The Diesel story

Manipulation in USA (only?)

Volkswagen and USA have a long history. The brand has struggled for a long time, interrupted by some highlights like the new beetle and the genius Darth Vader commercial.

But for the rest VW fought a loosing battle, because its vehicles are perceived as average vehicles sold for a premium price. That might work back home, but not in the most competitive market in the world. While Toyota introduced hybrid technology to meet California standards and address the environmental consciousness, the board of VW, Audi and others believed in Diesel technology to save the environment. If one looks at the refining process of Diesel, it is obviously a false assumption.
Together with Mercedes and BMW the german carmaker tried to convince Americans to buy german Diesel, while Toyota constantly improved hybrid technology and offers Lexus hybrids as well. The premium brand is sold big time in the US. It is a serious competitor for our german luxury brands. Many Germans can’t simply accept that fact, always comparing the success of Lexus in Germany to their beloved Audis or Benz. But we are talking US here. One of the biggest car markets in the world.

Remember, VW built a factory solely for the US market. VW developed a US version of the Passat sold for a much cheaper price in US. We are talking big investments for the North american market, which now seem to be wasted. Adding the penalty to those costs we aren’t even almost there. US buyers have a very very long memory. In the Nineties Audi had a break incident, which wasn’t a technical problem. But sales dropped to a fraction it once was and it took Audi 20 years to recover.

Now imagine what it will do to sales, when the company admits (and it already has!) fraud! The brand image got a huge hit and I wonder if it ever will recover from it. Maybe – with some huge luck – the EPA won’t penalize Volkswagen. VW will show a big chunk of humility and fire some high ranks and the public will forgive after a couple of years. Maybe. So get ready for some really once-in-a-lifetime performances from Winterkorn.
On the other hand it’s doomsday. Audi is already part of the sales stop, is Porsche next? Thank god Bentley and Lamborghini don’t sell Diesel, otherwise they’d be screwed too.

Hits are coming closer to home?

The most interesting part of it all will be played by the EU. It is a fair assumption, that this is not a single event in US. A german environmental organization has complained for a long period of time about some irregularities regarding Diesel engines.
Sales figures of Diesel in Europe should be around 40% (estimate). If – and that’s a big if – VW has manipulated in Europe too, it’ll face some serious trouble with a high likeliness of extinction. But let’s stay positive and wait for all the nice EVs presented on the IAA. Perhaps this was the external event necessary forcing this giant to rethink its course.

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