Don’t you just love it when some big corporation gets caught cheating?
Volkswagen have been caught with their pants down in the USA for using a “Defeat Device” to cheat the normal exhaust emission texts that take place in the EPA Laboratory’s.
Apparently all VW diesel engine cars since 2009 have been fitted with this software which can detect when the car is in the laboratory and adjust the engine management controls to minimise NOx outputs but turns the cheat off during normal on-road conditions to improve performance.
Totally immoral obviously and poses a number of questions.
1 – Who at VW knew? How high was the decision made?
Imagine you’re a software developer and your boss comes along and says, what we want is a piece of code that detects when the car isn’t moving and knocks down the emissions, but disables itself when the cars moving so that the performance is maximised.
As a software developer, who would be party to that?
it’s not something that as a developer you’d just say okay to.
Having worked for IBM for BMW in Germany, I expect that VW do not have in-house developers and like most car manufacturers they sub-contract the development of the Engine Management Systems to specialist software houses.
Someone in the software company would have had to have approved it.
But at some point someone in VW had to specify this as a requirement and someone higher up had give this approval.
I would guess that if this software was developed in-house or externally, VW management knew it was taking place.
But how high did it go?
Was this an engineering performance change the detail of which was not shared with corporate management or did they know and chose to go with it as a selling point and help maximise their sales?
2 – How naive is the EPA and possibly the other test companies around the world to take manufacturers on their word when its in the manufacturers benefit to falsify or circumvent genuine test results.
Hey, this car goes at 200mph and is powered by unrefined crude oil with zero emissions .. honest!! Oh okay .. pass!
How naive do you have to be?
People lie .. corporations lie .. FACT.
The banks lied about the :Libor rate, traders lie about shares and profits, car manufactures have already been caught lying about their cars alleged MPG.
In the case of VW, performing the tests on a simple rolling road would have provided the correct results.
3 – Naive, Incompetent or Corrupt?
I find it impossible to accept that the external nationally appointed bodies accept anything that corporations tell us without independent verification.
Haven’t they learned anything?
That if it is in a manufacturers or corporations interest to falsify the figures then that’s what they will do?
So are the testing bodies whether that’s the EPA in this case, the FCA the UK Financial Conduct Authority naive, incompetent or corrupt?
Certainly at best naive and incompetent.
VW shares dropped by 20% on Monday in response to this news and continued to drop over the past few days losing 35% of value.
It’s a scandal .. like most lies ..its only a scandal because they got caught after getting away with it for years.
However, financial markets are fickle, they react to the fear of the unknown, they want to maximise their portfolios and not take a hit holding on to corporations who will be perceived to have high costs in making reparation.
Sure there will be costs, hopefully some serious fines too, but is that worth 35% of the brand?
I don’t think so .. so I’d be willing to gamble that in the short-term VW shares will recover, maybe not to pre-scandal levels but not too far away from and they’ll get back there eventually.
I’ve just had a look at the VW share price VOW. It was 167.40 Euro per ordinary share earlier this week.
As I write, its currently on the way back
Sell: €120.80Buy: €121.00€9.60 (8.63%)
ie. up almost 9% on the day .. already on the way back as the markets recover from their over-reaction.
Personally I’d take a gamble on that .. but thats up to you and please don’t consider this financial advice!