Ist Volkswagen Kaput

by John Delach

 

The executives and chief engineers at Volkswagen (VW) face a self-imposed crisis of  that may permanently cripple the world’s second largest auto maker if not destroy it. If that happens, it will catapult VW into a new category of ruined businesses completely surpassing other monumental failures like Arthur Andersen, Lehman Brothers and Enron. Herr doctor Martin Winterkorn, who was CEO from the time that the dastardly deed began in 2009 until he was forced to resign on September 23, 2015 would become the butt of semi-apolitically correct jokes joining the Fuhrer with ridicule like this:

 

Did you know the German people actually hated Hitler for all of the stupid things he did? Like losing the war!

 

I will try to recap what this crisis is all about for those of you who have been too busy playing fantasy football, tuning in to the latest Kim, Kourtney or Khloe Kardashian dilemma, exploit or scandal or crying in your beer after the Mets lost a brutal World Series in five games.

 

Jack Ewing reporting for The New York Times wrote:

 

After he became chief executive in 2007, Mr. Winterkorn declared his determination to make Volkswagen the world’s largest carmaker overtaking Toyota. He was known for his intense attention to the technical fine points of the vehicles the company produced.

 

“A lot of things were subordinated to the desire to be faster, higher, larger,” (the successor CEO, Matthias Muller) said in a conference call with analysts and reporters…”

 

Mr. Winterkorn’s management style, coupled with a relentless drive for growth, is cited by some critics…as a contributing factor to the scandal by impeding open communication and perhaps causing subordinates to cheat rather than admit failure.

 

And cheat they did on an unprecedented scale. One of VW’s goals was to develop clean, green diesels that …were environmentally responsible while delivering excellent fuel economy.

 

This turned out to be a fool’s errand; such a diesel being as mythical as “clean coal.” Instead of addressing the problem head-on, certain company executives and engineers chose to develop software that would cheat on control tests by lowering oxide emissions to acceptable levels making full use of pollution controls. Once the engines passed, the software shut down providing excellent fuel economy but producing as much as 40 times the allowable limits for nitrogen oxide.

 

The possibility of fraud was discovered by the Environmental Protection Agency (E.P.A.) which road tests vehicles instead of using European static laboratory tests. In May 2014, diesels in a 2012 Jetta and a 2013 Passat repeatedly emitted high levels of nitrogen oxide. Finally, in August of 2015, the E.P.A. stated that it would not certify VW’s 2015 diesels until the discrepancies were explained. On August 18th a VW executive finally came clean.

 

The German Government is forcing VW to recall 8.5 million vehicles in Europe and 500,000 in the United States. VW is estimating the cost at €6.7 billion not including fines, penalties and legal fees. The fine imposed by the Federal Government will likely be greater than that imposed on BP for the spill in the Gulf of Mexico as this event was deliberate and not accidental.

 

Further and even more devastating than the monetary cost, the Justice Department’s investigation could conceivably lead to criminal charges against both individuals and against VW as a corporate entity if culpability reaches that high. If that transpires, people will likely go to prison and VW as now constituted, would cease to exist.

 

Be assured that intense anxiety has descended upon company headquarters in Wolfsburg, Germany that will not be lifted any time soon. Is Gotterdammerung at hand in Wolfs- burg?