Wednesday, September 23, 2015

The VW Undiscovered Lie

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Volkswagen AG Chief Executive Officer Martin Winterkorn, resigned over his leadership of the company after it was revealed that VW cooked its automotive firmware to lie about the exhaust emissions of its popular diesel cars. 

The company rigged the computer code to falsify the pollution levels during emission tests. Essentially the engine performance was tweaked to be better running, i.e. lower fuel efficiency in order to pass the EPA tests. Then the setting were returned to "normal" where the fuel efficiency was higher but so was the pollution.

On the day of that expose VW stock price fell 20% and the company said that it was sorry for the deception, the betrayal of its customers and promised to fix the deficiency. They said they were setting aside $7.3 Billion to cover fines and recall repairs. THAT's a lot of car sales to make up for that cost.

Before this Undiscovered Lie the VW company was the darling of German engineering and value.  Today we find out how and why they were able to accomplish this status.

Undiscovered Lies are appallingly common. All it takes is the desire to be thought of as great, generate massive wealth and not concern yourself with the consequences or the people who are hurt by it. At lease in this case of VW the damage done was contributing to the long term health impairment of the breathing public. There are so many other violators of environmental standards that VW can only be held accountable for it portion of the total damage.

At least the damage done was not like the Toyota "Sudden Unexplained Acceleration" events caused by their computer glitch. While they failed to take action on the poor design of the system, they did not design the system to have this "Bug" be a "feature." General Motors' ignition switch defect was allowed to go on while denying that it was indeed a flaw. In both of these cases, people were injured. People died.

Back in the days of the Ford Pinto fires due to deficient fuel tank design and position, the uncommon knowledge was that the Ford Mustang had the exact same type of fuel tank problem. The Mustang brand was far more valuable than that of the Pinto, so Ford sacrificed the Pinto and bit the bullet to publicly fix its problems while silently going about fixing the similar Mustang tank. 

In all of these situations, the manufacturers believed (and probably rightfully so) that waiting to have their problems surface and fixing it later is more cost-effective in the long run. VW will survive and Martin Winterkorn either already has his millions of Deutsche Marks or will get some other position of equal compensation. 

Author's Note: The book cover images in the side margins of this blog are my own publications of eBooks available at both Amazon and B&N. Please take a moment and go to the sites and read about them. Then if you like it, buy one or two.