheaters.....

Volkswagen is certainly not the flavour of the month anymore. VW is being bad mouth by everyone and the news channels are having a field day  with the resignation of Dr Martin Winterkorn its CEO and the dismissal of  the chiefs of R&D in their Audi and Porsche divisions. In fact the general interest in Volkswagen has waned so dramatically that VW, Audi, Seat and Skoda vehicle  blog sites are seeing a huge decline in surfer interest. As an avid Volkswagen enthusiast who owns a 7 year old Polo just witnessed that the amount of Volkswagen AG vehicles on sale at Gumtree.com has doubled. This is a bad sign, because I was hoping to sell my car some three weeks ago before Volkswagen's disclosed that they cheated. This is bound to impact on the price I  will get for her because the supply of VWs are way more than the current demand. Grrrrr.

The emission scandal coupled to the notorious DSG transmission debacle has really done all VAG vehicle owners a disfavour, to the point that the first time in more than 5 years, Volkswagen's share values fell below Toyota's share value. In a nut shell, your VW that won "car of year" in several divisions for several years has just depreciated to less than that of a measly Toyota... and falling. 

To make matters worse, the California Air Resources Board announced that it intends to broaden its testing of  Volkswagen AG cars fitted with diesel engines. This will include 3.0-liter V6 engines used in the the Porsche Cayenne and the Audi A6. Rival car manufacturers like South Korea's Kia and Hyundai, have seen their share prices climb as investors steer clear of German automobile manufacturers. As a consequence even German car maker BMW has suffered a 5 percent slump in its share price today. Not to mention that  businesses that service and supply components to the auto industry have also suffered a hard knock.