Professor Elson, you seem rather ignorant of the history of German co-determination, much less its achievements. The problems at VW have nothing to do with unions or the company's system of corporate governance. General Motors is a shareholder-driven company. Yet it failed to report problems with ignition switches that led to the deaths of 125 people. Chrysler was fined over $100 million this year for safety lapses. Ford fined in 2013 for failing to recall cars with stuck throttles. At least the VW emissions cheating didn't kill anyone.
5
This is truly a disturbing story. How can a company trade their ethics the way Volkswagen has in this story. It will make me think twice about trusting them in the future.
2
Those VWs are too clever by half. Just think if all that technology and engineering were put to good use -- making cleaner, more fuel efficient cars.
1
Volkswagen is the Madoff Securities of automobile manufacturers.
If ever there was a situation that called for maximum fines and penalties, this is it.
There is no need to dissect the problems with their corporate governance and internal culture, just force them to fix the cars they have sold in the US and fine them as much as possible. Let them stare at their own navels and fix themselves.
If ever there was a situation that called for maximum fines and penalties, this is it.
There is no need to dissect the problems with their corporate governance and internal culture, just force them to fix the cars they have sold in the US and fine them as much as possible. Let them stare at their own navels and fix themselves.
4
what nonsense about the influence of the unions! The problem was Ferdinand Piechs megalomaniac strategy for VW to quickly become world no 1 and his autocratic leadership style. Hence the opposite of what they wrote here.
US businesses brought us the worst economic crashes, so your ultra-capitalist model doesn't work. Period. Let's first see what other car manufacturers are doing and I want to see the real road emissions of the Dodge Rams and F150 heavy duty vehicles against the VW Jetta - shall we make a bet??!!
VW scandal is a scandal, but it surely doesn't mean that VW ditched all ecological ambitions. This is utter nonsense, all new (Euro6) models do fulfil the emissions regulations without cheating. VW has pioneered several energy saving technologies, including the first 3l and 1l car.
This smashing criticism is merely an expression of protectionist American business warfare!! Like accusing the Chinese of spying/hacking when having the entire world under total surveillance - ludicrous!
US businesses brought us the worst economic crashes, so your ultra-capitalist model doesn't work. Period. Let's first see what other car manufacturers are doing and I want to see the real road emissions of the Dodge Rams and F150 heavy duty vehicles against the VW Jetta - shall we make a bet??!!
VW scandal is a scandal, but it surely doesn't mean that VW ditched all ecological ambitions. This is utter nonsense, all new (Euro6) models do fulfil the emissions regulations without cheating. VW has pioneered several energy saving technologies, including the first 3l and 1l car.
This smashing criticism is merely an expression of protectionist American business warfare!! Like accusing the Chinese of spying/hacking when having the entire world under total surveillance - ludicrous!
2
VW cheated with emissions data, yes. We also need to recall another German giant who recently was busted for blatant bribery, violating US, UK and a myriad of other nations' anti-corruption laws. Siemens, with its briefcases full of cash, all but had a Department of Bribery sign on one of its corporate doors.
Without excusing other, non-German corporate palm greasing and cheating, what is it with two of the formerly most respected and largest German corporations?
Without excusing other, non-German corporate palm greasing and cheating, what is it with two of the formerly most respected and largest German corporations?
4
If VW had to fake the emissions tests on it diesels then it's likely - in fact, almost certain - that other car companies must be doing the same. Unless by some miracle as yet unknown to automotive engineering these other companies have found a way to make their diesels run cleaner than VW's. VW can't be the only cheater here. They're all doing it. They have to.
1
Don't forget that without a US government bailout Chrysler and GM would be bankrupt. To my knowledge VW like Ford toughed out the market crash caused by the FED induced "bubble" and managed to survive. Next time you have to pay $65 to have your car smog checked every 2 years that is a joke. If the repair bill is over $450.00 you don't have to have the car fixed. When you see an old "junker" belching oil that is why they are still on the road and registered.
5
It certainly is annoying that Mr. Stewart names labor representation on the VW board of directors as part of its problem. He doesn't really explain this - I guess its just a good opportunity -- for someone captured by the industry he reports on -- to take a swing at workers. But this country would have less inequality if we adopted the German system of co-determination. German autoworkers make twice what American workers make, and sell far more cars than U.S. automakers. Somehow, they are able to compete whereas American car makers say they must keep workers pay low.
http://www.forbes.com/sites/frederickallen/2011/12/21/germany-builds-twi...
http://www.forbes.com/sites/frederickallen/2011/12/21/germany-builds-twi...
10
This is simple to understand. The labor representatives on the board put employee interests above proper corporate governance and compliance with laws. They are conflicted.
1
Haven't yet heard how much an advantage VW's shenanigans conferred. Is it possible that these geniuses risked all for only marginal performance bragging rights?
5
The most interesting part of the article is the comparison of the Volkswagen and Toyota employment figures. It seems that you can maintain employment while still having a prosperous company. Flouting the law, however, is another matter.
4
Circumventing emissions while bad pales in comparison to other companies ignoring faults that have lead to deaths. There is no small dose of nationalism here in the US that how dare a foreign company try to pull something on us. Nothing wrong if we do it ourselves so long as it is done by Americans ?
Truth is there will be no impact on owners of the cars - so long as Volks remains in business - and yes, the US is hypocritical in that it is such a large overall polluter. Why are SUV's which circumvent car emissions laws since they are classifed as trucks, so prevalent on the road ? Freedom of choice, freedom to damage the environment?
Volkswagen deserves to have the book thrown at it, be we here in the US aren't exactly standing on high moral ground.
Truth is there will be no impact on owners of the cars - so long as Volks remains in business - and yes, the US is hypocritical in that it is such a large overall polluter. Why are SUV's which circumvent car emissions laws since they are classifed as trucks, so prevalent on the road ? Freedom of choice, freedom to damage the environment?
Volkswagen deserves to have the book thrown at it, be we here in the US aren't exactly standing on high moral ground.
10
What do you drive, Saint Ray?
2
I was appalled at the small amount GM was fined for the faulty ignition switch, the related deaths and injuries and their denial tactics.
5
You know what really is sad here? These so-called B-school professors pontificating now about "I told you so". Not one of any of these losers would have the guts to say what they are saying now before this news blew up. It's deja vu all over again and is the reason people are so fed up with the new global economy - media, B-schools, boards, Wall Street - everyone is culpable and in on the scam. This is a largest automaker in the world and all these so-called new-found experts knew exactly of these board-level shenanigans. Yet, was there a single article by any of them about this long-standing malfeasance at VW's board prior to this? Why not and why now?
3
This argument is totally incoherent. Professor Elson criticizes the VW board for being an "echo chamber" and later on he's explaining how the natural conflicting interests of management and labor lead to bad corporate governance. Sorry, Professor. You can't have it both ways. Is the problem too many conflicting interests on the board or is the problem groupthink on the board?
Does the good professor honestly think that shareholders would have snuffed this problem out had they had more power? Is there any evidence that VW investors had identified this problem at VW and just could not get anyone at the company to listen to their concerns? The whole point of VWs deception was to avoid the real costs of engineering cars that did what they claimed they did in order to sell more cars and increase profits. VW shareholders were beneficiaries so long as these practices improved financial returns.
I suspect this scandal is the result of bad/failed internal operational processes and corporate culture, much like Enron and BP. BTW, shareholders didn't snuff out those problems either. This is why regulation is so important. Let's stop pretending we outsource corporate oversight to investors.
Does the good professor honestly think that shareholders would have snuffed this problem out had they had more power? Is there any evidence that VW investors had identified this problem at VW and just could not get anyone at the company to listen to their concerns? The whole point of VWs deception was to avoid the real costs of engineering cars that did what they claimed they did in order to sell more cars and increase profits. VW shareholders were beneficiaries so long as these practices improved financial returns.
I suspect this scandal is the result of bad/failed internal operational processes and corporate culture, much like Enron and BP. BTW, shareholders didn't snuff out those problems either. This is why regulation is so important. Let's stop pretending we outsource corporate oversight to investors.
4
Is some sort of VW circular firing squad going on here? Because the title suggests the rigged pollution results started in the boardroom, but the body of the article then starts blaming unions, which are also in the boardroom.
On the other hand what I've read and heard suggests that the rigging the pollution controls via software would have required a closely held group.
Seems to me they are spreading the guilt here, as if all 600,000 workers will soon be accused as complicit.
I am no expert on any of this, but am I supposed to believe that VW deceit is endemic? Because if so... God help the entire German economy! And owners of any VW-related vehicles.
On the other hand what I've read and heard suggests that the rigging the pollution controls via software would have required a closely held group.
Seems to me they are spreading the guilt here, as if all 600,000 workers will soon be accused as complicit.
I am no expert on any of this, but am I supposed to believe that VW deceit is endemic? Because if so... God help the entire German economy! And owners of any VW-related vehicles.
3
Fascinating that the CEO claims (and I believe him) that he knew nothing about this issue. But that begs the question- if he doesn't know about something so massively corrupt, what DID he do to earn his great big salary? what else does he know nothing about? It is moments like this where we should look at CEO compensation, and regulate it based on the most good for the share holders and society, not just the board of directors.
2
Volkswagen may be right about their dismissal of electric cars if powered by coal power plants. Of course, coal is going slowly away in the U.S. But coal does not produce the nitrogen oxides that is the focus of some of the limits on car exhaust that VW was evading.
Volkswagen sounds like the Lance Armstrong of car manufacturers. He was also right about doping being the only way to win in a sport where many of the best do it. The arrogance sure is the same.
Volkswagen sounds like the Lance Armstrong of car manufacturers. He was also right about doping being the only way to win in a sport where many of the best do it. The arrogance sure is the same.
4
Any centralized power generation is generally achieved with far more efficient turbines (max. 90% efficient at converting chemical energy to kinetic energy) vs. reciprocating engines (pistons, max. 35% efficient even if idealized and frictionless). Even considering electric transmission losses, which can be mitigated with decentralized energy production as is the case in Germany's growing renewable energy sector, the results may be, at worst, a wash for the pure-electric car. Regenerative braking even mitigates the extra battery weight (kinetic energy of the battery pack contributes to the capture of energy on braking). I can't quote real world numbers concerning electric car systemic efficiencies, but just going hybrid has resulted in a leap from cars averaging at best 35mpg to, now, 50+ mpg in real-world use. Plug-in hybrids can further reduce inefficient car-located fuel use by another factor of two in average use cases (e.g.: not a long road trip). Pure-electric vehicles, in turn, get their "fuel" from utilities that are far easier to regulate than each and every tailpipe: if every car were electric, pollution would only be as bad as the regional generation technology, which could evolve in a more orderly way over time than the car-buying habits of individuals. So the assertion you refer to - that going electric is a case of American regulatory overreach to the German engineers at VW - is one that should be challenged. That policy may be just what we need.
It would be pleasing to the soul to see every last non-union board member imprisoned for life.
1
I was wondering why in the 7 years since this started that there were no whistleblowers. This article explains a lot about the mentality at VW.
3
There is a broader issue here. When directors and top executives of a company in a competitive industry set a goal to become number one in the industry, they should also state how the goal is to be accomplished. The goal, which may not even be possible, puts subordinate managers under intense pressures to cheat. Unless the directors and executives assure the subordinates that cheating will be worse for them than missing the goal, and monitor what happens very closely, a VW type event is highly likely.
5
What a ridiculous premise: labor should not have representation on corporate boards because they care about jobs? What is he implying? That US corporate boards--that exclude labor--function perfectly or even marginally better? They don't. A board guided solely by next quarter's profits and the almighty dollar is far more likely to approve dubious, illegal and fraudulent practices (e.g., the GM ignition scandal, the peanut butter scandal, BP Deepwater Horizon, sourcing from sweatshops, you name it). If you would have told the labor representatives on the VW Board about the defeat device, the vote for long term job gain and security would have been a vote AGAINST fraud, which will undermine trust in the company, threatening sales, profits, AND jobs. Labor's interests are for the long term life of the company, not next quarter's gains.
16
How many times are we going to trust companies' to operate and function honestly - the "regulate themselves" idea? We've seen this movie plenty of times before and quite recently - Enron, WorldCom, the Wall Street banking system and the 2008 global financial crisis. Fool me once....
4
This article seems to be countenancing a strong anti union, anti-labor attitude that's articulated by the various sources quoted. It's as if the entire debacle is being blamed on co-determination. Toyota produces cars with fewer workers because it employs a "lean and mean" policy. Germany's industrial policies are way more protective of workers.
5
As with GM vehicles, I will now add VW to my "Never Buy" list.
2
"Moreover, "there is no other company where the owners and the unions are working so closely together as Volkswagen," he said."
The Times countenances this anonymous informant's implication that this is a bad thing.
But labor/management collaboration is consistent with Germany's laudable policy of mitbestimmung, or co-determination, which gives labor a strong voice in corporate decision-making, particularly concerning the organization of production, in many cases by electing members to works councils. This policy is enshrined in a series of legislative acts starting in the early 20th century.
Obviously, there's no equivalent in the U.S., especially now that industrial unions have been so disempowered.
Maybe the anonymous informant now works for Nissan, a notoriously anti union corporation.
The Times countenances this anonymous informant's implication that this is a bad thing.
But labor/management collaboration is consistent with Germany's laudable policy of mitbestimmung, or co-determination, which gives labor a strong voice in corporate decision-making, particularly concerning the organization of production, in many cases by electing members to works councils. This policy is enshrined in a series of legislative acts starting in the early 20th century.
Obviously, there's no equivalent in the U.S., especially now that industrial unions have been so disempowered.
Maybe the anonymous informant now works for Nissan, a notoriously anti union corporation.
8
Does Volkswagen realize that many people who thought they were buying fuel efficient, lesser polluting cars will never ever buy a Volkswagen again? Do the rest of the the board rooms and titans of industry subject to regulations around the world realize this? It's time for a revolution - a revolution for accountability, and for a commitment to responsive regulation.
3
One theme recurring in this article echoes my first thought: German auto-makers are steeped in a cultural reverence for engineering, with the greatest goal being efficiency. To the builders of German cars, and in many cases to those who buy them and who work on them, anything that interferes with the extraction of horsepower from an engine is simply evil. When the EPA forced Nashville to institute emissions testing, I know of at least one BMW mechanic whose customers would visit him every year to have their emission-control devices refitted and the engines detuned to their meagre "controlled" power until they would pass their tests. Then the cars would come back, the air pumps etcetera pulled off, the engines re-tuned for another happily polluting year.
This is a mindset more common than some seem to think among car enthusiasts. For that reason, while I'm sure many sincere environmentally sensitive VW owners will never buy another, those drivers who see a car's prime goal as "Turning gasoline into fun" – and there are many – will shrug and say, "Too bad they got caught." That seems callous, and of course it really is, but as long as we have elected officials riding to the defense of the coal industry it's hardly surprising that a lot of car freaks feel they're carrying a disproportionate burden.
This is a mindset more common than some seem to think among car enthusiasts. For that reason, while I'm sure many sincere environmentally sensitive VW owners will never buy another, those drivers who see a car's prime goal as "Turning gasoline into fun" – and there are many – will shrug and say, "Too bad they got caught." That seems callous, and of course it really is, but as long as we have elected officials riding to the defense of the coal industry it's hardly surprising that a lot of car freaks feel they're carrying a disproportionate burden.
I am not surprised that the author wants to spill some of the blame on to the German labor unions: Never waste a crisis when there is an ax to grind. According to the article, unions are guilty for wanting full employment.
What is wrong with full employment? Does the author prefer a large mass of the unemployed to depress wages and benefits?
What is wrong with full employment? Does the author prefer a large mass of the unemployed to depress wages and benefits?
10
The problems at Volkswagen began with GREED, and not only in the Board Room. Although the VW emission controversy is a scandalous one, it however, has not killed anyone.
Where there is smoke, there is fire! The next step should be for an investigation to be held into all recent recalls on VW vehicles, i.e. the 2014 Safety Recall 9727 - Fuel Pump issue, which caused 2009-2014 VW Tiguan's to stall out. I should know, as I had a 2010 Tiguan that both attempted to stall, and often stalled out completely. I fought with the dealership where I had purchased my car, regarding this issue, from November 2013, even before receiving the recall notice, until two days ago, at which time we finally came to an agreement in regard to the issue. Our agreement in no way negates the fact that they let me continue to drive an unsafe car for two years, in the hope that I would either give up, or just sell it or trade it in elsewhere. In good faith, this was not an option for me.
For the sake of others who continue to have Volkswagen issues...issues that could possibly result in severe injury, or even death, it is my hope that those in power do the right thing, and investigate Volkswagen to the fullest extent on ALL issues, and not remain focused solely on the emissions scandal.
Where there is smoke, there is fire! The next step should be for an investigation to be held into all recent recalls on VW vehicles, i.e. the 2014 Safety Recall 9727 - Fuel Pump issue, which caused 2009-2014 VW Tiguan's to stall out. I should know, as I had a 2010 Tiguan that both attempted to stall, and often stalled out completely. I fought with the dealership where I had purchased my car, regarding this issue, from November 2013, even before receiving the recall notice, until two days ago, at which time we finally came to an agreement in regard to the issue. Our agreement in no way negates the fact that they let me continue to drive an unsafe car for two years, in the hope that I would either give up, or just sell it or trade it in elsewhere. In good faith, this was not an option for me.
For the sake of others who continue to have Volkswagen issues...issues that could possibly result in severe injury, or even death, it is my hope that those in power do the right thing, and investigate Volkswagen to the fullest extent on ALL issues, and not remain focused solely on the emissions scandal.
4
NYT should have their own emission control checked perhaps.
Germany's corporate structure has nothing to do with this fraud and scandal. VW's internal culture has. In all honesty a corporate governing structure that shares the power with both the labour and the local government is to be copied by the western world and not derided. Wolfsburg is not Detroit for that very reason, and even if VW folds completely as a result of this scandal it still won't become one. I would love to have the author of this piece explain in depth why a high rate of local employment is bad for a corporation or for any country's economy for that matter.
That being said this VW stunt must be the absolute dumbest ever. With the amount of independent testing that's done in the industry, it's an absolute miracle the deception lasted this long. How they could possibly think they could get away with this?
There's no question a major purge has to happen at VW and the ones found responsible should be punished according to the role they had to play but this "news" piece does nothing to further our understanding of what actually happened.
For a tabloid piece this would be a fantastic example of investigative journalism. For NYT standards it fails miserably.
Germany's corporate structure has nothing to do with this fraud and scandal. VW's internal culture has. In all honesty a corporate governing structure that shares the power with both the labour and the local government is to be copied by the western world and not derided. Wolfsburg is not Detroit for that very reason, and even if VW folds completely as a result of this scandal it still won't become one. I would love to have the author of this piece explain in depth why a high rate of local employment is bad for a corporation or for any country's economy for that matter.
That being said this VW stunt must be the absolute dumbest ever. With the amount of independent testing that's done in the industry, it's an absolute miracle the deception lasted this long. How they could possibly think they could get away with this?
There's no question a major purge has to happen at VW and the ones found responsible should be punished according to the role they had to play but this "news" piece does nothing to further our understanding of what actually happened.
For a tabloid piece this would be a fantastic example of investigative journalism. For NYT standards it fails miserably.
10
The key issue is is corporations make cost/benefit decisions on environmental regulations and ignore them to meet revenue and profit goals.
US oil and gas companies in the South and South West routinely ignore EPA requirements on channel dredging, treatment of drill waste with impunity.
Gold Mining companies pay little for mining rights, leave huge wast sites,
to avoid clean up costs. When rivers run Gold with waste, we want to blame EPA?
Well paid lobbyists write environmental legislation and campaign contributions allow these corporate raiders get away with this.
Wake up, no go back to sleep.
Hypocrisy at its Worst!
US oil and gas companies in the South and South West routinely ignore EPA requirements on channel dredging, treatment of drill waste with impunity.
Gold Mining companies pay little for mining rights, leave huge wast sites,
to avoid clean up costs. When rivers run Gold with waste, we want to blame EPA?
Well paid lobbyists write environmental legislation and campaign contributions allow these corporate raiders get away with this.
Wake up, no go back to sleep.
Hypocrisy at its Worst!
7
What are Germany's protections for whistleblowers? Probably plenty of VW's are sold in Germany for use by police and other governments. Now the governments didn't get the expected value of their purchases so there is a potential financial claim against VW. Under American law a VW employee could have received a percentage of discovered fraud against the government.
To get the complete picture on pollution in car production and operation of electric cars, you have to include the environmental impact from mining lithium (for the batteries), refining, battery production, shorter life than the car, and most of all power production- including the power loss during charging and discharging. Coal fired power-plant do also have a low efficiency as well.
5
The essence of game theory - if there is more upside than downside, it is rational for people to cheat (think of cycling). That said, we can easily shift the propensity to cheat through the issuance of mandatory harsh and lengthly jail terms for white-collar workers are deathly afraid of prison.
2
I agree with many other comments. The article takes a couple of big leaps to make the argument that the fraud committed was a direct result of structure of the board of directors at Volkswagen. Every corporation and entity given governing power is constantly faced with conflicting goals such as full employment and maximizing profits, efficiency vs. cost or regulation compliance. Can structure be a factor? Of course, but the largest factor is always leadership and the individuals that make those choices.
3
Germany, just factually, has always been about nationalism, uber alles. There may be apologies but it's hard to imagine there is remorse. The company's slogan has been "Das Auto" ("People's Car".) Perhaps it should be "Die Luge" ("The Lie") as it's a long-standing tradition.
2
Das Auto means The car
3
"Professor Elson emphasized ... that maximizing employment shouldn’t be a primary goal of a board, whose purpose is to monitor management for a company’s investors and ensure the long-term health and profitability of a company." Ayn Rand would approve of your remark, Prof. Elson.
However, VW is owned 20% by local government and 50% represented by its workers who are huge stakeholders, just as are investors like Qatar. Does Elson suggest that VW should exist for the interests of foreign investors over those of its workers and elements of local government? Such a free-market view may sound nice, but does not address the long European experience in how cooperation between unions and management can improve production, quality, and reduce labor troubles.
If high employment should not be a corporate goal, then neither should reducing workforce size. Profits, quality, improved process, sustainability, and regulatory compliance (being a good corporate citizen) are proper goals. If 'Corporations are people', then they must not disdain their stakeholders, including workers and governments where they conduct their business.
Laws apply to the rich and powerful, too. This article shows how Ayn Randian attitudes can lead to corporations that deliberately break laws because they think they know better. Weak laws on power plant emissions do not mean that laws about auto emissions are to be disregarded.
However, VW is owned 20% by local government and 50% represented by its workers who are huge stakeholders, just as are investors like Qatar. Does Elson suggest that VW should exist for the interests of foreign investors over those of its workers and elements of local government? Such a free-market view may sound nice, but does not address the long European experience in how cooperation between unions and management can improve production, quality, and reduce labor troubles.
If high employment should not be a corporate goal, then neither should reducing workforce size. Profits, quality, improved process, sustainability, and regulatory compliance (being a good corporate citizen) are proper goals. If 'Corporations are people', then they must not disdain their stakeholders, including workers and governments where they conduct their business.
Laws apply to the rich and powerful, too. This article shows how Ayn Randian attitudes can lead to corporations that deliberately break laws because they think they know better. Weak laws on power plant emissions do not mean that laws about auto emissions are to be disregarded.
17
If indeed the board was aware of the deceptive software, it shows not only insular thinking, but short-sighted thinking as well. No matter how clever the software, it was inevitable that it would eventually be uncovered. Yet there appeared to have been no thought given to what would happen when it did. Their all-important sales would fall off a cliff.
The German people, as a whole, have shown they are committed to environmental stewardship. They are now challenged to devise a way of keeping their industry in line. As are we, in this country.
The German people, as a whole, have shown they are committed to environmental stewardship. They are now challenged to devise a way of keeping their industry in line. As are we, in this country.
8
I think this has less to do with corporate governance issues and more with lax regulations and testing compliance in the European Union. Carmakers can literally shop for their results by choosing the testing facilities that suit them best. Additionally these tests provide no indication of how these cars actually behave on streets. e.g. recent studies have shown the difference between fuel consumption indicated in the sales brochure and actual consumption is on the average 2 percent in the US whereas in Europe this number averages 37 percent and in extreme cases can go as high as 70 percent. The lawmaking and probably the business environment cater to these companies and assuming turn a blind eye purposefully. I wouldnt be astounded if more european car makers were affected by this and also american car makers that sell in Europe. Although admittedly their sales numbers are much lower than vice versa.
9
During the rise of VW over the past several years, the influence of Labor on the board was heralded as a model for corporate governance in a world where workers' issues were sidelined against the interests of growth and profitability. The Times published that narrative as well.
Now, we are told the very structure of the board - which has not substantially changed in that time - was a dysfunctional time bomb waiting to go off.
I wish the Times would pick a story line and stick to it. But I guess shifting times demand shifting narratives. Otherwise the Times would have gotten it wrong.
Now, we are told the very structure of the board - which has not substantially changed in that time - was a dysfunctional time bomb waiting to go off.
I wish the Times would pick a story line and stick to it. But I guess shifting times demand shifting narratives. Otherwise the Times would have gotten it wrong.
3
The NYT continues to overreach. Let's find a couple of people who support our negative opinion of something and then publish it as investigative reporting. What hogwash.
Time to switch to the WSJ.
Time to switch to the WSJ.
6
Look at the numbers comparing Toyota to Volkswagen. Volkswagen will not survive long term in a competitive world while taking twice as many people to produce the same number of cars. That is a reality!
It really doesn't matter what the German Government does. Nor does it depend on solving the current problem. Volkswagen is simply not that much better. If they could have solved the diesel pollution problem while maintaining road performance, don't you think they would have? After all, they have had years!
It really doesn't matter what the German Government does. Nor does it depend on solving the current problem. Volkswagen is simply not that much better. If they could have solved the diesel pollution problem while maintaining road performance, don't you think they would have? After all, they have had years!
1
@ Gene
Er...VW recently overtook Toyota as the world's largest auto manufacturer.
Er...VW recently overtook Toyota as the world's largest auto manufacturer.
4
I think that the 600000 employees refer to the overall employment of the Volkswagen Group, which consists of 12 different brands. Cars such as Porsche, Bentley, Bugatti, Lamborghini and Audi are much more sophisticated and thus require more manpower, but also earn way more revenue. In fact, Porsche is the most profitable car company in the world. So just comparing the employment numbers is too simple.
2
So what? GM, at one time, was the largest.
The author seems to be saying we should blame Labor for trying to preserve jobs, when they should be looking out for the profits of investors.
9
This scandal was revealed and within days the VW CEO resigned. It's outrageous that the too big to fail banks engaged in financial scams for years which blew up the global economy, from which we have yet to recover, even with whistle-blowers like Alayne Flieschman of JPMorgan Chase, and Richard Bowen of CItigroup. But the CEOs remain in place. Does this reflect the arrogance of our financial services sector titans?
14
Deliberate fraud is a criminal act and must be treated as such.
2
This article essentially says that unions being part of management was and is the problem. So why don’t the Germans just change to the kind of corporate governance we have here so they too can share periodically soaring unemployment, large numbers of people paid wages they cannot live on and industry and government delaying acting on environmental issues until they can milk every last bit of profit out of dirty fossil fuels?
45
Corporations make cost benefit decisions to flout the rules all the time. Not sure why having labor on the board and a policy of maximizing employment is described as a cause of this fraud. The engineers sought an easy way out of the problem that their diesel cars could not run powerfully while meeting emission standards. But for the University researchers, we never would have known.
25
No engineer would implement such a system without explicit (if undocumented) management approval. It simply isn't possible in such a large organization that manufactures expensive and complicated products. Sure, engineering is complicit, but the decision to put in the cheat requires broad consent, especially in management.
3
This is largely baloney. You could make the same charges of incestuous behavior about scores of corporations in the US starting with the NYT and News Corp. Nor is the commitment to maximizing employment by German corporations anything unusual in Germany as the article states. It's a fundamental part of the German social ethos. Some US economists may not like it but I'd say the German economy is more efficient and effective than most so if it's not broke why fix it. Then there's the products that come from VW, Audi and Porsche which are absolutely outstanding so they must be doing something right. This emissions situation is amazing. How it was ever allowed to happen needs to be established and those responsible held accountable but this sort of vague "It's all a cultural problem" where Stewart rounds up comments from anonymous competitors and sundry other worthies who probably have agendas is nonsense. Even the Nazis get a walk on role.
14
Thank you John. I was going to make the exact same points. Shareholders are not the only stakeholders- factor American corporations have ignored. The root cause of the fraud is not co-determination, unions or full employment. It is spelled out but glossed over in the article- engineers and board members contemptuous of regulations
6
I totally agree. Welcome to the NYTimes, the newspaper of editorial agendas.
4
More heat than light in this comment. I would not cite the couple of rental VWs I've driven recently as superb -- very happy to keep my Honda. Would you list this company with this Board structure as a Buy?
1
The comments attributed to the VW engineers are very interesting. Not only do they leave the impression that the engineers thought they knew better, but it raises the question as to who was really running the company, and how high up did it go?
2
I lived long enough in Germany; I'm not surprised at all, it is so entrenched in the culture, that nothing is exposed, there is no real separation of the Judicial and the Executive branch at all level of government. This is a society controlled by the Few, and the "Government" which looks more and more like a regime caters to the Few. Corruption is Germany is everywhere, at the highest level. What would seem completely unethical and immoral to a North American is considered normal business here.
4
VW has yet to see the Class Action lawsuits in the U.S. The Complaints are being drawn up as I type. In addition every owner of an effected auto has a fraud claim in the sale of the vehicle. VW was selling a vehicle that did not comply with emission standards but represented to owners that it did. It therefore lied about performance too. All of these cars cannot now be legally driven in the U.S. I would suggest that every VW owner effected drive to the dealership leave their car there underwarranty repair and take a loaner at VW expense . Also those VW owners who are still within the provisions of the Lemon Law may have the right to a complete refund. Remember you bought a car that would have X performance and now you are told after retro fit it will have only Y performance. That is not what you bargained for and VW knew it and misrepresented the specs of the car. You want your money back. Be the first on your block and commence your action as soon as possible.
2
Someone (or many) very high up in the VW hierarchy needs to go to prison. The peanut butter magnate is there, no doubt willing so share thoughts on ethics and morality. Governments, businesses, and individuals do what they have to do in the short term to "succeed" - some are just too hungry, selfish, and stupid to take the longer and morally sound paths.
4
If I recall correctly AG Loretta Lynch recently stated "We will go after the Fraudsters". If the VW fiasco is not a test case for her determination I definitely will look at everything anyone from DOJ saas with a very jaundiced eye. I should say a more jaundiced eye than I already vo. FIFA is really chump change compared to the VW situation.
2
I question the editorial judgement going on here.
VW has two boards like many German companies- a Board of Management and a Supervisory Board. It has yet to be shown or discovered exactly who knew what and at what time and second guessing based upon assumptions or politics is not in anyone's interest. If people are shown to have knowingly approved the actions involved in making these engines cheat on the emissions tests or to have been willfully ignorant, they should be dismissed and possibly charged under criminal complaints for conspiracy. If they are found to have been negligent in their duties they should also be dismissed.
I own a VW (Gas) and own shares in the company, but think many aspects of the tone of articles reflect "homer" reporting and not detached journalism. GM was found to have knowingly sold and not recalled millions of cars with defective ignition switches that have killed well over 100 people - this after bailouts of GM, GMAC, Delphi (all parts of the former GM)- the dumping of unfunded pensions and all the rest that cost the US taxpayer tens of billions that will never be repaid. No cries that that knock the US off it's high horse, but the VW case prompts an article that talks about how Germany has been taken down a notch and needs to shut up or something.
This "Memo from Germany" needs review by the Public Editor as it is opinion and not journalism:
A car scandal shoves Berlin off high ground.
I expect better from the NYT.
VW has two boards like many German companies- a Board of Management and a Supervisory Board. It has yet to be shown or discovered exactly who knew what and at what time and second guessing based upon assumptions or politics is not in anyone's interest. If people are shown to have knowingly approved the actions involved in making these engines cheat on the emissions tests or to have been willfully ignorant, they should be dismissed and possibly charged under criminal complaints for conspiracy. If they are found to have been negligent in their duties they should also be dismissed.
I own a VW (Gas) and own shares in the company, but think many aspects of the tone of articles reflect "homer" reporting and not detached journalism. GM was found to have knowingly sold and not recalled millions of cars with defective ignition switches that have killed well over 100 people - this after bailouts of GM, GMAC, Delphi (all parts of the former GM)- the dumping of unfunded pensions and all the rest that cost the US taxpayer tens of billions that will never be repaid. No cries that that knock the US off it's high horse, but the VW case prompts an article that talks about how Germany has been taken down a notch and needs to shut up or something.
This "Memo from Germany" needs review by the Public Editor as it is opinion and not journalism:
A car scandal shoves Berlin off high ground.
I expect better from the NYT.
15
It s fiasco for VW. The question is, if this is just the peak of the iceberg in the car industry?
2
I am quite jaded. The emergence of free press and the disappearance of deference towards any established institution reveal the universal corruption underlying most human endeavours. There is not a day when the casual peruser of the daily news does not stumble upon another 'scathing' revelation about melamine in baby milk, sexual deviancy at prestigious universities or in the corporate world.... I for one have lowered my expectations for high standards from the part of the rich and powerful who are just as prey to their lower instincts as any slum dweller or uneducated rustic.
A couple of points. The VW scandal is not about the US. It was uncovered in the US after a European advocacy group (ICCT) commissioned the U of W. Va. to check the results between testing for car emissions in a lab and under real-world driving. For the past couple of years, the ICCT has been questioning whether EU emissions test procedures allow automakers to game the system and get much better "official" results than actually produced under normal driving. But the US has stronger product liability and regulatory enforcement mechanisms than the EU, so it was unsurprising that the ICCT would do testing in the US where the California Air Resources Board and the EPA are well-positioned to take action.
Moreover, of the 11 million affected vehicles, only 482,000 are in the US. The US is a minor market for VW (although the company wanted to change that). Diesel cars are a very small segment in the US compared with Europe.
The digression on the purpose of a board of directors is beside the point. This is about regulatory systems, enforcement, and corporate culture. The notion that this wouldn't have happened if VW had been more focused on shareholder wealth and profits than on job creation and security is wholly unsupported. We've had more than enough scandals involving profit-driven companies to prove that point. The VW debacle is about insularity and arrogance. VW thought it could get away with breaking the law. They were wrong and now, VW will pay the price.
Moreover, of the 11 million affected vehicles, only 482,000 are in the US. The US is a minor market for VW (although the company wanted to change that). Diesel cars are a very small segment in the US compared with Europe.
The digression on the purpose of a board of directors is beside the point. This is about regulatory systems, enforcement, and corporate culture. The notion that this wouldn't have happened if VW had been more focused on shareholder wealth and profits than on job creation and security is wholly unsupported. We've had more than enough scandals involving profit-driven companies to prove that point. The VW debacle is about insularity and arrogance. VW thought it could get away with breaking the law. They were wrong and now, VW will pay the price.
6
The problem actually starts in the German politics, where there is a similar similar revolving door system, through which politicians readily move into the boardroom. This is even more egregious with the partially state-owned Volkswagen, where two members of the board are in fact appointed by the State of Lower Saxony.
The entire system of the German unequal taxation for gasoline vs. diesel is a consequence of a deep-seated politics/industry collusion. It started as a back-door subsidy for the trucking business, and evolved into pure protectionism for the car industry. Even apart from the Volkswagen manipulation, the German diesel fetish is creating a toxic environment for hybrid and electric vehicles, where the German car makers are already technologically falling behind.
The entire system of the German unequal taxation for gasoline vs. diesel is a consequence of a deep-seated politics/industry collusion. It started as a back-door subsidy for the trucking business, and evolved into pure protectionism for the car industry. Even apart from the Volkswagen manipulation, the German diesel fetish is creating a toxic environment for hybrid and electric vehicles, where the German car makers are already technologically falling behind.
3
Do we have any proof that the software modification was done at the command or with the knowledge of the board? Do we have a smoking gun that ties the unions or Porsche family to this? How about waiting for some facts before writing this hit piece?
By the end of the article I had to double check to make sure I wasn't on the Fox News site. Clearly unions are the target of this piece.
Yes, let's just have profit and investor oriented management for all corporations. That surely would eliminate all such scandals. Right.
Maybe if unions were on the boards of GM and Toyota, the deaths from the recent scandals of those companies could have been avoided. How about some analysis of that proposition?
By the end of the article I had to double check to make sure I wasn't on the Fox News site. Clearly unions are the target of this piece.
Yes, let's just have profit and investor oriented management for all corporations. That surely would eliminate all such scandals. Right.
Maybe if unions were on the boards of GM and Toyota, the deaths from the recent scandals of those companies could have been avoided. How about some analysis of that proposition?
3
Writing this story as if it were all about the defect of VW's "kultur" is a mistake. All the companies have worked to circumvent exhaust regs and a timeline--along with some real investigative reporting--will make that clear.
Let's be clear: heads should roll at VW. But if we want cleaner cars to roll, and air that our children can breath, the heads will need to keep on coming.
Let's be clear: heads should roll at VW. But if we want cleaner cars to roll, and air that our children can breath, the heads will need to keep on coming.
4
The "made in Germany" tag has been heavily tarnished over the years and one day will be fairly meaningless. Their products are inferior to those of the Japanese in terms of overall quality and longevity, however the German ones may occasionally have the edge in design aesthetic. Miele, Bosch, Mercedes, etc. they are extremely well-marketed -- and riding on their reputation. Meanwhile the Koreans and Chinese are catching up. In my experience, Panasonic products have been infinitely more reliable than the German ones. Unless there are big changes in quality control (a disaster-area for Mercedes in the past), and a major leap forward in innovation, German exports will suffer. Fewer and fewer consumers seem to care about legacy brands. Lexus and then Tesla went straight to the top, without having history on their side. No German manufacturer can afford to be cynical -- unless of course VW emerges unscathed from their massive deception, which seems unlikely.
1
Engineers at the helm and families (of engineers) and workers (!) in the supervisory board
are worse
than bankers at the helm and hedgefonds in the supervisory board?
GM and Ford produced cars killing people, but no problem, fine US companies, bailed out by the US Goverment some years before, no problem in the boardrooms?
And when it comes to environmental aspects.
What do you think is worse, a car with a mileage of 40 and a NoX problem or a SUV with a mileage of 15 and a CO2 problem?
are worse
than bankers at the helm and hedgefonds in the supervisory board?
GM and Ford produced cars killing people, but no problem, fine US companies, bailed out by the US Goverment some years before, no problem in the boardrooms?
And when it comes to environmental aspects.
What do you think is worse, a car with a mileage of 40 and a NoX problem or a SUV with a mileage of 15 and a CO2 problem?
2
Both are a very serious problem.
This is not about national pride.
This is not about national pride.
I would like to say that's total irresponsible from the company. The German engineering companies are seen as very reliable and that they are delivering quality product/services. Maybe that's not the case anymore. If we look back at mayor malfunction at German industry. Germanwings - aviation company the subsidiary of big parent company Luhthansa, left ill pilot to stay in capacity. We know for what is Luhthansa known - they are reliable,... Consequence was app. 200 dead. Further, The Siemens company was bribing abroad government officials to get deals and consequently pumped company revenues. Regarding the last incidence, I don't know, after three years would be all ok, nobody will now that fiasco literally happened. Is his just tip of the iceberg in automotive industry?
Those German engineers are clever, imagine figuring out a solution to actually hide emissions, instead of trying to solve the problem of emissions. Thank goodness, we still have visionaries like Elon Musk, who actually want to create 21st century products that fix 20th century problems.
3
It is always interesting to note the feigned outrage of some who wring their hands when dishonest people do deceitful things. This untrustworthy behavior by a 68 year old man is unlikely to have been his first act of corporate betrayal. We need to change our personal approach to honesty from "honest until proven guilty" to "honest until suspected to be otherwise". I will admit that I am waiting to see where the other shoe falls. Unless this Chief Executive's brain is exhibiting signs of advanced pathology, this apparent gotcha by the ERA may just be VWs way of folding while allowing them to hold some of the money in their pot. Some other company will be revealed to have an even larger cache of dastardly deeds.
It is a real pity that companies in the Twenty-first century have morals similar to Banks, Coal mines, Healthcare and Slave owning plantations of prior centuries. We consumers must be doing something wrong. Perhaps we may be forgiving before exacting severe consequences for those who betray us. I am quite happy with the 11 year old car which I have but I will not be looking at a VW product for the rest of my life. I recall taking a similar approach to similar products (cars) during the "constructive engagement" Apartheid period in South Africa. Some companies were "all in" as were their countries. I recall that Japan made derogatory statements about Black people. As consumers we need to exact severe punishment and go beyond the pale if that is possible.
It is a real pity that companies in the Twenty-first century have morals similar to Banks, Coal mines, Healthcare and Slave owning plantations of prior centuries. We consumers must be doing something wrong. Perhaps we may be forgiving before exacting severe consequences for those who betray us. I am quite happy with the 11 year old car which I have but I will not be looking at a VW product for the rest of my life. I recall taking a similar approach to similar products (cars) during the "constructive engagement" Apartheid period in South Africa. Some companies were "all in" as were their countries. I recall that Japan made derogatory statements about Black people. As consumers we need to exact severe punishment and go beyond the pale if that is possible.
It is surprising that the Times has not covered the engineering basis for the failure. Many news outlets have suggested this is a problem for all German diesels but I think this came from a design decision by VW not to use a urea based exhaust treatment system as others have done. Who knows how this happened, but my guess is that VW committed to meeting the standards without urea to keep prices and maintenance costs lower, then had to cheat when it found it couldn't. Certainly, the cheating involved at least middle management, someone in engineering who had promised to deliver results without the costs of urea treatment. Even if there were executives excluded from the decision to cheat, they should have been curious about the sudden success of a design that was not producing the required results. Anyone who knew must have considered the far larger cost if they were caught.
The VW scandal is an example of news story type. Whether an army massacre, a racist arrest, a bridge delay, a murderously defective part redesign, there will be an inquiry, a scapegoat, and a lingering doubt. Why would a trusted manager so brazenly disregard the corporate mores preached by the boss? If the VW story follows the script, a line of plausible deniability will be drawn, and those above the line will say the words "I take full responsibility" but not the words "and (of course) the consequences".
The VW scandal is an example of news story type. Whether an army massacre, a racist arrest, a bridge delay, a murderously defective part redesign, there will be an inquiry, a scapegoat, and a lingering doubt. Why would a trusted manager so brazenly disregard the corporate mores preached by the boss? If the VW story follows the script, a line of plausible deniability will be drawn, and those above the line will say the words "I take full responsibility" but not the words "and (of course) the consequences".
6
During WW2 my mother was a slave laborer at a Volkswagen plant. She made me promise to never drive a VW vehicle. Now I have another good reason.
3
Mr. Stewart recites history with more than a little bias.
Co-determination... mitbestimmung... comes under criticism only because labor holds board seats, and the shareholders profitability tends to be constrained by the desire for stable labor demand. Would that were true in the US! The only people complaining are corporate investors seeking pure profit.
As to the scandal.... let's see.... the engineers tuned the engine to meet the EPA test standards. That NOX is up under "normal" driving..(what is that, anyway?)... the fact is that the engineer who detected this very clearly stated that the cars tested good on the dynamometer....were put on the road and revealed high levels of NOX with different equipment...and without being diddled were put back on the dynomometer and passed.
The problem is that the EPA tests are flawed, not that VW met the test conditions.
Shame on the EPA, the DOJ for overzealous prosecution, the lawyers who have started class action lawsuits already, and the media for simply reporting on "the scandal" without verifying facts.
I heard an NPR interview with the engineer who discovered the problem, who very clearly stated that the vehicles were not manipulated by anyone....they simply met the test requirements unaided... but portable equipment under different conditions revealed a problem. And the interviewer NEVER inquired about the details!
VW may be inbred, but it's not a bogeyman.
Co-determination... mitbestimmung... comes under criticism only because labor holds board seats, and the shareholders profitability tends to be constrained by the desire for stable labor demand. Would that were true in the US! The only people complaining are corporate investors seeking pure profit.
As to the scandal.... let's see.... the engineers tuned the engine to meet the EPA test standards. That NOX is up under "normal" driving..(what is that, anyway?)... the fact is that the engineer who detected this very clearly stated that the cars tested good on the dynamometer....were put on the road and revealed high levels of NOX with different equipment...and without being diddled were put back on the dynomometer and passed.
The problem is that the EPA tests are flawed, not that VW met the test conditions.
Shame on the EPA, the DOJ for overzealous prosecution, the lawyers who have started class action lawsuits already, and the media for simply reporting on "the scandal" without verifying facts.
I heard an NPR interview with the engineer who discovered the problem, who very clearly stated that the vehicles were not manipulated by anyone....they simply met the test requirements unaided... but portable equipment under different conditions revealed a problem. And the interviewer NEVER inquired about the details!
VW may be inbred, but it's not a bogeyman.
8
Wow, this post ignores facts on a number of levels.
I find it odd people that some people are defending VW here. There is no question of whether they did anything wrong, VW has come out and fully admitted guilt and apologized. They have set aside a massive amount of $$ to pay fines.
This has nothing to do with a "flawed test" by the EPA. This has to do with building an operating mode in software that operates the engine completely differently during the test. Which is illegal and VW and their workers (indirectly) will pay dearly for it.
I find it odd people that some people are defending VW here. There is no question of whether they did anything wrong, VW has come out and fully admitted guilt and apologized. They have set aside a massive amount of $$ to pay fines.
This has nothing to do with a "flawed test" by the EPA. This has to do with building an operating mode in software that operates the engine completely differently during the test. Which is illegal and VW and their workers (indirectly) will pay dearly for it.
Attempting to link the way in which Germany's corporate structure shares power between labor and management has nothing to do with what happened at VW regarding the emissions cheating.
However, it does show us how in the US, where shareholder relationship to labor is predatory, profits continue to soar, while an inter-generational jobs hemorrhage continues with all the social/familial damage it causes.
For example, look at Michigan and more closely, Detroit.
Just the opposite has occurred under the German system.
Volkswagen employs 600,00 people in Germany. And that is why there are no "Detroits" in Germany.
Keep the system in Germany the way it is, conduct an investigation and if convicted fine AND imprison ALL culpable parties--corporate or labor.
The US government should use this opportunity to take a hard look at US corporate legal structure and suggest some changes so that we have the same type of "democracy" in the boardroom that Germany enjoys.
However, it does show us how in the US, where shareholder relationship to labor is predatory, profits continue to soar, while an inter-generational jobs hemorrhage continues with all the social/familial damage it causes.
For example, look at Michigan and more closely, Detroit.
Just the opposite has occurred under the German system.
Volkswagen employs 600,00 people in Germany. And that is why there are no "Detroits" in Germany.
Keep the system in Germany the way it is, conduct an investigation and if convicted fine AND imprison ALL culpable parties--corporate or labor.
The US government should use this opportunity to take a hard look at US corporate legal structure and suggest some changes so that we have the same type of "democracy" in the boardroom that Germany enjoys.
27
Fact checker: In 2012 Volkswagen stated that 45 percent of its employees were based in Germany. http://annualreport2012.volkswagenag.com/managementreport/value-enhancin...
I think it is safe to assume that, barring some major shift, well under 300,000 people work for the VW Group in Germany. Getting facts straight is crucial.
As for keeping the system the way it is in Germany: why was Federal Minister of Transport and Digital Infrastructure Dobrindt blindsided by this if reports were already out months and months ahead of time about a defeat device and a recall by VW _offered_ in 2014 and then silently carried out? He is so vocal about charging toll to people driving through Germany, but when it comes to inhaling harmful substances, where did his voice go there? There is always room for improvement, including in Germany.
I think it is safe to assume that, barring some major shift, well under 300,000 people work for the VW Group in Germany. Getting facts straight is crucial.
As for keeping the system the way it is in Germany: why was Federal Minister of Transport and Digital Infrastructure Dobrindt blindsided by this if reports were already out months and months ahead of time about a defeat device and a recall by VW _offered_ in 2014 and then silently carried out? He is so vocal about charging toll to people driving through Germany, but when it comes to inhaling harmful substances, where did his voice go there? There is always room for improvement, including in Germany.
1
Its a great car and once the lying computer program is fixed it will still be a great car to own. Until I can afford an electric, hydrogen or some other non fossil fuel alternative, I will stick with diesel.
4
It's a great car that pollutes massively.
So why did it take six years to discover this? The real problem may be that the systems in place to validate compliance with the laws aren't very effective or capable, providing the opportunity to be exploited by businesses more concerned with maximization of profit than complying with the law. Interestingly enough it wasn't a discovery prompted by our Government agencies diligence that led to this being uncovered. Lot of tax dollars spent for exceptionally lame results.
4
I'd hope the U.S. could prevent any VW from being registered in the U.S. For a span of 10 years. They clearly don't deserve their market share because this transgression is simply too outrageous.
2
The stock is still a great short; it has much further to fall. The trouble is that the VW family owns too many of the shares; borrowing the stock runs the risk of a short squeeze. Follow the stock price if you want a true picture of the outcome.
2
For all the doomsayers, look how much the ignition lock failure affected general motors - and there actually people died. The US is a much smaller market for VW than for GM, and Volkswagen will always put this in perspective.
There is already a technical solution to make the diesel motors cleaner without affecting it's performance, it is retrofittable, it is just expensive (nearly 700$).
This is no disaster for Volkswagen, i even do believe it will make Volkswagen stronger. It will end this hubris at the boardroom, this really got out of control. It seems once in a while it needs a katharsis, a ritual purification by an utterly failure, to remind a company, what they are really standing for.
There is already a technical solution to make the diesel motors cleaner without affecting it's performance, it is retrofittable, it is just expensive (nearly 700$).
This is no disaster for Volkswagen, i even do believe it will make Volkswagen stronger. It will end this hubris at the boardroom, this really got out of control. It seems once in a while it needs a katharsis, a ritual purification by an utterly failure, to remind a company, what they are really standing for.
7
"This is no disaster for Volkswagen" Mr. Weitz, I don't know what you would then categorize as a disaster given the fines and recalls that will be required and the CEO resignation. Not to mention loss of valuable reputation not only to VW but also to the much revered Made in Germany tag.
8
GM ignored a potential failure of the ignition lock for nine ? years. Around hundred casualities are tied to this failure (40 assured, 250 claims). What has become of this ? Does people still care, does it have affected the brand ?
Of course there is outrage, and i hope it lasts for a while. Especially as i just have read, that Winterkorn has resigned, but still wants to be part of the boardroom.
And expect more scam. The ICCT, which has detected this fraud, up to now just tested two brands, VW and BMW, in a totally different testing environment.
We are also going also after the lobbying of the company. There are strong and unhealthy ties between politics, boardrooms and unions. For years we used the same testbed for nearly anything, it would be naive to believe that the industry doesn't cope to that.
And it will affect the german brand, like it always does. Let me have a look at the export excess... nearly 9% of the GDP, in absolute numbers twice the chinese. There is much glee and schadenfreude here, too. But noone believes that it will affect us economical.
Of course there is outrage, and i hope it lasts for a while. Especially as i just have read, that Winterkorn has resigned, but still wants to be part of the boardroom.
And expect more scam. The ICCT, which has detected this fraud, up to now just tested two brands, VW and BMW, in a totally different testing environment.
We are also going also after the lobbying of the company. There are strong and unhealthy ties between politics, boardrooms and unions. For years we used the same testbed for nearly anything, it would be naive to believe that the industry doesn't cope to that.
And it will affect the german brand, like it always does. Let me have a look at the export excess... nearly 9% of the GDP, in absolute numbers twice the chinese. There is much glee and schadenfreude here, too. But noone believes that it will affect us economical.
1
Depending on how long it takes VW to retrofit the TDI's already in the field, it may be a disaster for VW's customers, the market value of whose cars have taken a nosedive. I own two Jetta TDI's. Great cars. 45-50 mpg.
The discussion is only now getting around to the flawed EPA testing standards!
They are the real culprits here, not the engineers who met their standards.
The discussion is only now getting around to the flawed EPA testing standards!
They are the real culprits here, not the engineers who met their standards.
The United States governmental system is totally corrupt and awash in legalized bribery, especially since the Citizens United decision. The last hope is in the Department of Justice. The Republicans under Bush tried to polticize it, but it was found out. Now the Attorney General is a woman for the first time and a former US prosecuting attorney from New York. Hopefully she will substitute prison time for the criminal executives rather than corporate fines.
That is the only way to stop lying and cheating by our humongously rich CEOs--if they fear jail and it is a probability if they commit a criminal act, then they will be deterred.
That is the only way to stop lying and cheating by our humongously rich CEOs--if they fear jail and it is a probability if they commit a criminal act, then they will be deterred.
10
Dear Mr. Wigton,
Actually Janet Reno was the first woman to hold that position. During the Clinton presidency.
Actually Janet Reno was the first woman to hold that position. During the Clinton presidency.
5
Mike, this article isn't about Citizens United. It's not about the U.S. or the Republican Party. It will be okay, Mike.
Actually, it is all about the Republican Party and their endless pandering to the rich who fund their elections thanks to Citizens United. They respond only to the Koch and Adelson lobbiests, that is if they want to have their campaigns funded through the billionaires exercise of their money free speech. It all started with the Republican controlled Supreme Court holding money was free speech, then corporations as well as individuals could donate unlimited money(free speech) to politicians, then for-profit corporations have the right of free exercise of religion--now we have government of, by and for the rich whose influence is measured only in how many $$$ they will pony up.
The dems didn't bring us to this sorry state--the Republicans did--
The dems didn't bring us to this sorry state--the Republicans did--
VW is in a HEAP of trouble. This is far worse than the Audi acceleration problems of the 1980's. My prediction: There will be firings. Heads are going to roll. Expect more than the CEO and lead engineers. Hundreds are involved, between the software and hardware engineers.
There will be recalls. The fix will alter the performance of the TDI’s by 40% or more. People will want to offload their cars. Sales will dry up. Lawsuits for financial loss and false advertising will abound. Dealerships will sue and close.
There are going to be massive fines in the USA. Nothing criminal here, but possibly in other countries. VW is the world’s largest auto manufacturer. Billions of dollars/Euro in fines are coming.
VW will hemorrhage. It will either split up and be sold to different buyers. Or, they will receive a bailout from Germany. VW is too big to fail. 600,000+ jobs are on the line. Germany is not in a position to have a weak economy with 800,000 refugees. That is a recipe for disaster..
Environmental tech and innovation will take a hit as we find out other companies have followed suit. .
EPA will change testing standards.
Finally, any company that hid this type deception for this long has other problems under the carpet. More will emerge. Something is wrong with VW’s culture. It is astonishing that it has not created checks and balances and it’s employees are not interested in reporting intentional fraud. This is the tip of the iceberg.
There will be recalls. The fix will alter the performance of the TDI’s by 40% or more. People will want to offload their cars. Sales will dry up. Lawsuits for financial loss and false advertising will abound. Dealerships will sue and close.
There are going to be massive fines in the USA. Nothing criminal here, but possibly in other countries. VW is the world’s largest auto manufacturer. Billions of dollars/Euro in fines are coming.
VW will hemorrhage. It will either split up and be sold to different buyers. Or, they will receive a bailout from Germany. VW is too big to fail. 600,000+ jobs are on the line. Germany is not in a position to have a weak economy with 800,000 refugees. That is a recipe for disaster..
Environmental tech and innovation will take a hit as we find out other companies have followed suit. .
EPA will change testing standards.
Finally, any company that hid this type deception for this long has other problems under the carpet. More will emerge. Something is wrong with VW’s culture. It is astonishing that it has not created checks and balances and it’s employees are not interested in reporting intentional fraud. This is the tip of the iceberg.
10
When new regulation is created to govern the use of computerized systems on automobiles, it will have a permanent impact on the development and price of cars. It will be called the VW rule.
DON'T bail them out. JAIL JAIL JAIL!!!! What a mess.
3
Wow, if I ever considered a VW before reading this article, I never will now. The arrogance is palpable.
7
If VW had better engineers, they could have designed a peppy diesel engine that met U.S. emission standards. But instead of being smart and honest, they were stupid and crooked. So much for the myth of great German engineering.
9
Nice segue. VW has a software scam = German engineering prowess is a myth. A few years ago Germany (pop. 80+ million) had higher exports (mainly autos and high value engineering) than the USA (pop. 300+ million). Try adult ed. Clear Thinking 101.
9
Mr. Conner, the problems only arose in the area of the low cost Diesel cars where they built in cheaper carbon-particulate filters. So its not about bad engineering (the more expansive Diesel cars have no problems) but about priorities: VW wanted to be the No. 1 car manufacturer (growth growth growth). Thereby they tried to be not too expansive. Thats why !
No word in the article about this most relevant aspect. Instead they are talking about the participation of the workforce in the board.
No word in the article about this most relevant aspect. Instead they are talking about the participation of the workforce in the board.
1
I think there is a strong chance that VW will not survive. The outrage in the US is palpable (as it should be). I think VW will get the book thrown at them. And, of course, this is easy, politically. Go after some Germans! Extradite some bad engineers to the US! We won't put our own corporate crooks in jail, so that makes it all the more delectable politically to have a corporate bad guy from elsewhere to go after!
7
OK so VW ran a huge scam, what were the government environmental agencies doing? It seems they accept a document from auto manufacturers and file it. Didn't anyone think to carry out an audit and actually test the vehicle?
1
Yep, blame corporate criminal acts on the government not the executives who committed the criminal act. The government needs to prosecute the individuals responsible now.
9
The vehicle went thru government (national and California) defined tests... the software hack deliberately falsified the results.
2
Hmmm. The articles I read state engine software can detect the test condition and generate false readings. Didn't anyone bother to read the articles?
All the reasons for the criminal decisions point to board, engineers and management but blame unions for having some representation. Poor analysis.
11
The real problem in the U.S. is that corporate executives are no longer personally liable and send to jail if it is a really large corporation or bank. They know they are too big to fail or jail. Look at the fact that Mary Barra and the former chief lawyer at GM are both walking around in street clothes.
11
Mary Barra was not the CEO of GM until just before the revelation of hiding their killer flaw. What about the guy who was CEO all those years before her?
2
I have found the Times coverage of this story incomplete and therefore irresponsible. As an auto enthusiast and a New York Times aficionado, I am at least disappointed. I found too much of the wording in the initial articles inappropriately inflammatory and therefore inaccurate. I wish the auto writers had been more involved in this coverage.
That being said ... this is still huge. This kind of self-important disregard for laws by any auto maker (or any manufacturer) is completely unacceptable. Being a dedicated VW owner, I have paid close attention to every move this company makes. They make great cars and I'm not about to rush to another brand simply because of this apparent deception. I was disappointed by Winterkorn's resigning. I had hoped he would oversee the internal investigation. I believe that he didn't know of this software function and suspect his former mentor Piech a far more likely backer of deception of this kind.
That being said ... this is still huge. This kind of self-important disregard for laws by any auto maker (or any manufacturer) is completely unacceptable. Being a dedicated VW owner, I have paid close attention to every move this company makes. They make great cars and I'm not about to rush to another brand simply because of this apparent deception. I was disappointed by Winterkorn's resigning. I had hoped he would oversee the internal investigation. I believe that he didn't know of this software function and suspect his former mentor Piech a far more likely backer of deception of this kind.
9
"Volkswagen said it employed nearly 600,000 people last year to produce about 10 million vehicles. By comparison, No. 2 Toyota employed 340,000 to produce just under nine million vehicles."
These numbers by themselves don't tell us if Toyota has more work done by suppliers that don't count as Toyota employees.
Also, we don't know which company is more profitable. If Volkswagen is using more employees to make higher end cars and is more profitable, then hiring more workers is great for their economy.
These numbers by themselves don't tell us if Toyota has more work done by suppliers that don't count as Toyota employees.
Also, we don't know which company is more profitable. If Volkswagen is using more employees to make higher end cars and is more profitable, then hiring more workers is great for their economy.
9
To me, the largest issue is that Volkswagen deliberately fiddled with the software to game the system. And admitted it did so. I cannot believe a decision like that escaped detection from higher-ups, particularly the now former CEO, who has been characterized as an engineer's engineer. Surely he must have been perplexed by how, miraculously, VW diesels were able to pass the EPA's stringent tests. The other issue is that the EPA knew something fishy was going on. For years. And it didn't act.
6
It always seems that then there is a scandal, the academics and press point to problems of corporate governance. Especially from faculty who have that worst form of job security called tenure.
But, when we look at firms/individuals that are considered highly successful such as Warren Buffet at Berkshire Hatheway or Jamie Diamond at JP Morgan (remember the London Whale?) we completely overlook corporate governance issues.
But, when we look at firms/individuals that are considered highly successful such as Warren Buffet at Berkshire Hatheway or Jamie Diamond at JP Morgan (remember the London Whale?) we completely overlook corporate governance issues.
4
On coal-based electric cars, I ran the numbers for a Chevy Spark. Counting the extra production emissions (including the diesel used for lithium mining, and so on), my electric worked out to about the same carbon emissions as a 45 mpg gasoline car. I assumed 150K mile lifetime, and off peak electricity from coal.
A conventional gas spark only gets 34 mpg- and that is the EPA estimate. Real world is probably lower.
So electrics are a small win for CO2. A much bigger win for particulates and ozone.
A conventional gas spark only gets 34 mpg- and that is the EPA estimate. Real world is probably lower.
So electrics are a small win for CO2. A much bigger win for particulates and ozone.
2
Only 38% (and declining) of US electricity is coal-generated so your results arre irrelevant. Natural gas, nuclear, and hydro - which hare all much more environmentally friendly - account for the majority, and solar is coming along nicely.
5
You are on the right track but its quite a lot of complexity involved if you want to get an accurate number. It's okay to make some assumptions but I'd caution you, they do make aa huge difference. Charging from a PV array during the day while at work say, has virtually zero cost and no emissions. And if you have to calculate the footprint of producing LI batteries, that surely involves machinery that uses fossil fuels. Try calculating the cost of extraction, transport, refining, and distribution of gas and diesel and that would make it infinitely more complex for electric and combustion fuels.
For rough calculations like this, try two comparisons. One would be the one-time costs of production and emissions, and then compare ongoing fuel (and mktor oil, etc) and emissions.
Electric will definitely come out consistently better, cheaper, and less polluting than gas or diesel. And consistently so.
For rough calculations like this, try two comparisons. One would be the one-time costs of production and emissions, and then compare ongoing fuel (and mktor oil, etc) and emissions.
Electric will definitely come out consistently better, cheaper, and less polluting than gas or diesel. And consistently so.
1
Would you please help us making sense of your numbers? Or, are you assuming all NYT readers to be environmental engineers? Thank you.
Worked overseas for a government own company that sold 49% to private investors and as soon as profit margins became the top priority, quality of service and personnel moral plummeted.
4
Sure. If only VW were government-owned, it would be ethical, efficient & competent. Like Amtrak. Or the LIRR. Or the IRS. Or the Port Authority.
4
Um, it would be government owner, by the German Government. I personally don't know their poor practices, so help me out and name some examples of German Government poor efficiency, unethical acts and incompetency.
What VW did is known as using a "defeat device." There is a long history of the industry doing that. That is autos, trucks and many companies including American companies.
The American laws were written with lobbyist input to decriminalize the use of defeat devices. Fines, but not a crime.
This article turns this industry practice into an attack on VW and Germany, and especially the German laws that mandate labor participation and corporate good citizenship in the community. Those things horrify American business far more that the cheating which the Americans themselves have been caught at many time before VW.
The NYT has run recent articles explaining all this.
The American laws were written with lobbyist input to decriminalize the use of defeat devices. Fines, but not a crime.
This article turns this industry practice into an attack on VW and Germany, and especially the German laws that mandate labor participation and corporate good citizenship in the community. Those things horrify American business far more that the cheating which the Americans themselves have been caught at many time before VW.
The NYT has run recent articles explaining all this.
38
“If you have electric cars and a coal-fired plant producing the electricity, you gain nothing.”
Precisely why we need to get rid of coal-fired plants. An electric car + solar power and you gain everything! Tesla gets this. Elon Musk's other company is a solar power company.
Precisely why we need to get rid of coal-fired plants. An electric car + solar power and you gain everything! Tesla gets this. Elon Musk's other company is a solar power company.
36
As a former vehicle test engineer at an OEM (not VW, not rigged the diesel either), I can answer this. The reason is, whenever the governments asked power generators to go clean, they would rarely budge, especially in the building of EV charging infrastructure because of 'LOW DEMAND', obvious due to low number of EVs on the road. Hence, the governments in CA, USA and EU went through the route of either emissions or fuel efficiency to start OEMs to make more xEV (x being hybrid, plug in hybrid, battery or fuel cell). With Tesla's success, again OEMs' insistence that EV is cost prohibited were proven false, and we now have Apple joining the industry in another EV form. Hence, OEM sidewise, they have done their job of releasing more EV. It is now back to the energy generators, who will have to comply by installing more charging stations and clean power plants. The ball has left the OEM court very recently, so we will see the aftereffects of EV proliferation becoming the change agent for change in the energy sector. It is very interesting, or rather exciting times for an industry insider to see this sea of change happening at such an accelerated rate. Thanks, VW. Your blunder might have pulled forward the days of clean EV.
5
You do gain something from electric cars even if the energy source is ultimately coal combustion: you gain air quality benefits in urban centers, because you move the combustion out to remote and cleaner location where you avoid the concentration of pollutants that combine to produce photochemical smog. The whole emissions reduction system that Volkswagen bypassed was aimed at smog-forming compounds, not at greenhouse gases.
7
We in the US live in a glass house. The world can see our hypocrisy. We tell the world how to do everything and thumb our collective noses as we do as we please. Now we’re rubbing those erudite noses in the mess and claiming we told you so. Rather than looking for a solution, we again go to the penalty well to solidify our position as the best in the world. GM is off the hook for killing people, now that VW is polluting the world… Obfuscation pure and simple… Pay no attention to the man behind the curtain…
14
Enron. Arthur Andersen. Volkswagen.
'Nuf said.
'Nuf said.
11
GM, BP ...
3
[[He cited...a deep-rooted hostility to environmental regulations among its engineers.]]
Ugh! That's very disappointing to hear.
Ugh! That's very disappointing to hear.
8
"Professor Roth said ..." - who is he and what are his qualifications? Most engineers I have dealt with dislike environmental measures, because the benefits are difficult to measure. The hypocrisy of politicians concerning power versus oil consumption is absolutely staggering. It costs more to build, run, and then dispose of an electric car, then to run a regular vehicle. Where is the integrated E policy?
5
"...the real mystery may be why something like this didn’t happen sooner."
It probably has.
It probably has.
12
So....Who's going to jail........
8
Is it true? Two fine American workers are being loaned to Volkswagen to help turn around the poor, beleaguered company?
Scuttlebut has it that the Bush campaign apparatus has teamed up with the Republican National Committee and they coerced the two proven management gurus to take their talents to Deutchland to lead the turnaround of this poor company.
I know that the the loss of these two jobs to Europe might hurt our job statistics, but sacrifices must be made when allied trade partners are in need.
Understand that the two "experts" became quite interested as soon as Carli was offered the prospect of having her picture placed on the U.S. million dollar bill captioned as CEO of everything delusional and Donald was swayed when guaranteed the chance to swagger forever in the limelight on Fox's new show: Swaggering Forever In The Limelight With Bieber and Kardashian.
Bon Voyage American heros.
Scuttlebut has it that the Bush campaign apparatus has teamed up with the Republican National Committee and they coerced the two proven management gurus to take their talents to Deutchland to lead the turnaround of this poor company.
I know that the the loss of these two jobs to Europe might hurt our job statistics, but sacrifices must be made when allied trade partners are in need.
Understand that the two "experts" became quite interested as soon as Carli was offered the prospect of having her picture placed on the U.S. million dollar bill captioned as CEO of everything delusional and Donald was swayed when guaranteed the chance to swagger forever in the limelight on Fox's new show: Swaggering Forever In The Limelight With Bieber and Kardashian.
Bon Voyage American heros.
4
The engineers have a very good point about electric vehicles not truly being "zero emission" when you trace the electricity back to the source. There may be a day when electric vehicles are powered by solar energy through the smart grid, but that day is not today.
3
What many people don't understand about the Germans, and being one I am allowed to say this, is how incredibly arrogant they are, how incredibly superior they think they are in every way. They are very good at many things and I give them their due in terms of work ethic, discipline, craftsmanship, and their engineering. The American Air Force and space programs would not be where they are today if the US didn't bring over the brightest and best to work for America after the second world war.
But the culture of obedience to the German ethos begins at birth. There is a proper way to do everything. Stepping out of line is verbotten and those who do are shunned. It is something you have to experience from the inside to believe. They feel absolutely no shame in cheating the system in some other country based on their assessment of that system. As I've written in other posts, they did the math on this from the outset and will pay whatever the fines will be and still come out ahead.
As to what the rest of the world thinks of them, they could care less.
But the culture of obedience to the German ethos begins at birth. There is a proper way to do everything. Stepping out of line is verbotten and those who do are shunned. It is something you have to experience from the inside to believe. They feel absolutely no shame in cheating the system in some other country based on their assessment of that system. As I've written in other posts, they did the math on this from the outset and will pay whatever the fines will be and still come out ahead.
As to what the rest of the world thinks of them, they could care less.
35
@memi
" is how incredibly arrogant they are, how incredibly superior they think they are in every way."
@memi "But the culture of obedience to the German ethos begins at birth. There is a proper way to do everything. Stepping out of line is verbotten and those who do are shunned. It is something you have to experience from the inside to believe. They feel absolutely no shame in cheating the system in some other country based on their assessment of that system. "
You must feel a very strong hate against german people, not ? And I think, You didnt lived in Germany or even visited Germany for a longer period in the recent past. What You wrote was true for the WWII Germany, but the country changed radically after WWII. "Stepping out of line is verbotten" ... hmmm...I met real cool germans stepping out of line each day and guess what ? Nothing happened to them ! Probably You have a very outdated view on Germany.
You are not very credible by speaking out those generalisation about 80 million (british counting) people, 25% with a non german background.
" is how incredibly arrogant they are, how incredibly superior they think they are in every way."
@memi "But the culture of obedience to the German ethos begins at birth. There is a proper way to do everything. Stepping out of line is verbotten and those who do are shunned. It is something you have to experience from the inside to believe. They feel absolutely no shame in cheating the system in some other country based on their assessment of that system. "
You must feel a very strong hate against german people, not ? And I think, You didnt lived in Germany or even visited Germany for a longer period in the recent past. What You wrote was true for the WWII Germany, but the country changed radically after WWII. "Stepping out of line is verbotten" ... hmmm...I met real cool germans stepping out of line each day and guess what ? Nothing happened to them ! Probably You have a very outdated view on Germany.
You are not very credible by speaking out those generalisation about 80 million (british counting) people, 25% with a non german background.
1
I would not be so sure they will come out ahead. The fines in this case should be the maximum, the legal costs will be billions. It took Audi over 10 years to recover its reputation after the unintended acceleration incidents in the mid 80s. If somehow their math showed they could do this and somehow come out a winner if they were caught, they have made a big mistake
The best and most insightful commentary on this mess, yet, in the press, and from the Times, no less.
Deutschland AG is remarkably successful, but also seriously flawed. Herewith the evidence.
Deutschland AG is remarkably successful, but also seriously flawed. Herewith the evidence.
6
I am one of the duped. I bought a 2014 Jetta TDI precisely because it combined great driving with great mileage. I was trying to be environmentally conscious...Now I want to drive around with a big sign on my car: This car cheats!
5
The engines passed the pollution tests without the computerized rigging to get better performance. So it shouldn't be that hard to reintroduce the legal computer controls. How much the auto performance will suffer is the only drawback I can see. And, as a new Passat diesel owner, that's the only thing I'm concerned about at this point.
Your mpg will go way down, the car will feel much more sluggish, and the engine will wear out sooner. I think as a Pasat tdi owner you wouldn't want that
Like most others I've read since the scandal broke, this article fails to address a key question: Why was VW so intent on expanding the number of diesel cars it sells in the US that it would knowingly engage in fraudulent behavior? Were the diesel-powered models more profitable than the gasoline equivalents? Why couldn't they just continue to sell conventional Golfs, Jettas, and Passats with gasoline engines that comply with emissions standards? I have yet to hear a good explanation for VW's strategy.
9
Gas mileage and related claims, to compete with cars like Toyota's Prius.
2
This is totally off the cuff:
1) They wanted to be number one in car sales (not unusual for organisations that set such a simplistic goal to ignore the effects on profits, quality etc.. Remember Jack Welch's dictum to be number one or two in any business you are in?
2) They charged much more for the cars due to mileage and green credentials
3) Some buyers got tax credits (VW was harvesting government subsidies)
1) They wanted to be number one in car sales (not unusual for organisations that set such a simplistic goal to ignore the effects on profits, quality etc.. Remember Jack Welch's dictum to be number one or two in any business you are in?
2) They charged much more for the cars due to mileage and green credentials
3) Some buyers got tax credits (VW was harvesting government subsidies)
a good sized passenger car/wagon that gets 40+ mpg puts them in a niche that will sell here, in addition to their gas models
1
The business world seems not to change. Everyday there are articles about indictments, huge fines and stock values shaken. I guess some in the VW Boardroom concluded that only others get caught. VW will have to replace the deficient cars with new cars, ones that are in compliance, and pay huge fines. Unfortunately no VW official will go to jail. Jail time is reserved for minorities caught shoplifting.
21
The auto industry has a long and troubled history of hostility to environmental and passenger safety concerns. And the problem is not confined to VW. Remember that Ford, GM and Chrysler all fought gov't regulation tooth and nail in the 60's, 70's and 80's, sometimes enlisting the auto workers union, complaining that common sense regulation would be ruinous to the industry. Note that as soon as recession set in and car sales declined, the auto execs threw the UAW members under the bus. When the imports grabbed significant market share, rather than innovate and build quality vehicles, consumers were given coach windows and "landau" vinyl roofs, and the workers were again thrown under the bus.
Fraud and questionable business practices are rife within the industry. Does anyone really believe the EPA estimated mileage numbers on the window sticker? Of course not. And the EPA is complicit. And don't get me started on ignition switch problems and unintended acceleration concerns that are still outstanding.
I predict that all other auto makers--domestic and imports-- are surely examining their vehicle engineering and manufacturing processes to retroactively attempt to "fix" software and hardware environmental problems theyt know to exists in their cars.
Fraud and questionable business practices are rife within the industry. Does anyone really believe the EPA estimated mileage numbers on the window sticker? Of course not. And the EPA is complicit. And don't get me started on ignition switch problems and unintended acceleration concerns that are still outstanding.
I predict that all other auto makers--domestic and imports-- are surely examining their vehicle engineering and manufacturing processes to retroactively attempt to "fix" software and hardware environmental problems theyt know to exists in their cars.
20
Has anyone ever heard of a corporate board preventing--or halting a scandal? GM? BP? Wall Street? Banks? J&J? Given their incredibly lush jobs, it is no wonder they never risk them by challenging management.
And how often do directors pay out of their own pockets--rather than the company's insurance policy--when things go horribly wrong on their watch?
And the alleged governance expert faults the union for trying to protect its members' jobs? How awful of them!
And how often do directors pay out of their own pockets--rather than the company's insurance policy--when things go horribly wrong on their watch?
And the alleged governance expert faults the union for trying to protect its members' jobs? How awful of them!
41
Markets don't seem to agree that the Volkswagen situation is "remote and isolated..." and shares of auto companies and suppliers worldwide have been beaten down bigtime the last 2-3 days. How about you share your insights on this with the imbeciles who have been selling off everything related to autos and companion industrials.
Just for the sake of argument let me assume that the article is right that VW's corporate governance isn't driven by profits as much as by job creation. What then is the mechanism that goes from that hypothesis to the conclusion that scandalous behaviour is more likely? Obviously something went very wrong, but how is that wrong driven by labour influence on the board?
69
That's a case of positive feedback, i. e. It is in the interest of all those involved. As others have commented, this might be bigger than VW and diesel as the European response to higher mileage vehicles (CAFE). "Clean diesel" is like "clean coal", no such things are possible without relaxing standards, of course. Regulations and their enforcements are the only way to ensure that the automotive and societal cultures are aligned.
Funny. The author seems to indicate that the ABSENCE of government regulation of the VW Board is at fault. The opposite is true. VW and its German bretheren have far too many government ministers and regulators involved in every aspect of their company.
Surprised they haven't killed off VW in the process.
Surprised they haven't killed off VW in the process.
2
Funny. California Man doesn't see the difference between inept government regulation and effective government regulation. If VW is killed off it will be at its own hands.
4
Obviously they haven´t. VW may have done that all by itself.
1
Right, just trust the guys who gave us Enron. Everything will be fine.
1
I don't know much about vw, but did unions really play a big roll in this? I think not.
44
What if the problem of diesel pollution is not limited to VW? When I rented a car in France a few years ago, I noticed that puffs of particulate matter could be seen coming from the tailpipe at night when the exhaust was backlit by the headlights from other cars. I took note. This seemed strange: these newer diesel cars were supposed to be clean diesels. Just how clean?
The problem with diesel cars is not limited to emitting greenhouse gases. The particulate matter from trucks, buses and older diesel cars is a known carcinogen, substances known to cause cancer in humans. Those bellowing clouds of gray to black smoke you see coming from the exhaust pipes of trucks can, in the right quantities with the right victims, create cancer and death. It could be the car makers clean up some of the gases from diesel cars, but were unable to reduce fine particles enough for safety.
I was unable to determine whether the newer diesel cars, like the one I rented, emit enough pollution to cause concern. I suspect that they do, because I repeatedly witnessed puff clouds of particulates when I accelerated the rental car. It seemed to me entirely possible that the idea of "clean diesel" involved trickery on a wide scale or, perhaps, just a case of wishful thinking. There has been at least one news story in the NY Times in the last couple of days also indicating that I might be correct in this suspicion, that the problem could be much wider than just VW.
The problem with diesel cars is not limited to emitting greenhouse gases. The particulate matter from trucks, buses and older diesel cars is a known carcinogen, substances known to cause cancer in humans. Those bellowing clouds of gray to black smoke you see coming from the exhaust pipes of trucks can, in the right quantities with the right victims, create cancer and death. It could be the car makers clean up some of the gases from diesel cars, but were unable to reduce fine particles enough for safety.
I was unable to determine whether the newer diesel cars, like the one I rented, emit enough pollution to cause concern. I suspect that they do, because I repeatedly witnessed puff clouds of particulates when I accelerated the rental car. It seemed to me entirely possible that the idea of "clean diesel" involved trickery on a wide scale or, perhaps, just a case of wishful thinking. There has been at least one news story in the NY Times in the last couple of days also indicating that I might be correct in this suspicion, that the problem could be much wider than just VW.
12
"The problem with diesel cars is not limited to emitting greenhouse gases." This is a common misunderstanding. Diesel cars actually emit FEWER greenhouse gases than gasoline cars: they get better mileage and hence have fewer CO2 emissions per driver mile. However, the flip side is that without careful control devices, diesel cars do emit more compounds that contribute to local air quality problems (smog-forming NOx and the particulate matter that you see). And, VW's bypassing their NOx-control system actually improved gas mileage and reduced CO2 emissions still further.
3
You could see particulate matter from the exhaust as you were accelerating the car? Really? Not only are diesel particulates rarely big enough to be seen with the naked eye, you would have to be seeing this while in the driver's seat presumably looking in the rear view mirror. I think you must have been seeing something else.
So, is the latest scandal at VW over emissions testing of its diesel cars something middle managers engaged in and tried to cover up from senior management (including the board), or was it something that senior executives implicitly or explicitly authorized or encouraged? Or is the problem more nuanced? For example, is it possible that senior management (including the board) didn’t know the specifics of the misconduct, but had set business goals that all but ensured corner-cutting by lower-ranked employees? Certainly, we must examine incentive structures that cause the board and senior management to make bad decisions and remain insular as to the consequences. Ultimately, It seems as though some type of regulatory scheme or governance arrangement to hold individual directors and senior managers accountable for their company's misdeeds, regardless of actual knowledge or intent, would be necessary as an incentive for top management to refrain from and stay vigilant on corporate misconduct.
10
It seems to me that the idea of a company working to maximize employment is an excellent one. It is far better than the model followed in the US, where corporations are literally psychopaths and they are legally required to recognize no obligation except their duty to maximize profits for shareholders. That sociopathic attitude is why the US system is teetering on collapse as the income inequality gap grows. Obviously, there are problems at Volkswagen, but I don't think that this relationship between management and labor is one of them. I think that the system needs more checks and balances, but that can be done without sacrificing the benefits of internal cooperation.
102
More people employed equals more people spending money equals a more robust economy. More people employed mean more revenue to the state from increased income and sales taxes. Etc. The "trickle up" theory, to coin a phrase.
1
The duty of the directors is to act in the best interests of the corporation. That duty may from time to time lead to maximizing employment, but maximizing employment is not a goal or purpose of a corporation. Any director representing labor interests is therefore conflicted in any decision which has implications to the labor force, which would be most decisions.
“People have a completely uncritical view of cars and their impact on the environment because they all make a living from the industry.”
And that is the crux of the problem. For more than one hundred years, we have come to rely upon, be committed to, and identify with our personal transport. The performance-driven thinking in corporate quarters plays to and reinforces our love. The money to be made - and other than housing and education, cars are the most expensive item in personal budgets - drives the motive to cheat in reining-in pollutants.
There are more than twice the number of people on the earth as when I first began driving. Even if a leap occurred in the development of cleaner fuels, the sheer numbers may ultimately make personal cars untenable.
What to do? Our love runs very deep; I have had many cars: strict performance machines for racing, small trucks, SUVs, sedans, as well as motorcycles and scooters. This is not uncommon, and in part explains our tolerance of industry malfeasance.
But the time has come to ask: would we rather drive than breathe?
And that is the crux of the problem. For more than one hundred years, we have come to rely upon, be committed to, and identify with our personal transport. The performance-driven thinking in corporate quarters plays to and reinforces our love. The money to be made - and other than housing and education, cars are the most expensive item in personal budgets - drives the motive to cheat in reining-in pollutants.
There are more than twice the number of people on the earth as when I first began driving. Even if a leap occurred in the development of cleaner fuels, the sheer numbers may ultimately make personal cars untenable.
What to do? Our love runs very deep; I have had many cars: strict performance machines for racing, small trucks, SUVs, sedans, as well as motorcycles and scooters. This is not uncommon, and in part explains our tolerance of industry malfeasance.
But the time has come to ask: would we rather drive than breathe?
27
problems always start in the boardrooms because its members are the real problem. Take any company that claims to be struggling and, invariably, you will find the deterioration began with the CEO and his/her band of board members.
11
As an owner of their products, and an engineer I have been following the group technical choices and strategic direction for some time. I have had serious doubts about their strategic direction and discussed them at length with colleagues in conferences. With everyone else already switching to electric powertrains, they still kept pursuing internal combustion engines, which require an increasing and more complex solution for their emissions (not easily done at a reasonable price point for their target market). In a fast evolving world where climate and emissions are becoming of primary importance, they simply couldn't get it.
Engineers know full well that it would be more efficient and impactful to clean up emissions in 200 power plants producing electricity, than trying to clean up say exhaust emissions for each one of say 100 million vehicles. And not only that, but the assumption that everyone will be charging their cars from electricity produced in a coal plant is seriously short-sighted.
I have worked with German engineers and I have to say that sometimes the confidence and smugness this article talks about helped move things along tremendously, but at other times it was a nuisance and an obstacle. I can't say this is aa trait unique to German engineers, but it was much more pronounced.
Engineers know full well that it would be more efficient and impactful to clean up emissions in 200 power plants producing electricity, than trying to clean up say exhaust emissions for each one of say 100 million vehicles. And not only that, but the assumption that everyone will be charging their cars from electricity produced in a coal plant is seriously short-sighted.
I have worked with German engineers and I have to say that sometimes the confidence and smugness this article talks about helped move things along tremendously, but at other times it was a nuisance and an obstacle. I can't say this is aa trait unique to German engineers, but it was much more pronounced.
61
Great points Nick!
1
Seriously short-sighted? How short-sighted? You need to get across the bridge to Richmond and check out the coal trains parked along 580. Sure, CA cracked down on burning coal here and aggregate buyers like Marin Clean Energy will sell you unbundled renewable credits marketed as "clean energy." But the coal power production simply went to Utah, and the juice flows into the state and groups like MCE still need to buy conventional power to back-up those unbundled credits. And, the coal rolls through just down wind of you on its way to Japan and Mexico. Many estimates put the grid about 15+ years out before truly supporting electric cars. That's more than 2 vehicles away for many drivers.
So, instead of cleaning up emissions from 100 million vehicles they should each have a toxic lump of rock to store significant quantities of electricity until needed? Right, there's no problem there.
California is currently about 7% coal powered, mostly the shift is to natural gas, not solar. When the state limited coal, production went to Utah and the juice is shipped back across state lines. As that loophole slowly expires, the coal trains run through the East Bay with huge shipments to Japan and Mexico. Different states, same atmosphere. Come check out the trains parked along 580 some time. Aggregate buyers like Marin Clean Energy will sell you unbundled renewable credits marketed as "clean energy." But they still need to buy conventional power to cover those credits. So, how short-sighted is it? The grid alone appears about 15 years away from truly supporting electric cars. That's 2+ vehicles away for many drivers.
Contrary to what many seem to believe this week, the WVU/ICCT real world study on the vehicles found them well within EPA threshold for all metrics except NOx. And the NOx emission they found isn't that far off the state fleet average for light weight vehicles, including gas. Meanwhile electric cars are rolling defeat devices. Impossible to smog and left to complex debates about whose backyard the power actually comes from and how much emissions is associated with them.
California is currently about 7% coal powered, mostly the shift is to natural gas, not solar. When the state limited coal, production went to Utah and the juice is shipped back across state lines. As that loophole slowly expires, the coal trains run through the East Bay with huge shipments to Japan and Mexico. Different states, same atmosphere. Come check out the trains parked along 580 some time. Aggregate buyers like Marin Clean Energy will sell you unbundled renewable credits marketed as "clean energy." But they still need to buy conventional power to cover those credits. So, how short-sighted is it? The grid alone appears about 15 years away from truly supporting electric cars. That's 2+ vehicles away for many drivers.
Contrary to what many seem to believe this week, the WVU/ICCT real world study on the vehicles found them well within EPA threshold for all metrics except NOx. And the NOx emission they found isn't that far off the state fleet average for light weight vehicles, including gas. Meanwhile electric cars are rolling defeat devices. Impossible to smog and left to complex debates about whose backyard the power actually comes from and how much emissions is associated with them.
In yesterday's NYT, Jack Ewing all but implicated Volkswagen's union labor force in the emissions scandal. He offered the company's alleged "struggle with high labor costs" as a possible reason for Volkswagen's decision to install the rigged detectors. Ewing offered no evidence whatsoever to support his claim.
Today James B. Stewart follows a similar tack by implying that union participation in Volkswagen's leadership structure and the opinion that "the unions won't give up co-determination without a fight" seem to lie at the heart of the scandal. Mr Stewart offers no evidence to support this except the opinions of Professors Charles Elson and Markus Roth, both academics with impeccable conservative credentials and strong ties to corporate-funded think tanks.
After reading these two stories, I'd be interested to know if the NYT will be providing actual evidence to support labor union culpability in the scandal and if the NYT intends to interview labor officials on the matter.
Today James B. Stewart follows a similar tack by implying that union participation in Volkswagen's leadership structure and the opinion that "the unions won't give up co-determination without a fight" seem to lie at the heart of the scandal. Mr Stewart offers no evidence to support this except the opinions of Professors Charles Elson and Markus Roth, both academics with impeccable conservative credentials and strong ties to corporate-funded think tanks.
After reading these two stories, I'd be interested to know if the NYT will be providing actual evidence to support labor union culpability in the scandal and if the NYT intends to interview labor officials on the matter.
148
This isn't a matter of culpability. Factually, organized labour has a much stronger voice at the table in Germany than it does elsewhere. And the German "export miracle" is driven by the conviction that someone (well, specifically a German national) losing their job is to be avoided at all costs.
This, in turn, has led to a hierarchy of values in German industry, with VW perhaps the most extreme case, where fundamental precepts, like adherence to regulations, are weighed against the impact on home country employment, in contrast to companies headquartered in other nations. Witness the Daimler and Siemens bribery scandals; if there is no other way to secure a contract for a German factory but to defy the law, it is justified in the interest of the higher order good - sustaining employment.
The German economic model is remarkably successful, but there are dark sides. Entrenching the rights of already-employed union members has beggared younger, unenfranchised workers. And placing the interests of the workforce ahead of those of the equity holders, the customers, and other key stakeholders, distorts decisionmaking and leads to moral relativity, which is revealed in all its ugliness in this distasteful episode.
This, in turn, has led to a hierarchy of values in German industry, with VW perhaps the most extreme case, where fundamental precepts, like adherence to regulations, are weighed against the impact on home country employment, in contrast to companies headquartered in other nations. Witness the Daimler and Siemens bribery scandals; if there is no other way to secure a contract for a German factory but to defy the law, it is justified in the interest of the higher order good - sustaining employment.
The German economic model is remarkably successful, but there are dark sides. Entrenching the rights of already-employed union members has beggared younger, unenfranchised workers. And placing the interests of the workforce ahead of those of the equity holders, the customers, and other key stakeholders, distorts decisionmaking and leads to moral relativity, which is revealed in all its ugliness in this distasteful episode.
2
Ceadan's comment is absolutely correct. Let me add a couple of points. Strong employee representation on the supervisory board--co-determination--is required for all large German companies, not just VW. It is not just that the German public is "used to it," but that many Germans view it as a cornerstone of the German social compact and indeed, of German democracy.
Mr. Stewart seems to think that eliminating worker representation and limiting a board's mission to maximizing profits for shareholders would increase corporate social responsibility or obedience to law. That idea would strike many people--German or American--as ludicrous.
Mr. Stewart seems to think that eliminating worker representation and limiting a board's mission to maximizing profits for shareholders would increase corporate social responsibility or obedience to law. That idea would strike many people--German or American--as ludicrous.
11
Exactly! Tell the board to stop caring about workers and - hey presto - they will suddenly start caring about society and being honest! Works perfectly here in the US. All the corporations that have outsourced all their jobs have become much more ethical since then.
The only thing the author forgot was to point out that if Germany slashed taxes on the rich, they wouldn't have needed to cheat on emissions testing.
The only thing the author forgot was to point out that if Germany slashed taxes on the rich, they wouldn't have needed to cheat on emissions testing.
1
Volkswagen's announcement that it intended to become the largest automaker in the world was received with considerable skepticism. Not that it couldn't sell a lot of cars if it wanted to, but what would it have to *change* in order to outsell Toyota. VW's higher cost structure would keep them from going head to head with Japanese companies on price. And luxury cars may have a high price tag and margin but can that make up for volume products? Would they compromise quality? (They did, at least at first.)
Well, we found out. Perhaps they never believed that they could compete in the open market to meet their (unnecessary, unwise, and ill-considered) goal, so they adopted other methods. Selling products on false pretenses can come back and bite you in ways expected and unexpected. If nothing else, VW has achieved a world-leading level of hubris.
Up to a point, I feel bad about this because they do make such bloody good cars. I've had three of them in recent years. But now the market they so feared will and should punish them severely. Perhaps their best hope now is that they will be acquired by a company that will break the logjam at the top and put it on a more righteous path. Hmm. Perhaps Sergio Marchionne...he's good at turnarounds, and he believes more consolidation in the auto industry is needed, not a bad strategic fit ... Oh man, the irony! Makes me positively giddy...
Well, we found out. Perhaps they never believed that they could compete in the open market to meet their (unnecessary, unwise, and ill-considered) goal, so they adopted other methods. Selling products on false pretenses can come back and bite you in ways expected and unexpected. If nothing else, VW has achieved a world-leading level of hubris.
Up to a point, I feel bad about this because they do make such bloody good cars. I've had three of them in recent years. But now the market they so feared will and should punish them severely. Perhaps their best hope now is that they will be acquired by a company that will break the logjam at the top and put it on a more righteous path. Hmm. Perhaps Sergio Marchionne...he's good at turnarounds, and he believes more consolidation in the auto industry is needed, not a bad strategic fit ... Oh man, the irony! Makes me positively giddy...
10
To see how the board acted, look no further at the recent movements, where Porsche head engineer was fired, the VW CEO was replaced with Porsche CEO, and the US head was fired for what amounted a sincere apology.
This movement is ridiculous. Do you see any logic in firing Porsche head of development and promoting his boss? I don't.
This movement is ridiculous. Do you see any logic in firing Porsche head of development and promoting his boss? I don't.
10
There is some logic if you dig a bit deeper. In addition to leading Porsche R&D, Wolfgang Hatz was also in charge of engine and transmission development for the Volkswagen Group...
1
Clearly this is not a culture that will do the right thing without a good whipping. The EPA should fine them the full $18 billion because they were told about the problem in 2014 and were forced to do a recall in December 2014 for the emissions problem. They got a "get out of jail free card" and just turned around and didn't fix the problem. They didn't fess up to their crimes until the US threaten to ban the sale of their 2016 models. This is clearly a sign of a corrupt culture that needs to be changed. And if $18 billion is not enough, then maybe the trial lawyers can ask for a few more billion for the owners who were defrauded.
17
Even if all the engineers' premises about the hypocrisy and futility of emission controls and electric cars are true (and I tend to agree with them on the big picture), wasn't there anyone there who said, "Ja, aber, wenn wir gefangen, werden wir geschraubt"?
1
Whether through defeat devices or other means, there appears to be significant documentation to show that all newer small vehicle diesel cars and trucks do not adhere to NOx emission standards. In that sense, VW is the canary in the coalmine for diesel but more manufacturers are going to be damaged, because the diesel industry has not sufficiently tackled these emissions issues.
Personally, as a 2015 VW Passat TDI owner, I would gladly refill DEF much more often, if that would be a way to solve the problem without any changes to efficiency and performance, which are truly great in this car.
Personally, as a 2015 VW Passat TDI owner, I would gladly refill DEF much more often, if that would be a way to solve the problem without any changes to efficiency and performance, which are truly great in this car.
1
You can't keep all of that intact with only some additional DEF (which is not much of a sacrifice to be honest).
VW marketing made everyone believe they can get everything, but now you know how. So the owners are now having to honestly decide which is a higher priority for them, the environment, or a "fun-to-drive" car. Most of the owners who commented these past few days are much closer to the latter than the former.
VW marketing made everyone believe they can get everything, but now you know how. So the owners are now having to honestly decide which is a higher priority for them, the environment, or a "fun-to-drive" car. Most of the owners who commented these past few days are much closer to the latter than the former.
1
VW will make an easy target for the next several month for virtually anyone with an axe to grind against large corporations. Viewed through the prism of all-knowing hindsight, blame will be cast in every possible direction. We should be especially cautious of those who seek to blame this on some particular feature of VW's corporate governance. The governance types will not rest until corporations are run by panels of constituency-selected experts and watchdog groups, totally divorced from the principal purpose of the business, which is to make profitable products.
Without far more information than has been disclosed to date, we have no idea how this happened and why. We don't know who at VW knew of the deception. Thus, virtually every statement in this article is self-serving prattle without the slightest bit of evidence to back it up. But it will certainly be music to the ears of those preconceived to believe that corporations are inherently evil and should be governed by persons other than those who own them.
Without far more information than has been disclosed to date, we have no idea how this happened and why. We don't know who at VW knew of the deception. Thus, virtually every statement in this article is self-serving prattle without the slightest bit of evidence to back it up. But it will certainly be music to the ears of those preconceived to believe that corporations are inherently evil and should be governed by persons other than those who own them.
4
As a VW owner, I'd like to see the lot of them indicted and convicted for fraud. A stint in a nice U.S. prison would be very helpful to teach these rich crooks a lesson.
2
Is it too much to expect corporations to follow the law? Does it hurt their feelings?
I give them three years, tops, before they are gone from the U.S. market. Dealerships will start closing in the Spring of 2016. They are toast in the U.S.
7
Now whenever I see an owner of a diesel, VW, all I can think of is, "You were duped."
Rob's comment may very well be proven to be quite astute, with his not being surprised if the German government ends up having to bail them out.
As this crisis plays out and and it could snowball very quickly, the German government will have not one (the refugees costing them pallets of Euros), but TWO crises, this being the truckload cost of bailouts, which in turn could cause the European economy to overheat, which in turn could cause another 2008 scenario to unfold.
In my mind, the refugees should take priority. Let VW twist in the wind and fail. I would rather see helpless refugees get a helping hand rather than a bunch of corporate crooks.
As this crisis plays out and and it could snowball very quickly, the German government will have not one (the refugees costing them pallets of Euros), but TWO crises, this being the truckload cost of bailouts, which in turn could cause the European economy to overheat, which in turn could cause another 2008 scenario to unfold.
In my mind, the refugees should take priority. Let VW twist in the wind and fail. I would rather see helpless refugees get a helping hand rather than a bunch of corporate crooks.
2
A fine of $37,000 per vehicle for the 500,000 or so fraudulent vehicles sold in the US would very likely fix all this pretty quickly. Too many septuagenarians on the board, too many bad apples in the executive ranks, time to clean house.
11
I am sorry, this article just sounds like jumping on a bandwagon. A primary source is an ex-executive working at a competitor who remains unnamed, and whose motives we do not know. He offers up a lot of opinion and suppositions as to how VW works that cannot be verified as true, so we do not know what is fact, it is just a picture being painted for us.
Another primary problem with the article is despite what VW has done wrong, you cannot show by looking around the world that peer companies and companies in other sectors who run on very different governance structures have not done similar things or worse. The global financial crises of 2008 that was brought on by American financial companies is a good example. The situation was similar, American banks hired credit rating agencies to police themselves, just as VW was allowed to hire its own testers. So, the credit ratings agencies blessed whatever fictions the banks wrote up, just as VW's testing companies blessed the defeat software. Reading this article, the recommendation is obvious, VW should restructure its governance to be more like the public corporations in America (and elsewhere) and the problems will go away. Given what we know about the financial crisis, how does this solve the problem? And that is before we mention recent problems at many car companies, GM, Toyota, Ford, Kia, Takata, Hyundai etc. So, it is probably better to let the facts of this story come out before offering diagnosis and recommendations.
Another primary problem with the article is despite what VW has done wrong, you cannot show by looking around the world that peer companies and companies in other sectors who run on very different governance structures have not done similar things or worse. The global financial crises of 2008 that was brought on by American financial companies is a good example. The situation was similar, American banks hired credit rating agencies to police themselves, just as VW was allowed to hire its own testers. So, the credit ratings agencies blessed whatever fictions the banks wrote up, just as VW's testing companies blessed the defeat software. Reading this article, the recommendation is obvious, VW should restructure its governance to be more like the public corporations in America (and elsewhere) and the problems will go away. Given what we know about the financial crisis, how does this solve the problem? And that is before we mention recent problems at many car companies, GM, Toyota, Ford, Kia, Takata, Hyundai etc. So, it is probably better to let the facts of this story come out before offering diagnosis and recommendations.
17
"So others have done the same."
"Why listen to a former top employee?"
And that's the sum of your position. Some position.
"Why listen to a former top employee?"
And that's the sum of your position. Some position.
1
It seems a bit of a stretch to say that because the company is managed top-down, it was inevitable that someone would decide to secretly install software to cheat on emissions standards in the United States. It's convenient to lay blame somewhere, but it's not yet clear what combination of dumb decisions and poor communication set up this debacle.
5
Part of the problem is the bought and paid for automotive press, always so eager to promote German engineering as perfection when compared to anyone else while asking no hard questions or doing any real journalism in return for their junkets. Same with their appraisal of Asian cars. And so we have this latest automotive disaster to add to exploding Japanese air bags and dishonest Korean mileage statistics from the industry press darlings; I remember the devastating "ironic" reviews of all late edition Saab products by the automotive press: that brand wasn't hip enough for them and they put it out of business; yet everywhere I go I see 9-3's still on the road, chugging along smoothly at their accurately-reported so-so mileage standards, safely performing in accidents and blizzards.
3
I don't see what's wrong with the company? It makes good cars that sell well. A company exist to make a profit. Ideally, it makes a product people like. The issue today is that VW felt it could not make a car that performed well and that met very, maybe impossibly stringent emissions requirements. This has nothing do with how well as VW drives or how well the company is doing.
The main problem seems to be that VW makes cars that use gas, and that gas creates carbon monoxide.
I drive a Porsche stick shift (a new 2015 car). I know it gets decent milage, but that wasn't a concern when I bought it. I drive for sport. I want the right to buy manual cars, but they get worse milage than new automatics. At some point, theUS Government could outlaw stick shifts or 6 cylinder engines. I love my car, and I might choose to leave the USA if it means I can't own and drive a manual 6 cylinder Porsche.
The main problem seems to be that VW makes cars that use gas, and that gas creates carbon monoxide.
I drive a Porsche stick shift (a new 2015 car). I know it gets decent milage, but that wasn't a concern when I bought it. I drive for sport. I want the right to buy manual cars, but they get worse milage than new automatics. At some point, theUS Government could outlaw stick shifts or 6 cylinder engines. I love my car, and I might choose to leave the USA if it means I can't own and drive a manual 6 cylinder Porsche.
5
You do realize that none of this scandal has anything to do with gasoline-powered vehicles, right?
3
You are completely missing the point. No one has suggested that VW autos are poor quality. I drove a Porsche for many years, and loved it, switching to BMW only because I wanted more passenger room. I like German engineering, and am willing to pay a premium to get it.
However -- there is no excuse for the dishonesty brought to light by this scandal. This can't be excused by stringent emission requirements, or the desire to make a high-performance car. it is outright consumer fraud. They say a fish rots from the head down. I will be surprised if VW survives this in anything like its present configuration.
However -- there is no excuse for the dishonesty brought to light by this scandal. This can't be excused by stringent emission requirements, or the desire to make a high-performance car. it is outright consumer fraud. They say a fish rots from the head down. I will be surprised if VW survives this in anything like its present configuration.
1
Thanks to "Mitbestimmung" VW was able to grow when times were tough years ago. The workers made sacrifices to keep VW going and reaped the benefits later on; it was - and is - a win-win situation for all concerned.
I think we should look for an answer in Mr. Winterkorn's moaning and complaining about the high costs of cutting emissions. Some directors/ executives decided to cut corners with disastrous consequences. It has nothing to do with co-determination ("Mitbestimmung").
I think we should look for an answer in Mr. Winterkorn's moaning and complaining about the high costs of cutting emissions. Some directors/ executives decided to cut corners with disastrous consequences. It has nothing to do with co-determination ("Mitbestimmung").
79
I would like to hear an answer to the VW engineers complaints about electric cars because i have wondered the same thing. What good is an electric car if the electricity is produced using coal or even nuclear power? Perhaps it's the nuclear power that's the difference. I believe Germany has said "no" to it.
The US may have plans to bring more nuclear plants online in spite of the lunacy of producing more radioactive and heavy metal waste that they can't contain properly. Living near Oak Ridge, TN gives you a negative view about nuclear anything. There are too frequent release "events" followed by newspaper articles that always reassure that it's perfectly safe! There are many reasons to doubt this.
If nuclear power is the justification for electric cars in the US, it's certainly been kept a secret. I would like to hear this answer.
The US may have plans to bring more nuclear plants online in spite of the lunacy of producing more radioactive and heavy metal waste that they can't contain properly. Living near Oak Ridge, TN gives you a negative view about nuclear anything. There are too frequent release "events" followed by newspaper articles that always reassure that it's perfectly safe! There are many reasons to doubt this.
If nuclear power is the justification for electric cars in the US, it's certainly been kept a secret. I would like to hear this answer.
1
I don't understand the logic here. At the end the unions/the workforce should have less say? So it would be better investors had more control? Investors are mostly interested in the highest profits at the worker's expenses. Outsourcing of the labor intense part of production into foreign countries with cheap labor costs is one result of such a shortsighted thinking. Isn't it smarter for a company, at least in the long run, to have a highly motivated local workforce which also earns good wages? That's one reason Volkswagen became so successful. I don't think the structure of the board lead to the current cheating problems otherwise companies under U.S. laws never would do so.
63
Is someone saying that union leaders wrote or were otherwise responsible for the faulty software? Because if not I don't understand why this article reports on the criticisms about unions. OK, people making money from investments want more money going to them and not the workers. What does that have to do with deceptive software?
99
The concluding sentence of the piece: "...I wouldn’t be surprised if the German government ends up having to bail them out.” Unlike Greece, VW is appraently too big to fail. A government rescue of VW would give the lie to self-righteous sermons about fiscal moral hazard
89
Actually, the USA recently rescued it automotive industry, making a better point of compare than Greece, I believe.
1
But despite whatever loud protests they made, the Germans have bailed out the Greeks, 3 times, so, what would be so bad to bail out their own company once. Does it not happen in America?
3
But in the case of Greece, too, it was Germany's tax-payers bailing out German banks who had made the original loans...
1
When are governments going to begin to jail these corporate criminals?
82
Politicians know that prison food isn't all that good for the apres-golf lunch buffet.
What about Blankfein, Dimon, Rubin, etc.?
2
The former governess and kindergarten teacher elected to the supervisory board? That alone should have sent the stock into a tailspin. So VW is now not only thoroughly corrupt, but thoroughly incompetent. This company is in for a very long, slow ride down to the bottom, and it's not helpful that Wolfsburg's refusal to release more information is allowing rumors to fill in the gaps. The communications team at VW is as incompetent as its board.
14
When you own half the company you get certain latitude in naming the board.
1
" So VW is now not only thoroughly corrupt, but thoroughly incompetent. This company is in for a very long, slow ride down to the bottom,"
I dont think so. They are building good cars. Only the low cost Diesel ones with the cheaper carbon black filters are in problems now.
I dont think so. They are building good cars. Only the low cost Diesel ones with the cheaper carbon black filters are in problems now.
1
Although I agree with the analysis of Volkswagen's insular governance and family feuding, I don't agree that VW's attitude regarding the environment is negative. Engineers in powertrains may have an attitude against environmental concerns, but I'm sure that's at all car companies. It's a pain in their analytical behinds.
Volkswagen has been a leader in environmental standards by recycling heat from its factory, the first company to make their cars over 90% recyclable (I think they're now 98% recyclable), the first to use recycled plastics in many areas of manufacturing and the first to use water-based paint, which is much more environmentally friendly than oil-based. They were also the first to create a recycling system for their cars in the European market--effectively becoming their own wrecking yard/recycling center. I would venture to guess that Volkswagen is amongst the most environmentally friendly automaker in the world--certainly in responsible manufacturing--and a leader.
This article features some unnecessary hyperbole, painting VW as some tyrannical company. They are not a 1970s-era General Motors. Dr. Piëch is a tyrannical leader, who made a lot of dumb decisions, but mostly great ones to get VW where it is today. Certainly, this style echoes of Mr. Jobs, who set up Apple for great success.
I'm guessing we will find the outcome of this to be a massive middle-management coverup that someone used to achieve an unattainable goal. Sad and very dumb.
Volkswagen has been a leader in environmental standards by recycling heat from its factory, the first company to make their cars over 90% recyclable (I think they're now 98% recyclable), the first to use recycled plastics in many areas of manufacturing and the first to use water-based paint, which is much more environmentally friendly than oil-based. They were also the first to create a recycling system for their cars in the European market--effectively becoming their own wrecking yard/recycling center. I would venture to guess that Volkswagen is amongst the most environmentally friendly automaker in the world--certainly in responsible manufacturing--and a leader.
This article features some unnecessary hyperbole, painting VW as some tyrannical company. They are not a 1970s-era General Motors. Dr. Piëch is a tyrannical leader, who made a lot of dumb decisions, but mostly great ones to get VW where it is today. Certainly, this style echoes of Mr. Jobs, who set up Apple for great success.
I'm guessing we will find the outcome of this to be a massive middle-management coverup that someone used to achieve an unattainable goal. Sad and very dumb.
48
They also told us that they were selling "clean diesel". If they were willing to lie about that who is to believe anything they say regarding their environmental bonafides. Not me.
10
Thanks for that commentary. I do not have car nor follow the car industry and that was all news to me.
You seem to have missed the point that Volkswagen have deliberately lied about the compliance of their products with environmental standards. In fact have gone to a great deal of effort to deceive the purchasers of their products into thinking they were relatively good for the environment.
I think this says more about their attitude to the environment than trying to reuse heat from their factories. Don't try and defend these fraudsters with a few trivial examples like this.
I think this says more about their attitude to the environment than trying to reuse heat from their factories. Don't try and defend these fraudsters with a few trivial examples like this.
5
One question I have always had about electric cars is whether they reduce pollution or just move it from moving vehicles to stationary electric power plants. And when the batteries wear out, are they disposed of in a way that does not create a new form of pollution? I have not seen an answer to these questions, but if someone has one, I would love to read it.
40
They are questions a lot of us have. So much that is high tech and seemingly efficient poses real problems in the waste stream. That downstream cost is rarely figured into costs. The German engineers may have cynically lied, and the management at VW incestuous, but that doesn't mean that all of their suspicions are off base.
Stationary power plants are much more effective at reducing pollution and contaminants than a car is. The rest of the equation I do not know much about.
Ryan
Ryan
4
The question of where the energy for the electric car comes from is a good one. However, recent developments in solar power may solve or greatly reduce the problem. As you are probably aware, Tesla and even Honda have worked out solar-powered battery chargers that can power cars (and homes). The question of what happens to the battery later is also an excellent one. I don't know the answer to that, though I would think that a lot of that material could be broken down and recycled. But it is something that needs explanation.
4
I was wondering why no whistle-blower came forwarded, but now that I understand how vested every side is in the corporate culture and maximizing profit, I'm not surprised. But, if they can't figure out how to recall those cars, they should pay each owner the fair market value of the car the day before the scandal broke. No consumer should accept less.
The executives and engineers knowingly perpetrated a massive fraud, if it bankrupts them and damages the economy, that's the price of doing fraudulent business. Welcome to 2008.
The executives and engineers knowingly perpetrated a massive fraud, if it bankrupts them and damages the economy, that's the price of doing fraudulent business. Welcome to 2008.
106
If they can't figure out a fix that brings down emissions to EPA standards and that retains intact the originally advertised fuel economy and performance, they must pay each owner the full purchase-price complete with related taxes and fees. Anything short of that would be adding insult upon injury, since you can't rectify fraud (as in emissions) with more fraud (as in passing the buck to affected car owners). Indeed welcome to 2008.
6
@newoldtimer, swm
Prepare to be disappointed, or feel insulted by the reduced performance of an object.
It's just a car. Not a reputation or dignity.
Prepare to be disappointed, or feel insulted by the reduced performance of an object.
It's just a car. Not a reputation or dignity.
2
Newoldtimer: that will never happen. The most you could hope for is some compensation for your lost mileage and savings. That won't be much. And cars depreciate. You will NEVER get the entire purchase price back, because you had use of the car for X number of years or months.
Most owners will get a nice check (eventually) and still get to keep what are fairly decent cars.
Most owners will get a nice check (eventually) and still get to keep what are fairly decent cars.
This article reveals a flaw in Volkswagon engineers' reasoning that a child can see through. From the article: " the engineers feel that the politicians are guilty of rank hypocrisy, especially in the United States, also grumbling that electric cars make no sense as long as power plants are burning fossil fuels."
Coal-fired power plants aren't usually in urban areas, and emissions (particulate and NOx) are well-controlled at the power plant. Car emissions, on the other hand, are emitted in dense urban areas (the places most sensitive to air pollution) with rather poor controls. So even if all the electricity for electric cars is generated at a coal-fired plant, you're still much better off from a health and environment standpoint than if you expel diesel exhausts in urban areas.
So much for the expertise of the german engineer.
Coal-fired power plants aren't usually in urban areas, and emissions (particulate and NOx) are well-controlled at the power plant. Car emissions, on the other hand, are emitted in dense urban areas (the places most sensitive to air pollution) with rather poor controls. So even if all the electricity for electric cars is generated at a coal-fired plant, you're still much better off from a health and environment standpoint than if you expel diesel exhausts in urban areas.
So much for the expertise of the german engineer.
149
Amen. The "it doesn't matter" also ignores the fact that states like CA generate only 0.5% of their power from coal, so while it may be true in KY that the total emissions are similar, states that care about the environment have a much different profile. Also it is way easier to shut down a coal fired plant and replace it with natural gas (or solar if you choose) than it is to tell 500,000 people to scrap their vehicles (chance of that = 0%).
9
Not only that, but their myopic thinking does not account for daytime charging (solar), evening charging with hydro, wind, geothermal, or nuclear. And it is certainly much more feasible to clean up emissions in a stationary coal power plant than in each one of the millions upon millions of cars each car maker produces.
There are other environmental issues with electric cars, but they are all in liquid or solid form.
There are other environmental issues with electric cars, but they are all in liquid or solid form.
4
It was just an excuse. German cars are the best to drive, period. That's all the engineers wanted.
But frequently they are not the most reliable (I know, from bitter experience.)
And now they aren't even legal.
Oops.
But frequently they are not the most reliable (I know, from bitter experience.)
And now they aren't even legal.
Oops.
1
If German capitalism is this flawed it's time to tear down the whole idea and start over. They seemed to be the only ones doing it right.
The fundamental problem is concentration- the bigger they get the more evil they become. Always. Checks and balances cease to work as power accumulates. Fix it quickly or we revisit revolution. That's essentially the problem in the Middle East, but cloaked in religion.
We are not mountain lions. We are bees.
The fundamental problem is concentration- the bigger they get the more evil they become. Always. Checks and balances cease to work as power accumulates. Fix it quickly or we revisit revolution. That's essentially the problem in the Middle East, but cloaked in religion.
We are not mountain lions. We are bees.
22
I'd like to respond to this by pointing out that one of the problems that led to this is the lack of a diverse shareholder base to keep an eye on the company. But I can't. It's just another one of those capitalist theories that doesn't hold up to scrutiny. Ach du Lieber!
1
When worlds collide, sparrows fall.