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Rumorpile: Carlos Ghosn Wanted To Oust Hiroto Saikawa As Nissan CEO
William Maley posted an article in Nissan
"Since the arrest former Nissan chairman Carlos Ghosn last month, various reports have come out revealing the strained relationship between Nissan and its alliance partner, Renault. It has also brought up questions as to whether or not Nissan decided to 'push' Ghosn out by using the misuse of corporate assets as the reason. A new report from The Wall Street Journal is only stoking those fires. Sources tell the paper that Ghosn was planning to "shake up the senior management ranks at Nissan" and told some executives that he was planning on replacing current Nissan CEO Hiroto Saikawa - his hand-picked successor. While Ghosn supported Saikawa in public, the two would clash over various problems the company was facing. This included, Problems with inspections done on JDM vehicles, prompting recalls of more than a million vehicles Declining sales in the U.S. According to one source, Ghosn wanted to oust Saikawa and planned to put it to a vote at a board meeting in November. But that would not happen as Ghosn would be arrested in early on in the month. The board would oust Ghosn at a meeting later on in the month. Some believed that Saikawa wasn't in danger. A source familiar with the relationship between the two said "their differences hadn’t reached a point where Mr. Ghosn would have contemplated removing Mr. Saikawa." Still, Saikawa's reputation is taking quite the hit. The Nikkei has learned that Saikawa had signed various documents that "spelled out payments to Ghosn after his retirement as a consultant and for agreeing not to work for or join the board of any competitor." These documents are being used as evidence to show that Ghosn deferring payments of current salaries that were not reported. While prosecutors don't believe Saikawa knew about this, his position as CEO may be questioned "for missing the opportunity to catch the improprieties." Source: The Wall Street Journal (Subscription Required), Nikkei Asian Review (Subscription Required) -
"Since the arrest former Nissan chairman Carlos Ghosn last month, various reports have come out revealing the strained relationship between Nissan and its alliance partner, Renault. It has also brought up questions as to whether or not Nissan decided to 'push' Ghosn out by using the misuse of corporate assets as the reason. A new report from The Wall Street Journal is only stoking those fires. Sources tell the paper that Ghosn was planning to "shake up the senior management ranks at Nissan" and told some executives that he was planning on replacing current Nissan CEO Hiroto Saikawa - his hand-picked successor. While Ghosn supported Saikawa in public, the two would clash over various problems the company was facing. This included, Problems with inspections done on JDM vehicles, prompting recalls of more than a million vehicles Declining sales in the U.S. According to one source, Ghosn wanted to oust Saikawa and planned to put it to a vote at a board meeting in November. But that would not happen as Ghosn would be arrested in early on in the month. The board would oust Ghosn at a meeting later on in the month. Some believed that Saikawa wasn't in danger. A source familiar with the relationship between the two said "their differences hadn’t reached a point where Mr. Ghosn would have contemplated removing Mr. Saikawa." Still, Saikawa's reputation is taking quite the hit. The Nikkei has learned that Saikawa had signed various documents that "spelled out payments to Ghosn after his retirement as a consultant and for agreeing not to work for or join the board of any competitor." These documents are being used as evidence to show that Ghosn deferring payments of current salaries that were not reported. While prosecutors don't believe Saikawa knew about this, his position as CEO may be questioned "for missing the opportunity to catch the improprieties." Source: The Wall Street Journal (Subscription Required), Nikkei Asian Review (Subscription Required) View full article
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Nissan News: Nissan To Oust Carlos Ghosn After Being Arrested
William Maley posted a topic in Nissan
Carlos Ghosn, the person credited with saving Nissan from total collapse and bringing it together with Renault and Mitsubishi finds himself in very hot water. Today, Ghosn was detained by Japanese authorities in Tokyo over the suspected breach of Japanese financial laws. During a press conference this morning, Nissan CEO Hiroto Saikawa explained that Ghosn under-reported his income and used corporate assets for personal use. Another executive, Greg Kelly (Nissan's director of human resources) is also involved. "The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn's compensation," Nissan said in a statement today. "Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed." Saikawa said that the two would be removed from their posts during a board meeting on Thursday. While many consider Ghosn to be a hero, he is also quite controversial. A lot of this comes down to his compensation. Ghosn got paychecks from his numerous roles as "chairman of the Renault-Nissan-Mitsubishi alliance, CEO of Renault, and chairman of both Nissan and Mitsubishi." According to Bloomberg, Ghosn took home about $17 million from the three companies. Ghosn's arrest also calls into question to the future of the alliance between Nissan, Renault, and Mitsubishi. Source: Automotive News (Subscription Required), Bloomberg, Nissan Regarding serious misconduct by Nissan Chairman and one representative director YOKOHAMA, Japan – Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly. The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn's compensation. Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed. Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so. As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan's Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director. Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures. View full article -
Carlos Ghosn, the person credited with saving Nissan from total collapse and bringing it together with Renault and Mitsubishi finds himself in very hot water. Today, Ghosn was detained by Japanese authorities in Tokyo over the suspected breach of Japanese financial laws. During a press conference this morning, Nissan CEO Hiroto Saikawa explained that Ghosn under-reported his income and used corporate assets for personal use. Another executive, Greg Kelly (Nissan's director of human resources) is also involved. "The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn's compensation," Nissan said in a statement today. "Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed." Saikawa said that the two would be removed from their posts during a board meeting on Thursday. While many consider Ghosn to be a hero, he is also quite controversial. A lot of this comes down to his compensation. Ghosn got paychecks from his numerous roles as "chairman of the Renault-Nissan-Mitsubishi alliance, CEO of Renault, and chairman of both Nissan and Mitsubishi." According to Bloomberg, Ghosn took home about $17 million from the three companies. Ghosn's arrest also calls into question to the future of the alliance between Nissan, Renault, and Mitsubishi. Source: Automotive News (Subscription Required), Bloomberg, Nissan Regarding serious misconduct by Nissan Chairman and one representative director YOKOHAMA, Japan – Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly. The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn's compensation. Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed. Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so. As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan's Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director. Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures. -
Nissan News: Nissan Admits To Improper Measuring Of Emissions
William Maley posted a topic in Nissan
Nissan finds itself in trouble once again as it admitted today that it had improperly measured exhaust emissions and fuel economy for 19 models sold in Japan. According to Reuters, Nissan found that test environments for emissions and fuel economy at final inspection stations didn't meet up to standards. Nissan also found that inspection reports were be based on altered measurements. The automaker was quick to point out this misconduct doesn't affect models exported to other markets "as it applies to requirements intended specifically for the Japanese market." “This is a deep and serious issue for our company,” Nissan Chief Operating Officer Yasuhiro Yamauchi told reporters at a briefing today. "We realize that our compliance awareness remains lacking." Nissan will be carrying out an investigation to determine the cause, which it expects to take a month or longer. This comes a few months after Nissan revealed that it had uncertified inspectors signing off on final inspection of JDM models for decades. It prompted a recall of 1.2 million vehicles and suspending production for two weeks. Source: Reuters View full article -
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Nissan finds itself in trouble once again as it admitted today that it had improperly measured exhaust emissions and fuel economy for 19 models sold in Japan. According to Reuters, Nissan found that test environments for emissions and fuel economy at final inspection stations didn't meet up to standards. Nissan also found that inspection reports were be based on altered measurements. The automaker was quick to point out this misconduct doesn't affect models exported to other markets "as it applies to requirements intended specifically for the Japanese market." “This is a deep and serious issue for our company,” Nissan Chief Operating Officer Yasuhiro Yamauchi told reporters at a briefing today. "We realize that our compliance awareness remains lacking." Nissan will be carrying out an investigation to determine the cause, which it expects to take a month or longer. This comes a few months after Nissan revealed that it had uncertified inspectors signing off on final inspection of JDM models for decades. It prompted a recall of 1.2 million vehicles and suspending production for two weeks. Source: Reuters -
Japan's manufacturing industry has been rocked by a number of scandals through the past year. It has ranged from inflating fuel economy figures, fabrication of product data, and recently, improper inspections of Japanese market vehicles by Nissan and Subaru. Now a new scandal has come to light. Subaru has revealed that it is investigating whether or not mileage readings on their vehicles were falsified during final inspection. According to Reuters, the mileage readings are used as an indicator for fuel efficiency. The company is checking to see if this data affected its official mileage readings and whether exported models are involved. "At the moment we are trying to confirm whether data was indeed fabricated, and if so, how this happened and which models are affected," said Subaru spokeswoman Miyuki Yasuda. This revelation stems from a current investigation being done by external investigators into final inspections being done by uncertified workers for JDM vehicles. Some inspectors told the investigators "that mileage data had been altered on some sample vehicle models tested during final checks." “Coming on the heels of the certified inspection issue, this could be a sign of a bigger problem of how Subaru manages its manufacturing operations,” said Janet Lewis, head of Asia transportation research at Macquarie Securities. Subaru's stock price fell as much as 8.5 percent during trading on the Tokyo Stock Exchange when this news came to light. Source: Reuters, NHK World -
Japan's manufacturing industry has been rocked by a number of scandals through the past year. It has ranged from inflating fuel economy figures, fabrication of product data, and recently, improper inspections of Japanese market vehicles by Nissan and Subaru. Now a new scandal has come to light. Subaru has revealed that it is investigating whether or not mileage readings on their vehicles were falsified during final inspection. According to Reuters, the mileage readings are used as an indicator for fuel efficiency. The company is checking to see if this data affected its official mileage readings and whether exported models are involved. "At the moment we are trying to confirm whether data was indeed fabricated, and if so, how this happened and which models are affected," said Subaru spokeswoman Miyuki Yasuda. This revelation stems from a current investigation being done by external investigators into final inspections being done by uncertified workers for JDM vehicles. Some inspectors told the investigators "that mileage data had been altered on some sample vehicle models tested during final checks." “Coming on the heels of the certified inspection issue, this could be a sign of a bigger problem of how Subaru manages its manufacturing operations,” said Janet Lewis, head of Asia transportation research at Macquarie Securities. Subaru's stock price fell as much as 8.5 percent during trading on the Tokyo Stock Exchange when this news came to light. Source: Reuters, NHK World View full article
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Mitsubishi Motors brought in investigators to answer a question; why did they manipulate fuel economy figures on a number of their models? The results of the investigation were announced yesterday and it was a combination of various decisions and factors that led to it. The investigation criticized the company for "not having the manufacturing philosophy of an automaker". A key example comes from the company not rallying their workers to help them back on track after two major scandals. Instead, it was focused on cutting costs wherever it could. This caused Mitsubishi engineers to pull off the impossible task of improving fuel economy on their current engines and not developing new ones. There was also the feeling that workers couldn't speak up about reaching these impossible targets. The investigation also revealed that management failed to the address the possibility of something fishy going on with the fuel economy testing. In 2005, a new employee brought up concerns about fuel economy figures being made up. This was brushed off by managers. Six years later, a compliance survey addressing other falsifications were not brought to Mitsubishi executives. “The problem is not only with the testing, certification, or the development department. It’s a collective failure of Mitsubishi Motors as a whole, starting from the management,” said Yoshiro Sakata, one of the investigators appointed by the company at a briefing yesterday. “I take the panel’s recommendation seriously,” Mitsubishi Motors Chairman Osamu Masuko in a statement. “The efforts we’ve been making since I took over in 2005 haven’t been enough.” The investigators made a number of recommendations to prevent something like this from happening again. They include, Revamping development Making vehicle certification department independent from the research and development department Restructure the organization structure Being more transparent Understanding laws Be willing to find and tackle violations Source: Bloomberg, Reuters -
Mitsubishi Motors brought in investigators to answer a question; why did they manipulate fuel economy figures on a number of their models? The results of the investigation were announced yesterday and it was a combination of various decisions and factors that led to it. The investigation criticized the company for "not having the manufacturing philosophy of an automaker". A key example comes from the company not rallying their workers to help them back on track after two major scandals. Instead, it was focused on cutting costs wherever it could. This caused Mitsubishi engineers to pull off the impossible task of improving fuel economy on their current engines and not developing new ones. There was also the feeling that workers couldn't speak up about reaching these impossible targets. The investigation also revealed that management failed to the address the possibility of something fishy going on with the fuel economy testing. In 2005, a new employee brought up concerns about fuel economy figures being made up. This was brushed off by managers. Six years later, a compliance survey addressing other falsifications were not brought to Mitsubishi executives. “The problem is not only with the testing, certification, or the development department. It’s a collective failure of Mitsubishi Motors as a whole, starting from the management,” said Yoshiro Sakata, one of the investigators appointed by the company at a briefing yesterday. “I take the panel’s recommendation seriously,” Mitsubishi Motors Chairman Osamu Masuko in a statement. “The efforts we’ve been making since I took over in 2005 haven’t been enough.” The investigators made a number of recommendations to prevent something like this from happening again. They include, Revamping development Making vehicle certification department independent from the research and development department Restructure the organization structure Being more transparent Understanding laws Be willing to find and tackle violations Source: Bloomberg, Reuters View full article
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Kenneth Feinberg is still hard at work on developing a compensation plan for TDI owners in the U.S. affected by the diesel emission scandal. But in an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung, Feinberg says "there will be a generous solution." Now what that solution will end up being is unknown at this time. Part of the problem is Feinberg has his hands tied as Volkswagen and the EPA/CARB are still working on trying to figure out a fix for the 2.0L TDI engine. "..my hands are tied, while VW and the authorities do not resolve their differences. The original time frame could be delayed, therefore." The other problem is trying to figure out what an appropriate compensation will look like. “The jury is still out, and at the moment all options are up for debate: cash payments, buybacks, repairs, replacements with new cars,” said Feinberg. Not helping matters are the different generations of the engine in question - the EA189. One generation of the engine might have a different program than the other. Feinberg believes that once the compensation program comes online, most owners will take advantage of it. "When funds for the victims of September 11, 97 percent of claimants have accepted my offer. If GM and BP were also more than 90 percent. This must also be the target for VW." Source: Frankfurter Allgemeine Sonntagszeitung, Reuters -
Kenneth Feinberg is still hard at work on developing a compensation plan for TDI owners in the U.S. affected by the diesel emission scandal. But in an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung, Feinberg says "there will be a generous solution." Now what that solution will end up being is unknown at this time. Part of the problem is Feinberg has his hands tied as Volkswagen and the EPA/CARB are still working on trying to figure out a fix for the 2.0L TDI engine. "..my hands are tied, while VW and the authorities do not resolve their differences. The original time frame could be delayed, therefore." The other problem is trying to figure out what an appropriate compensation will look like. “The jury is still out, and at the moment all options are up for debate: cash payments, buybacks, repairs, replacements with new cars,” said Feinberg. Not helping matters are the different generations of the engine in question - the EA189. One generation of the engine might have a different program than the other. Feinberg believes that once the compensation program comes online, most owners will take advantage of it. "When funds for the victims of September 11, 97 percent of claimants have accepted my offer. If GM and BP were also more than 90 percent. This must also be the target for VW." Source: Frankfurter Allgemeine Sonntagszeitung, Reuters View full article
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The emission cheating that went back to 2006 and would land Volkswagen in deep trouble last September was an open secret in the automaker's engine development department. German newspaper Sueddeutsche Zeitung along with regional broadcasters NDR and WDR reported on Friday some of the results of Volkswagen's internal investigation into the diesel cheating scandal. The cheating goes back to 2006 at Volkswagen's engine development department. With strict U.S. emissions standards looming, the department was given an impossible task; find a cost effective solution to develop clean diesel engines. Pressure from the board and fear of telling their bosses that it could not be done only added to fire of going with cheating. "Within the company there was a culture of 'we can do everything', so to say something cannot be done, was not acceptable," said Sueddeutsche Zeitung in its report (and translated by Reuters). Thus, the decision was made the development team to commit fraud to meet this impossible task. Sueddeutsche Zeitung says the cheating began in earnest in November 2006 and the staff took solace that regulators would not be able to detect the cheating with regular testing methods. The cheat was an open secret to those in the department. That doesn't mean someone tried to speak out. The report says in 2011, a whistleblower who was involved in the deception, told a senior manager outside the department about the cheating. The manager reportedly did nothing. A Volkswagen spokesman declined to comment on what he called 'speculation'. Source: Sueddeutsche Zeitung, Reuters -
The emission cheating that went back to 2006 and would land Volkswagen in deep trouble last September was an open secret in the automaker's engine development department. German newspaper Sueddeutsche Zeitung along with regional broadcasters NDR and WDR reported on Friday some of the results of Volkswagen's internal investigation into the diesel cheating scandal. The cheating goes back to 2006 at Volkswagen's engine development department. With strict U.S. emissions standards looming, the department was given an impossible task; find a cost effective solution to develop clean diesel engines. Pressure from the board and fear of telling their bosses that it could not be done only added to fire of going with cheating. "Within the company there was a culture of 'we can do everything', so to say something cannot be done, was not acceptable," said Sueddeutsche Zeitung in its report (and translated by Reuters). Thus, the decision was made the development team to commit fraud to meet this impossible task. Sueddeutsche Zeitung says the cheating began in earnest in November 2006 and the staff took solace that regulators would not be able to detect the cheating with regular testing methods. The cheat was an open secret to those in the department. That doesn't mean someone tried to speak out. The report says in 2011, a whistleblower who was involved in the deception, told a senior manager outside the department about the cheating. The manager reportedly did nothing. A Volkswagen spokesman declined to comment on what he called 'speculation'. Source: Sueddeutsche Zeitung, Reuters View full article
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One of the big questions coming out of the Volkswagen Diesel scandal was whether or not other automakers also manipulated emission tests. The German transport office at the moment doesn't have any evidence that says so. "At this point we have no indication of other manufacturers being involved," a spokesman for the office said at a government news conference today. Not the news Volkswagen wanted to hear as the company is beginning to feel the heat from European countries. France's prosecutors have opened a preliminary inquiry into suspected "aggravated deception" by the German automaker Separately, French consumer protection and fraud control authorities have opened their own investigation into Volkswagen's cheat Italy's antitrust body has opened an investigation into wrongdoing by Volkswagen Switzerland's Federal Roads Office has banned selling and registering new Volkswagen diesel vehicles equipped with software to cheat emission test Source: Reuters via Automotive News Europe (Subscription Required) -
One of the big questions coming out of the Volkswagen Diesel scandal was whether or not other automakers also manipulated emission tests. The German transport office at the moment doesn't have any evidence that says so. "At this point we have no indication of other manufacturers being involved," a spokesman for the office said at a government news conference today. Not the news Volkswagen wanted to hear as the company is beginning to feel the heat from European countries. France's prosecutors have opened a preliminary inquiry into suspected "aggravated deception" by the German automaker Separately, French consumer protection and fraud control authorities have opened their own investigation into Volkswagen's cheat Italy's antitrust body has opened an investigation into wrongdoing by Volkswagen Switzerland's Federal Roads Office has banned selling and registering new Volkswagen diesel vehicles equipped with software to cheat emission test Source: Reuters via Automotive News Europe (Subscription Required) View full article
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The past week has been miserable at Volkswagen as allegations arose from the EPA that a number of models equipped with the 2.0L TDI four-cylinder were found to emit more emissions than were legally allowed in the U.S. thanks to software. Since the announcement came out last Friday, there has been a fair amount of news. Volkswagen admitted that 11 million diesel vehicles sold around the world had the software The company has set aside $7.3 billion for possible penalties and fixes EPA is looking into the 3.0L TDI V6 used in a number of Audi vehicles, Porsche Cayenne, and Volkswagen Touraeg A number of European countries, along with South Korea announce their own investigations into Volkswagen TDIs to see if they violate emission standards U.S. Department of Justice begins an investigation into Volkswagen over the emission violations Dealers will be getting some financial assistance Volkswagen CEO Martin Winterkorn resigns The German Transport Minister announces 1.6L and 2.0 TDI Engines in Volkswagen vehicles have the illegal software There are still a number of questions up in the air as to what will happen to Volkswagen, the vehicles in questions, and other items. That's where I come in as I'll be looking into the crystal ball and try to figure out what happens next. What will Volkswagen do with the TDI vehicles in question? Most likely Volkswagen will implement a software update that will allow the TDI vehicles to meet the strict EPA emissions. This might also cause the TDI vehicles to lose some power. What is unlikely is Volkswagen retrofitting the affected TDI vehicles with to clean up the emissions. The Truth About Cars has an excellent article talking about the possible parts and price tag if Volkswagen decides to go this route. There could also be a buyback program if the EPA and/or Volkswagen deems it necessary. Will the EPA fine Volkswagen the $18 Billion that has been reported? No. The reasons for this are two-fold. Consider the previous penalties the EPA has levied against automakers: 1995: General Motors was fined $11.5 Million for installing illegal devices in 470,000 Cadillacs 1998: Honda was fined $12.8 Million for not reporting to EPA they had disabled part of the onboard diagnostic computer that detected engine misfires. 1998: Ford was fined $7.8 Million for installing a defeat device in 60,000 Econoline vans These amounts are somewhat a drop in the bucket for automakers. Also, take into consideration that Volkswagen has put aside $7.3 Billion for penalties and fixes. The automaker believes they'll get a hefty fine, but nowhere near the $18 billion. A possible guess as to how much Volkswagen will be fined? Somewhere under the $500 Million mark. Will there be a mass exodus of owners from their Volkswagen diesels? Not likely. A small number people will likely sell or trade in their Volkswagen diesel models, only to suffer a loss in resale value. Many will likely keep their vehicles. What will do to Volkswagen's U.S. Sales? Sales will drop even further, which isn't good news for the German brand as sales have been on a downward trend again. August sales in 2015 were down 8.1 percent when compared to same time last year. Sales for the year are down 2.1 percent. This compounds a problem that has been part of Volkswagen for the past few years for not quite understanding the U.S. market and its odd quirks. One model that could take a big hit is the Golf. The model has been one the bright spots for Volkswagen as it has posted a 151 percent in year to date sales in August. What about Volkswagen's reputation? It will likely take a dive. But if the past scandals with other automakers such as GM, Ford, etc are indication, Volkswagen will be back to good down the line. Are any other auto companies taking part in something similar? Signs seem to point to yes. Earlier this week, Automotive News reported that a European environmental group that suggests a number of other manufacturers are using software or some sort of technology to skirt emission laws. You can check the group's report here. Meanwhile, German publication Auto Bild alleges a number of vehicles violate the Euro 6 emission standards. One vehicle singled out in their piece was the BMW X3 xDrive 20d that was eleven times greater than the standard. Now BMW has denied they do any manipulation on emission tests. “We observe the legal requirements in each country and adhere to all local testing requirements. When it comes to our vehicles, there is no difference in the treatment of exhaust emissions whether they are on rollers or on the road," BMW said in a statement to USA Today. Don't be surprised if more automakers are found to be manipulating or finding a loophole to pass these tests. What about reputation of diesel? This is possibly the biggest unknown at this time for the U.S. For a time, diesel was seemingly making a comeback with a number of automakers announcing diesel options for their passenger vehicles. Now with Volkswagen taking a bit of heat on their diesels, this could cause a number of automakers to reconsider the idea of offering a diesel. There is also the question if the EPA could make further restrictions or changes to the requirements for the diesel models. If so, this could mean diesels are only for luxury models or just become non-existent. View full article
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Afterthoughts: Answering the Unknowns In the Volkswagen Diesel Scandal
William Maley posted an article in Opinion
The past week has been miserable at Volkswagen as allegations arose from the EPA that a number of models equipped with the 2.0L TDI four-cylinder were found to emit more emissions than were legally allowed in the U.S. thanks to software. Since the announcement came out last Friday, there has been a fair amount of news. Volkswagen admitted that 11 million diesel vehicles sold around the world had the software The company has set aside $7.3 billion for possible penalties and fixes EPA is looking into the 3.0L TDI V6 used in a number of Audi vehicles, Porsche Cayenne, and Volkswagen Touraeg A number of European countries, along with South Korea announce their own investigations into Volkswagen TDIs to see if they violate emission standards U.S. Department of Justice begins an investigation into Volkswagen over the emission violations Dealers will be getting some financial assistance Volkswagen CEO Martin Winterkorn resigns The German Transport Minister announces 1.6L and 2.0 TDI Engines in Volkswagen vehicles have the illegal software There are still a number of questions up in the air as to what will happen to Volkswagen, the vehicles in questions, and other items. That's where I come in as I'll be looking into the crystal ball and try to figure out what happens next. What will Volkswagen do with the TDI vehicles in question? Most likely Volkswagen will implement a software update that will allow the TDI vehicles to meet the strict EPA emissions. This might also cause the TDI vehicles to lose some power. What is unlikely is Volkswagen retrofitting the affected TDI vehicles with to clean up the emissions. The Truth About Cars has an excellent article talking about the possible parts and price tag if Volkswagen decides to go this route. There could also be a buyback program if the EPA and/or Volkswagen deems it necessary. Will the EPA fine Volkswagen the $18 Billion that has been reported? No. The reasons for this are two-fold. Consider the previous penalties the EPA has levied against automakers: 1995: General Motors was fined $11.5 Million for installing illegal devices in 470,000 Cadillacs 1998: Honda was fined $12.8 Million for not reporting to EPA they had disabled part of the onboard diagnostic computer that detected engine misfires. 1998: Ford was fined $7.8 Million for installing a defeat device in 60,000 Econoline vans These amounts are somewhat a drop in the bucket for automakers. Also, take into consideration that Volkswagen has put aside $7.3 Billion for penalties and fixes. The automaker believes they'll get a hefty fine, but nowhere near the $18 billion. A possible guess as to how much Volkswagen will be fined? Somewhere under the $500 Million mark. Will there be a mass exodus of owners from their Volkswagen diesels? Not likely. A small number people will likely sell or trade in their Volkswagen diesel models, only to suffer a loss in resale value. Many will likely keep their vehicles. What will do to Volkswagen's U.S. Sales? Sales will drop even further, which isn't good news for the German brand as sales have been on a downward trend again. August sales in 2015 were down 8.1 percent when compared to same time last year. Sales for the year are down 2.1 percent. This compounds a problem that has been part of Volkswagen for the past few years for not quite understanding the U.S. market and its odd quirks. One model that could take a big hit is the Golf. The model has been one the bright spots for Volkswagen as it has posted a 151 percent in year to date sales in August. What about Volkswagen's reputation? It will likely take a dive. But if the past scandals with other automakers such as GM, Ford, etc are indication, Volkswagen will be back to good down the line. Are any other auto companies taking part in something similar? Signs seem to point to yes. Earlier this week, Automotive News reported that a European environmental group that suggests a number of other manufacturers are using software or some sort of technology to skirt emission laws. You can check the group's report here. Meanwhile, German publication Auto Bild alleges a number of vehicles violate the Euro 6 emission standards. One vehicle singled out in their piece was the BMW X3 xDrive 20d that was eleven times greater than the standard. Now BMW has denied they do any manipulation on emission tests. “We observe the legal requirements in each country and adhere to all local testing requirements. When it comes to our vehicles, there is no difference in the treatment of exhaust emissions whether they are on rollers or on the road," BMW said in a statement to USA Today. Don't be surprised if more automakers are found to be manipulating or finding a loophole to pass these tests. What about reputation of diesel? This is possibly the biggest unknown at this time for the U.S. For a time, diesel was seemingly making a comeback with a number of automakers announcing diesel options for their passenger vehicles. Now with Volkswagen taking a bit of heat on their diesels, this could cause a number of automakers to reconsider the idea of offering a diesel. There is also the question if the EPA could make further restrictions or changes to the requirements for the diesel models. If so, this could mean diesels are only for luxury models or just become non-existent.
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