Phony Fumes

By Lloyd Graff

In this Sept. 23, 2015 file photo, company logos of the German car manufacturer Volkswagen sit in a box at a scrap yard in Berlin, Germany. (AP Photo/Michael Sohn, File)

The mess that Volkswagen now finds itself in will be a business case study that students at Harvard and Penn will have fun with for years. But for VW it is a problem that just keeps getting worse by the day. It has cost VW CEO Martin Winterkorn his job and will cost the company many, many billions of dollars.

As a spectator who has never even considered owning a diesel automobile, I find it a fascinating case of over-reaching, because Winterkorn promised everybody he was going to run the biggest car company in the world and do it by pushing diesel cars.

Unfortunately, the EPA in the U.S. would not oblige VW like the Europeans had by relaxing the emissions standards on the uniquely nasty emissions of diesels. A conspiratorial thinker might believe that the tough diesel emissions standards were instigated by VW’s competitors in America, but I doubt it. The EPA, particularly under the Obama administration, appears to hate all the auto companies, except maybe Tesla. VW probably thought it could buy the EPA or cajole it, or muscle it like it does the European regulators, but then the company discovered nothing was going to work except adding very expensive pollution control equipment to its cheap little small cars that would make the cars either uncompetitive on price or unprofitable, or both. So VW decided to go with the cheating software fix, that in its arrogance figured nobody would ever catch.

You can fool some of the people, some of the time – you know the rest. The suspicion is that maybe somebody from BMW, who knew how much it cost to put the costly diesel emission controls on their $60,000 SUV, made a call or sent a love note to the EPA, saying that VW’s cheap pollution fix did not add up. So the EPA decided to test and retest the small VWs to find out what the company’s secret sauce was. The secret sauce was software trickery that falsified the emission test results.

If it was only diesels in the U.S. it would have been a blow to the company, but since VW’s cars were a sales flop here, anyway, it would not have been a catastrophe. But when you are dealing in lies, you better be a consistent liar, which VW was. The deceptive diesel software is in all of the small European diesels too, about 11 million on the streets, all spewing worse fumes out the tailpipe than their test readings indicated. Wolfsburg – you have a problem!

As a business story, it is all so juicy. Corporate arrogance, lies, clever masking software, CEO resignation, regulators in Europe running for cover! Personal injury lawyers are probably figuring out whether they can manufacture some lawsuits out of it.

The Tanaka airbag failure took many years to unravel, but the Volkswagen diesel bubble broke quickly.

Volkswagen’s disconnect with the American market has some parallels with what I discussed in the DMG MORI story I wrote a couple of days ago. DMG wants to be the biggest machine tool builder in the world. Tying up with Mori-Seiki seemed like a good way to get there. But like VW’s difficulties working with an American market that dislikes diesel and navigating American regulators who would not simply wink at an inconsistency when it stared them in the face, DMG has had trouble responding to the service needs of American manufacturers.

The automotive industry as a whole must feel edgy these days. We appear to be close to the beginning of an enormous shift in the market. Apple and Google want to sell an autonomous car in five years. Tesla hopes to bring its mass market electric car to market in 2017. Uber wants to change the way we own and drive cars. It just commandeered almost the entire robotics department from Carnegie-Mellon to speed up its driverless car ambitions. Mercedes, BMW and VW recently bought Nokia’s mapping software for $3 billion to try to catch up on the autonomous car.

We are near some kind of inflection point where software will become more significant than hardware in car purchases. This is what Silicon Valley sees as the trillion dollar opportunity.

Martin Winterkorn was playing yesterday’s game by trying to use software trickery to mask a flaw in his hardware. Apple and Google are rich enough to muscle their way into the automotive world by either buying or hiring Tesla or another car builder to make their vehicles, which they see as software delivery packages. VW and many other car companies have more to worry about than phony fumes.

Question: If diesels were price competitive would you buy one?

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22 thoughts on “Phony Fumes

    1. AvatarHugh

      Onceupon a time turbodiesel was the way to go to for clean affordable small cars.
      ….Until….
      !!KABUMM!!. Future is here in the shape of zero emision electric cars 3 times more efficient and just as good. All those zillions spent in internal combustion engines, catalitic convertes, secuencial gear shifters and whatnots. To the toilet.

       
  1. AvatarGordy

    Probably better now, but I had a rabbit diesel in the 80’s. Only some gas stations had diesel, so it was always a concern on trips whether or not you would find fuel. That was enough reason to get rid of a real fine car. Got a solid 50+mpg from it, always over 500 miles from that tiny 10 gallon tank. The constant “diesel hunt” that started at 1/4 tank made it a car for local use only, just to scared of running out somewhere far from home. Today, I see diesel all the time though at most stations, so that might not be an issue. I like my RS4 though, wouldn’t trade for anything; will probably drive it til it dies, and it is only 8 this year.

     
    +1
  2. AvatarCharles D. Schultz

    Diesel has great potential but cheating is not the way to achieve it. How ironic is it that the funding used to find the VW problem came from a big settlement between the EPA and AMERICAN diesel builders some years ago for doing the exact same thing VW did.

    We have to have data we can trust. Think aback to the Bernie Madoff fiasco; careful analysis by his competitors showed his claims were impossible yet fund managers lost bonuses and jobs trying to match Bernie. No one else in the diesel world got “VW results” without urea injection yet Mercedes, BMW, & Fiat all kept their mouths shut rather than rat out the cheater.

     
  3. AvatarJake Thompson

    What I want to know is what did Volkswagen do to make their 3.0 litre diesel that they use in the Q5 Audi SUV to be compliant?

    Is there some software trickery lurking in that engine too?

     
  4. AvatarMike

    My wife and I owned rabbit diesels during the years when our teenage children lived at home and drove.
    The Rabbit did zero to sixty in a minute or two. Enough torque so using the clutch wasn’t much of a challenge. Transportation without any way to show off. Only one minor accident in 15 or 20 kid years.
    One of my major triumphs in raising 3 children!

     
    +2
  5. AvatarEd

    Used a diesel VW van on vacation for a week in Europe. 5 people and luggage bombing down the Autobahn at 130+ for 3000KM and averaged 34 mpg, my Chrysler van is lucky to get 28 empty at US speeds, I am just a simple engineer so maybe I am not smart enough to understand how burning more fuel produces less emissions.

    If I could get a diesel van at a competitive price with adequate support it would be in the driveway right now.

     
    +3
  6. AvatarJack

    How could VW expect to get away with this.
    I suspect the EPA knew about this all along and had some kind of monetary agreement with VW.
    Maybe they jacked up the fee and VW refused to pay.

     
  7. AvatarJack p

    Yes, I would buy one. I drive 65 miles per day. I know folks that get 40+ mpg with diesel. I have family in Europe and most of them drive diesels and they keep their vehicles for a long, long time.

     
    +1
  8. AvatarMike Mittler

    I own a 2003 Ford S350 diesel van that has almost 300,000 miles on it. On a recent trip to Chicago it got 17.5 MPG loaded with people and luggage while driving 78 miles per hour. Pretty good for that large o vehicle hauling a good payload. So yes I do own one.

     
    +1
  9. AvatarPatrick

    for the record, the energy content of conventional 10% ethanol gasoline is 111,800 btu per gallon, #2 diesel: 129,500 btu per gallon. A 15% advantage.

     
  10. AvatarVictor

    We have had a Prius for 5 years now. My parents have two.

    We routinely get 50 mpg or high 40’s. In 5 years, no maintenance beside Lube/Oil/Filter. This is just what I want. I don’t see how diesel would be better, unless I needed a truck or van. For a passenger vehicle the Prius is great.

     
    +2
  11. Avatared kays

    I bought my wife a new Jeep Grand Cherokee a year ago. I test drove both the gas engine and the diesel. I bought the diesel because it makes over 400 LB/FT of torque from 1200-4000 RPM. This engine coupled to the 8 speed automatic make for an amazing vehicle. It always seems to be in the right gear and makes plenty of drivable power. We went to Florida in December from Missouri and averaged 34MPG at posted limit + 5 MPH until we got into the mountains in Tennessee. Any trips around local are always better than 30 MPG. This vehicle uses DEF but you only fill it about every 8-10K miles. It is my first everyday driver with a diesel and it is amazing. As far as VW is concerned those driving them either like or they don’t. If you don’t sell them and buy something else.

    ed

     
    +2
  12. AvatarJeff adamson

    I have owned VW Jetta TDI for the past 5 years and I have loved it. I drive 80+ miles a day round trip for work and averaged 43 mpg. But now I am pissed at VW for fooling not only the EPA but me as well. I would buy another diesel in a heartbeat if I was sure it wasn’t scamming the emissions.

     
  13. AvatarJR

    own a diesel, would buy another. I don’t know if I agree with “old” technology, as the OTR truck in CA produce cleaner air out the exhaust than they take in driving through LA. How much cleaner do they need to be?? After all the upgrades, retrofits and mandating the destruction of older trucks for new replacements, CARB let the cat out of the bag at a seminar for compliance, that eventually, they will not allow diesel in CA; the goal is natural gas. With limited infrastructure to support that, we have to spend $$$ and jump through the tier system until there is.

     
  14. AvatarBryan Willman

    Main driver is a diesel dodge sprinter – 23mpg around town, 26mpg on trips, it’s tall enough I can stand up inside. I’d buy another tomorrow.
    Diesel pickup truck because (a) that’s about all you could get and (b) it’s mostly for towing or carrying very heavy things.

    Gasoline car – an Audi – and who knows, maybe they cheat on that too?

    Electric? Not yet. Probably not anytime soon.

     
    +1
  15. AvatarTom

    There is a bit of irony that 2 Ceos have lost their jobs over compliance over diesel emission standards and nearly tanking their companies: VW and Navistar. The cheating by the VW is disturbing. Years ago, I had the opportunity to have training in Germany. They where big into order and structure, a bit arrogant but they also impressed me by their basic honesty as a culture. I suppose times change, but I suspect the consequences for Mr. Winterkorn as this plays out will be rather severe.

     
  16. AvatarJeremy

    Would love to own another oil burner, current one is a Mid-90’s F250.
    No Urea to deal with and great power for towing, but not a daily driver.
    Toyota and Isuzu had little diesel pickups in the 80’s.
    Would love to get a small Canyon/Colorado with the diesel for daily driver.
    Maybe some day… until then, ROLL THAT COAL !!!!

     
    +2
  17. AvatarDavid

    I bought a 2014 Passat TDI last year because I felt guilty about 25 mpg with a wimpy four cylinder Toyota in New York City traffic. I consistently average 40 MPG commuting 56 miles round trip through some of the worst traffic in the US. Plus this is a drivers car, who else builds full size sedans with a six speed manual for under 30K. I was pleased that i could break speed limits and still get 50 MPG on the highway with four comfortable adults and their luggage.

    I consider myself a card carrying environmentalist but damn it I like cars. Hybrids/electric cars are ok for transportation, just refrigerators on wheels (unless you can afford a Tesla). VW better come up with a solid fix or I won’t be fooled again.

     

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