Volkswagen Is Ordered to Recall Nearly 500,000 Vehicles Over Emissions Software

[AnxietyRanger]

I'd wait and see. France has already called for an EU investigation and VW admits it affects 11mn cars. Should it escalate far enough a fine of $10k per vehicle could reach over $100bn, which would certainly have the potential to end VW as we know it. I doubt it'll go that far, but this story is far from over.

Well, waiting and seeing is certainly all we can do.

But no, I don't think the political powers that be would allow Volkswagen to fail. So, for once, at least you have a clear opinion from me.

In the meanwhile the financial impact, though, I'm sure will be significant.

 

[Yggdrasill]

Just checked how much NOx a 2.0l Golf TDI emits, and it seems like it's around 70 mg/km. Here, for every 1 mg/km, you need to pay a tax of ~47 NOK or ~5.7 USD. So if the actual emissions are 700-2800 mg/km, that should cost an additional tax of 30,000-128,000 NOK or 3,650-15,600 USD.

Now, I'm not sure if the government can actually collect these taxes after the fact, but I certainly hope so.

 

[AnxietyRanger]

A personal guess:

If it ever comes to that, that political considerations demand severe punishment in Europe, they will go after a person or persons with criminal charges. Handing a fine that would kill Volkswagen and take out with it a significant portion of German jobs and economy is not something that I would expect would be allowed to happen. Taking it to person or persons would be seen as a preferable route.

 

[NigelM]

But no, I don't think the political powers that be would allow Volkswagen to fail. So, for once, at least you have a clear opinion from me.

Wonders never cease! ;-)

Joking aside, I'm pretty sure you probably understand German; read the Die Welt article, it's a respected newspaper.

 

[Johan]

So far VAG has lost about 33% of it's value in the last 2 days. Closing price 2 days ago was about €161, it's now trading at €108 per share... My oh my.

 

[AnxietyRanger]

Joking aside, I'm pretty sure you probably understand German; read the Die Welt article, it's a respected newspaper.

I will. It is an interesting topic in any case.

- - - Updated - - -

So far VAG has lost about 33% of it's value in the last 2 days. Closing price 2 days ago was about €161, it's not trading at €108 per share... My oh my.

The question is: When to buy?

 

[NigelM]

The Frankfurter Allgemeine Zeitung notes the impact on the rest of the German auto sector. In turn its pulling down the DAX.

My take: it's possible that the politicians will cut VW loose to save the rest.

 

[AnxietyRanger]

The Frankfurter Allgemeine Zeitung notes the impact on the rest of the German auto sector. In turn its pulling down the DAX.

My take: it's possible that the politicians will cut VW loose to save the rest.

Is there a new game on TMC: "Are you short on Volkswagen?"

 

[Johan]

The question is: When to buy?

I'd be careful to buy this stock. A lot can still happen. The company could get split up in to parts that are untouched by the scandal, and keep functioning while a part of it (the VW brand, personal cars) may be taken bancrupt and then restarted (the way GM did).

 

[NigelM]

Is there a new game on TMC: "Are you short on Volkswagen?"

Thats actually pretty funny. Well done AR.

With regard to your comments on political protection, the pile-on may already be starting....

http://www.handelsblatt.com/dobrindt-greift-in-vw-abgasaffaere-ein

 

[AnxietyRanger]

I'd be careful to buy this stock. A lot can still happen. The company could get split up in to parts that are untouched by the scandal, and keep functioning while a part of it (the VW brand, personal cars) may be taken bancrupt and then restarted (the way GM did).

Yeah, while I am confident to have an opinion that Volkswagen is too big to fail (politically), even I can not predict what kind of measures it might take to get there vis-a-vis private ownership - if things were to get into more dire straits.

 

[jgs]

California is quite different from even the rest of the U.S., let alone the rest of the world. And even if Volkswagen were to face serious repercussions in California or even the whole of U.S., the idea that it would be enough to bankrupt them is just silly. And obviously the rest of the world won't automatically follow suit either. Do you think you can win elections in Europe by killing Volkswagen, considering it is a major manufacturer and employer in many EU countries? Let alone win in Germany? Do you have any idea how important that industry is to Germany - and how important Germany is to the EU? Volkswagen is the kind of company laws are made for. Heck, laws are named for.

When you think of Volkswagen, think of it like what would Tesla be, were it owned (and directed) in large part by, say, the state of California (Lower Saxony in the case of Volkswagen),

It's interesting to note that California's economy is almost 10x the size of Lower Saxony's and approaches the size of Germany's. That said, the old saw about bacon and eggs for breakfast applies. (The chicken is involved. The pig is committed.)

 

[AnxietyRanger]

It's interesting to note that California's economy is almost 10x the size of Lower Saxony's and approaches the size of Germany's. That said, the old saw about bacon and eggs for breakfast applies. (The chicken is involved. The pig is committed.)

I didn't mean to belittle California's economic standing in the world, but California and the U.S. in general are relatively speaking much smaller for Volkswagen than their global economic situation might imply. And in the end, I expect it would take an even greater power than that market to really bring down Volkswagen - and one with a reason to want to do so. Not even WWII and Allies did, because in the end they were involved but not committed, as your good analogy points out.

The global economy, overall sure - a rapid change in buying decisions globally could certainly kill Volkswagen, but I don't see the stars lining up that way either. Not for this anyway. And back in Germany, too many interests hang on the balance to let this happen anyway. I would not be surprised to see the Germans line up for defense - and using their clout to make sure EU does the same. A slap on the wrist, criminal prosecution of select individuals, change of some procedures and recall of some products for minor changes, and the gravytrain keeps rolling - with a few quarters lost.

Elsewhere, Volkswagen may certainly face hefty fines. Foreign markets may have less interest in being soft, unless a free-trade agreement or a local factory or two hang in the balance, of course.

 

[gene]

Reading the VW TDI forums on this subject is very interesting. Those VW Fanboys are all jumping ship. I would have though they'd be defensive of VW, no, they are not, they are pissed: Volkswagen's Clean Air Act violations on 2009+ TDIs trigger massive recall, stop sale - Page 152 - TDIClub Forums

 

[AnxietyRanger]

Well, FWIW, this scandal certainly makes for great Internet memes.

 

[mknox]

Looks like the CEO is gone and that this could reach across over 11 million cars.

 

[Cosmacelf]

Among other issues, don't CEOs now have to certify that their quarterly and yearly financial statements are materially correct? Since Volkswagen has known about this problem at least since 2014, and probably much longer, their boilerplate statement of risks has been materially wrong for a while now. Maybe the legal jeopardy here only effect US companies, is Volkswagen listed in the U.S. Though?

 

[dhanson865]

Hahaha, this news was "dumped" on a Friday afternoon. Best way to minimize US visibility. (All Football, All Weekend! Interspersed with CAR ADS!)
Someone has done VW a HUUUGE favor public-image-wise.

Maybe, but I didn't see it until Sunday or Monday and I'm still catching up on reading threads about it on 5 boards on Tuesday and the stock is still tanking and they announced this morning that it affects cars world wide.

I don't think the day of the week released thing matters now with the ongoing coverage this is getting.

 

[ecarfan]

That article states: "A VW spokesman has said the reports of Winterkorn’s ousting in favor of Müller are “ridiculous.”".

Looks like the CEO is gone and that this could reach across over 11 million cars.

 

[beeeerock]

In the US at least, pick ups are qualified under a different standard because they are designed to be commercial vehicles. Of course plenty of people use it for commuting. However, the idea is that it is not practical to expect vehicles in that size class to be able to meet the same standards as a typical passenger vehicle. If they used a uniform standard, it may either overburden the trucks, be too easy for the passenger vehicles, or both.

Yes, that's the official logic and I'm completely aware it exists. Except it makes about as much sense as most government logic - i.e., none. Why is it OK to burn a crapload of fuel, with marginal emissions control, but not OK to burn less with better (albeit no ideal) controls? If it's used as a commercial vehicle, perhaps somewhat acceptable (not to me, but to some). But what percentage actually ARE used commercially? Up here, it's a small fraction. Commuting to work isn't commercial use. Dragging a big trailer or wake boat over a mountain pass isn't commercial use. The hypocrisy of policy is ridiculous.