Contrarian Thinking About VW’s software

The VW software scandal is an ideal topic for contrarian thinking.

contrarian thinking

Volkswagen, Saint or Sinner?

The USA government auto industry regulators, media and consumer groups and more recently European governments, are indulging in an orgy or self-righteous condemnation of Volkswagen for beating the system.

Pontificating lawyers are drooling at the mouth at the prospect of huge class action lawsuits with the potential for billions in damages.

What exactly is the terrible crime that VW is accused of? Hundreds of deaths from accidents caused by stuck accelerators? Mutilation from over explosive airbags? Deaths and injuries from steering defects? Or a host of other dangerous deficiencies in vehicle design that have resulted in the recalls of millions of cars in recent years.

None of the above.

In the acres of print and hundreds of hours of publicity that has played out in old and new media over the last few days, I have yet to learn of one death or injury as a result of Golf, Jetta and Audi diesel engined vehicles having extra smart software in their engine management systems.

Using contrarian thinking to analyse the issue instead of merely following the screaming majority, here are 6 important points.

  • Publicised fuel consumption claims by all manufacturers are calculated under optimum driving conditions.
  • Any buyer who believes he or she will consistently achieve the claimed fuel consumption in real life situations is naive. A few will, most will not.
  • VW diesel engined vehicles are fuel-efficient. Ask drivers of those cars.
  • VW cars are safe, reliable and probably less polluting than the huge V8 engined trucks so beloved by many macho North American city drivers who never use them to carry more than a couple of carry packs of beer.
  • The auto industry is rife with misleading advertising. One truck maker claims “the most fuel-efficient pickup” for a V8 engined vehicle. I would bet that the tiny VW Golf, Ford Bantam or small Japanese pickups available in many parts of the world are considerably more economical.
  • Advertising a price and hiding a delivery charge and other extras in the small print is another example.

The regulators claim that consumers have been misled into buying vehicles they assume to be less damaging to the environment.

By how much do these vehicles exceed the required emissions? 1% 10% 50%? 2 parts per billion?

Just claiming they do not comply and therefore damage the environment is not good enough, let’s hear some facts.

Now the regulators want to impose larger fines than the original purchase price of the vehicles and to order  VW to offer compensation and / or a buy back scheme.

I am sure that any buyer feeling unhappy with actual versus claimed fuel consumption would have taken it up with the dealer long ago. A flood of such complaints would have been picked up by the media.

Large numbers of VW vehicles failing tests in jurisdictions requiring emissions testing before re-registration or after a number of years would have been picked up by the media, that does not seem to have been a problem.

This whole drama seems to be more about big government in the USA being miffed because a smart manufacturer found a way to break the rules. To add insult to injury, a European manufacturer.

Contrarian thinking would also point out that it is another weapon in the USA’s arsenal to damage European competition and enrich itself with billions of dollars at the same time.

The proposed punishment is as appropriate as using a sledge-hammer to kill a flea. The CEO of VW has already resigned, the stock price has lost 25% and the company’s sales are dwindling.

Should VW be punished for breaking the rules? Yes, if they could not comply with the regulations they should have lobbied for the regulations to be relaxed. Or applied for exemption.

There is a real danger that the world’s second biggest car maker’s ability to supply popular, safe, fuel-efficient and environmentally friendly cars will be affected. Whatever version of software is installed.

There is a case for criticising the regulations as being too stringent. Millions of small diesel engined vehicles comply with emission standards in Europe and the rest of the world. However in North America only VW and its sophisticated software has been able to comply.

Perhaps VW have done the industry and consumers a favour by exposing the regulations as being too onerous.

Any punishment should be relevant to the real harm done, not to cripple a maker of good vehicles.

What do you think?

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  7 comments for “Contrarian Thinking About VW’s software

  1. Nancy
    September 25, 2015 at 5:30 pm

    Peter,
    The conundrum improve efficiency or impede performance. This software decreases mpg. What is the true emissions % affected.

    I know of people who dismantle the emissions software to improve performance as well.

    It amazes me how the ripple effect not only overwhelms an idea but gains amazing momenteum in a short period of time.

    I especially liked your perspective of the legal system enjoying the spoils of this situation. Not paying for what may have happened but the perspective embellished of what may have happened.

    Always enjoy you common sense perspective. See you after harvest on your blog Nancy

  2. September 25, 2015 at 7:43 pm

    No. It’s deliberate fraud. You outlined some of the things they could have, and should have, done differently. Not all buyers here bought for the fuel efficiency alone; some believed that they were doing a better thing for the the environment, and that matters to them.

    I bought a Honda Accord Hybrid, years ago, for the same reasons. If it had been for fuel efficiency alone – for the gas costs, during a time when gas prices were very high – I’d have been better off buying a cheaper little gas guzzler (based on the costs of fuel over the lifetime of the vehicle – and I tend to own cars for 6+ years). So it wasn’t just about cost.

    No, they broke the law and they did it knowingly and deliberately. I have NO sympathy for them. I’m very disappointed in a car company I used to think highly of.

  3. September 26, 2015 at 5:48 am

    Interesting perspective Peter!
    But no matter how many times I read your comments I can’t agree this time. The problem is, is that they lied to the consumers. Did the CEO get paid bonuses during the time they were lying to the public? If so he was paid these based on dishonesty, wasn’t it?
    In fact it is these same consumers that will tell the future of the company. Will they have a short memory and be forgiving or not?

  4. Veronica Young
    September 26, 2015 at 8:11 am

    ‘Sigh. Although its certainly possible the punishment might be overkill, I am appalled by VW’s deceit. I’d rather the hammer of the law come down hard on corporate liars than continue to be harassed by all the lies perpetuated on us and not challenged. What corporate lie is next (or already here)? Voter fraud anyone?

  5. Roberta
    September 26, 2015 at 8:57 am

    I am/was not aware of this issue. And I pride myself for keeping up on news. I will say I drive a Toyota (who also paid a HUGE way fine for a phony issue a few years ago) and I will forever.

  6. Peter
    September 26, 2015 at 11:37 am

    Thank you for your comments, I am not suggesting that VW should not face some punishment for breaking the rules. I am suggesting that the fines should be relevant to the damages suffered (if any). I cannot believe that a manufacturer which deceived the regulators but did not cause a single injury, death or material loss to a buyer should be punished to the same extent as those manufacturers who allegedly did. The years long cover up of the airbag problem affecting many auto makers being a prime example.

    My major concern is that big government siezes any opportunity to confiscate billions of dollars of share holders wealth on the slightest pretext. The same predatory motive that lets the authorities seize vehicles, bank accounts, property and other assets without a court order merely on suspicion of some wrong doing.

    I have been a very satisfied owner of a VW Golf and driver of Jetta and Audi hire cars in the past. If I was a regular commuter looking for a fuel efficient small or medium sized vehicle, a diesel engined Golf or Jetta would be at the top of my list.

    No one has yet ventured an opinion on my suggestion that the proliferation of small diesel engined vehicles on European roads is an indication that the USA standards for emmissions of these fuel efficient engines are too stringent and too costly to achieve.

    That is perhaps why with the exception until now of VW, we only see diesel engines in large vehicles with high selling prices.

    Any one with concerns for the environment should be promoting the sale of small fuel efficient vehicles, like diesel engined, VW and other European and Japanese brands.

    Huge penalties will make VW cars more expensive or unavailable, that would be a pity.

    • September 27, 2015 at 8:13 am

      Peter,

      Well stated, as no one is above the law,

      I have found who have been writing the laws has been hijacked by special interests, who are people paid to include bias and benefit to those lobbied to do so.

      Fairness and common sense has given way to who benefits the most and exclusion of others, to or laws that make it difficult to do the right thing.

      I am in no way defending dishonesty.

      It becomes harder to follow the rules and not become jaded to the processes.

      It does give rise to lose of perspective when a few benefit, laws hidden in the volumes of text only to surface later, only to be found after the fact the laws were passed.

      The issue with VW exposes how complex our world has become; our polarized sense of right and wrong, our innovative ways of making money and our distored common sense.

      Nancy

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