I have to say that it’s gripping stuff watching the Volkswagen diesel scandal unfold in the last few days. The CEO has called time (there’s a new one), some personnel are suspended, while the Group has just been restructured, but millions of cars with exhaust emission cheat codes remain circulating the globe as we speak, along with millions of owners who must be feeling not-too-pleased about their choice of vehicle.
In his departing statement, former chief executive Martin Winterkorn mentioned that he “was not aware of any wrong doing” on his part. OK, it may take months to establish all the facts of the case, but I find this statement hard to believe.
So, why did they do it?
Anyone with industry knowledge pertaining to vehicle regulations and homologation would be aware that passing regulations is an integral part of the development of a model. If a car fails to meet a certain regulation imposed upon it (whether it’s safety or emissions), it won’t get the necessary approval from authorities for it to be sold to the public. The building that you live or work in, the medicine you’re consuming, the electrical appliance you’re using, they all have had to go through some form of certification.
Getting cars to pass regulations costs money. The tighter the regulations, the more a car company has to spend, but meeting regulations is mandatory, it is never ever an option, and most certainly not a risk worth taking on. But for Volkswagen Group, was the decision to defeat emission regulations made as part of a wider business consideration, even if it was a shockingly abhorrent one carried out over a lengthy period of time, over millions of vehicles?
Perhaps in the eyes of executives who made the conscious decision to deceive, the payoffs must have been worth the risk. Millions of Euros in development cost would presumably have been saved, models with these suspect TDI diesel engines would have reached markets earlier, engineering resources required to clean up emissions would have been deployed elsewhere, while marketers would have a nicer story to communicate. More importantly, the cars that cheated regulations would have gained a key competitive edge – a cleaner, more fuel efficient, higher performance engine – that would have netted Volkswagen more sales.
Would Volkswagen Group have been this profitable in the last decade if it hadn’t resorted to this diesel deception? As it stands, Volkswagen suspended sales of its diesel vehicles in the US as soon as the scandal broke, a correct move given that these cars no longer have a valid emission certification in effect. But what about other countries that are currently offering TDI-powered cars, are they still considered road legal? Like what Herr Winterkorn said in his final video message, Volkswagen Group is now “putting everything on the table”. I hope they do because everything is pretty much on the line for the world’s largest carmaker.
(Note: Claims of fuel efficiency should not to be equated with matters concerning regulations. Yes, manufacturers make optimistic claims, and it’s near impossible to replicate the mileage quoted by them, but do remember that these numbers are generated in a controlled environment, over test cycles that may not necessarily reflect real-world conditions. Additionally, driving styles and usage habits can adversely impact fuel efficiency).