Cashing Out

A moment came when Captain Smith knew the Titanic was doomed — and from that moment on, saving the ship was no longer important.

Surviving the inevitable sinking was.

This seems to be the case with Volkswagen. Like Titanic, the company is taking on water.

You can feel the list.

People are looking for the exits.

The trade publication Automotive News reports that about half the roughly half-million owners of diesel-powered Volkswagens fingered by Uncle want cash rather than their cars.

This is understandable, if regrettable.

First, there’s no fixing the “affected” cars. That is not the right word. To make them Uncle-compliant, it will be necessary to break them in some way. Whether it’s a new/reprogrammed ECU — the computer that controls the engine — or something more involved, such as physical modifications to the vehicle — it will not run better afterward.

It will merely be Uncle-compliant.

Most owners, of course, are not especially interested in that. They are interested in things like mileage and performance. They bought the diesels for these reasons — not because they complied with Uncle’s edicts.

If either mileage or performance are diminished as a result of the “fix”… well, would you keep a car that had to be taken in for mods (apparently, several will be necessary) that would likely result in poorer mileage and/or performance if you had the option of getting a fat check instead?

Exactly.

Besides which, VW has yet to figure out what the “fixes” (plural) will entail exactly. It is not an easy thing to engineer a car after it has left the factory. They are still trying to figure it out — with the first of at least 11 “fixes” per car scheduled to be announced in September. No one really knows how it’s going to work out.

Or, when.

Whatever VW’s engineers do come up with, it must first be approved by Uncle before whatever it is can be done. Expect this to drag on for a long time.

Then it will be on the owner to schedule a service appointment — perhaps several — and deal with the hassle of that.

Most people dislike hassles and avoid them, when possible.

It is much less hassle to dump the car — and collect a check.

Especially when the check is based on the pre-fiasco retail value of the car. Post-fiasco, the retail value of VWs generally — not just the diesel-powered ones — has plummeted by about 20 percent. If you own one of these cars and elect to keep it, that is a 20 percent haircut for you.

Possibly much more, the longer this drags on — and the more damage done to VW’s brand.

Who signs up for that?

Even if you don’t care about resale value and intend to drive your car for as long as it still runs reliably, the uncertainty about the viability of VW itself is unnerving.

VW has quite possibly been mortally wounded by this business — like the iceberg did to Titanic.

One billion dollars is a thousand million dollars. This is a large sum, even for a multinational corporation like Volkswagen.

$10 billion — the sum Uncle strong-armed VW to agree to “set aside” for dealing with the mass-buyback and whatever “fixes” are deemed necessary to make the remaining cars Uncle-complaint — is an almost incomprehensible amount of money.

And it is only a small percent of the total sum VW is on the hook for. Which is around $50 billion, plus or minus. This encompasses state and federal fines as well as mea culpa diversions of resources into make-work projects such as “zero emissions” vehicles and similar programs to “mitigate” the asserted harm caused by VW building diesels to customer rather than Uncle-approved standards.

Additional penalties will be applied if VW does not succeed in reducing the aggregate emissions of all the “affected” vehicles by 85 percent — either by buying them back and crushing them or by, er, “fixing” them.

There is no geld for this.

The total liability exceeds what VW earns. Forget profits.

If VW survives, it will be no less a miracle than Titanic arriving in New York instead of on the bottom of the Atlantic.

And all of it because of no good reason.

Titanic sank because it was going too fast (and turned too slowly) and struck an iceberg, which gashed its hull just enough to breach all of its water-tight compartment. But at least the iceberg was real.

VW is being sunk over something phantasmagorical. The “threat” asserted by EPA to the environment and public health of a fractional increase in tailpipe exhaust emissions from cars that would have been considered fully emissions-compliant by circa model year 2000 tailpipe emissions standards.

Were those cars “dirty”? Did anyone die — or get a cough — from getting too close to their tailpipes? How about bringing him up to the podium?

Anyone?

The “cheating” VW diesels are just as clean — probably more clean — than those circa model year 2000 cars. It doesn’t matter. Only compliance matters.

No matter how expensive, no matter how ridiculous.

No matter whom it actually hurts.

No matter whom it actually destroys.

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One Response to “Cashing Out”

  1. Ken in NH says:

    The alternative is that VW could sell part itself to and collude with the government. If only we had a name for such a form of government…