AD #1794 – VW to Offer “Generous Compensation,” Datsun Unveils Crossover Concept, VW’s Culture of Fear

February 8th, 2016 at 11:35am

Runtime: 7:10

- VW to Offer Diesel Owners “Generous Compensation”
- VW Delays Financial Results Report
- VW’s Truck Unit Wants IPO
- Datsun Unveils Crossover Concept
- Audi’s Super Bowl Ad Paying Off
- Ex-VW Chair Created Culture of Fear

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65 Comments to “AD #1794 – VW to Offer “Generous Compensation,” Datsun Unveils Crossover Concept, VW’s Culture of Fear”

  1. Todd T Says:

    VW handled this affair as poorly as they could. They are on the hook for a $9-12 billion cost, AND still on the hook for tons of legal liability. There was a way to spend the same $9-12 billion dollars, while simultaneously mitigating most litigation AND keeping customers loyal to VW AND making VW look like a hero corporation.

    Instead VW has opted for the instead package. Instead of all of the above, they’ll spend more than $12 billion (I suspect it will be close to $35 billion when all is said and done). AND will be despised by owners who loved their cars. AND will it’s brand dragged through high profile State suits, and potentially criminal charges as well. Ahhhhh, arrogance, what it bestows.

  2. Chuck Grenci Says:

    The R8 commercial was so well done I have to give it “two thumbs up” to the ‘ad’ agency; my only lament would be that this would have been even better had it been a Corvette commercial. (Corvettes were well revered back in the day by the astronauts.) Opportunity lost I suppose (but that’s 20/20 hindsight on my part)

  3. Lisk Says:

    VW, buy buying back the cheating diesels may seen like a good way out but for many it will be the start of some real trouble I fear. Who will put the value on the cars? Will it be like an insurance company who low-balls you on the value of your car expecting you to be a head nodder and agree? And if you are the original purchaser of the car will you get more or less of an offer. Not to mention those who will buy a diesel for little or nothing just to get a check from VW. This tactic occurred during the “cash for clunkers program”. People bought $300 cars only to get $2-3000 for them from Uncle Sam.

  4. Kit Gerhart Says:

    Will VW TDI owners who don’t want to sell their cars back, be forced to do so? In states and localities with emissions testing, it may not be possible to renew registrations, but in many places, like Florida, there is no testing.

  5. Todd T Says:

    Please edit the above second paragraph, third sentence: AND will have its brand dragged through…criminal charges as well.

    Culture of fear: Lutz is one hundred percent correct. But, the blame can’t be laid at Piech’s feet alone. VW culture is a reflection of a broader German style of business management culture. It works very well, until it breaks, and when it breaks no one is equipped to fix it, because it was never anticipated to break.

  6. Todd T Says:

    #4 Yet another piece of the puzzle. There is no precedent for a mandated sell back. Most likely most of the cars would move to states that have no testing. So, there would be no net gain for EPA in its goals (though CARB, would succeed).

  7. Kit Gerhart Says:

    2 …and a Corvette costs barely over a third as much as an R8. I thought it was a great ad, though, and the R8 is a really cool car.

  8. Kit Gerhart Says:

    6 If the cars move away from urban areas, the worst of the harm from the high NOx emissions would be gone.

  9. Brett Says:

    VW seems to be another classic example of how corporations attract sociopaths to high positions and reward them for their behavior.

  10. Todd T Says:

    #8 Interesting point, and doubtful those smaller markets could absorb so many cars. Basically, VW will just have a bunch of angry customers, who will never again give VW a second look.

  11. Rob Says:

    If VW was smart they should have been sending out offers to diesel owners to receive some crazy pricing on the purchase of a new (non-diesel) car with the extra money for their trade in of their exsisting VW. Sell a bunch of cars just barely over cost to keep sales up and customers happy with a new car. They would have removed the diesels and potentially kept customers real happy. If it is a special pricing for diesel owners only, they might actually feel privileged and not being forced to do something.

  12. GM Veteran Says:

    2 . . Love the R8 and the ad was well done. I agree that the concept would have been better suited to the Corvette. I get a little exasperated with foreign car companies that use pure Americana or American accomplishments to sell their cars. The Japanese brands have done this a lot over the last 5+ years, pulling at our national heartstrings while the profits go back to Japan. Grrrr! Why don’t they exploit their culture to sell their Japanese cars?

  13. Buzzerd Says:

    There certainly seems to be a difference in the way executive mistakes are viewed compared to blue collar mistakes are viewed, especially if it involves the UAW. VW executives have caused immense damage to the company in dollars and reputation and yet it seems like it’s not that big of deal. If it was found out that UAW workers were taking some sort of short cut on the line and were responsible for the huge recalls that VW is looking at people would be fired, many, many people. The public would be calling for the end of unions and for criminal charges and burning at the stake.
    I don’t that kind of reaction here, for something that actually deserves it. It’s more like, yea they f’s up, they are going to get fined, oh and everyone else is probably doing it so what’s the big deal.

  14. Rob Says:

    #12 I agree as I watch commercials and see foreign car companies set the stage of a 4th of July party, American flag, apple pie, and their vehicle. Which may or may not be assembled here in the states. I cant help but still feel a bit violated.

  15. dcars Says:

    VW getting their hands on Paccar would be a tragedy for Management and it’s workers. They’ve made great vehicles and should stay independent. Navistar is on the right track, but may run out of time.

  16. Lex Says:

    Former VW chairman Ferdinand Piech was too interested in VW becoming the world’s largest automobile manufacturer at any cost. This probably drove his managers and engineers to do anything and everything to please this power hungry dictator! I hope VW has learned it’s lesson and dedicates itself to the “Pursuit of Perfection”.

  17. HtG Says:

    R8 ad

    It ticked me off to see an astronaut in the R8, but reasonable me knows that it was Werner von Braun’s german engineering team which made great contributions to the US space program. Voluntarily, of course. ;) Our friend here, Bob Wilson of Huntsville Alabama, likely knows what I’m talking about.

    _____
    vw

    Does vw get to decide on its own how to compensate owners? The company violated EPA regs and will surely require govt approval for any buybacks or other compensation. If I were an owner of a ’06 diesel, I wouldn’t be too happy to lose a well maintained car for a few thousand dollars. Now I’d have to go get something else more expensive.

  18. HtG Says:

    R8

    who goes to KBB’s website after seeing that ad, anyway? Weird.

  19. Roger Blose Says:

    Where are all of the buy back TDIs going to be sent? The crusher….I think not. And the added cost to handle these buy backs will be huge as well. The VW dealers have to be pleased.

  20. Buzzerd Says:

    @19 Since they aren’t EPA complaint and can’t be where else would the cars go but the crusher?

  21. bobD Says:

    On the other Super Bowl auto ads, the one I’m still puzzled by is the Buick Cascada. With the tag line, “I can’t believe that convertible’s a Buick”. I have to agree. The front end looks like a Chrysler 200 to me. What is GM thinking when they have spend so much effort to “brand” the look of Buick grille, only to not put it on their “halo” car. I realize this is just a re-badged Opel, but surely they could have spent a little more time and effort to put a “real” Buick front end on the car.

  22. Alan Says:

    VW can probably sell all of these buy back TDI’s in developing countries. Should be able to recover a good percentage of cost.

  23. Todd T Says:

    #11 Given that 60% of TDI owners have owned more than one TDI, I’m not so sure a gasser would make them all that happy. When it comes to gassers there are a lot of options, better than VW.

  24. Todd T Says:

    #17 06 model year car would not be subject. It’s only 2009-2015 2.0 liter cars. But, you hit the nail on the head how it’s not going to be an easy sell.

  25. Todd T Says:

    #19 and #20 There are several options. Ship to markets that don’t have such restrictions. Modify and rebuild the cars with effective emissions equipment and resell as used (you avoid expectation losses as what you are buying is fully disclosed). Donate to shops and tech schools. And finally the crusher.

  26. HtG Says:

    23 yeah. a booboo with the year.

  27. bobD Says:

    I suspect that VW is envisioning buying back the US diesels, then shipping them out of the US (e.g., Mexico, Cuba, south America) to resell and recover part of their expense. However, I would not be surprised if the EPA requires VW to crush the cars, or at least destroy the engines, as was done with the Cash-for-Clunkers buy-back program, so you are simply not shifting the “polluters” to somewhere else in the world. I think the EPA will have control over what VW does with the buy-back cars using the potential fines as the hammer to follow their guidance. That is, if VW ignores the EPA and simply exports the cars to Mexico to resell, the EPA fines could be much higher, compared to VW crushing the cars, truly resolving the emission problem in the EPA’s eyes, where the EPA might issue lower fines for cooperating.

  28. Rob Says:

    #24 Pull the motors and convert them to plug-in EV’s lol

  29. ukendoit Says:

    Re: Yesterday’s discussion of RPMs; my wife’s ’97 Explorer idles around 600RPM! It has done this as long as I’ve known her (and it), over 16 years. I had never known a vehicle to idle that low, but it has never caused any problems and the engine never faulters or dies. It has been serviced several times and this was never brought up as an issue. I like it, as I assume it gets better gas mileage due to lower RPMs. Does anyone know if this was intentional at Ford, or if we have a freak SUV?

  30. bobD Says:

    On VW potentially spinning off their heavy truck divisions and then buying the struggling Navistar as a strategy for success, is that just more arrogance/cluelessness on the part of VW’s management of not accepting the financial situation they are in? Perhaps they are following the lead of Marchionne trying to make something successful out of the Fiat/Chrysler merger that is not sustainable in the long run, but perhaps buys time to look for a Plan B.

  31. Kit Gerhart Says:

    There are a lot of places they could sell the VW’s, like Somalia, North Korea, Cuba, Syria, for a few.

  32. bobD Says:

    #17(HtG) – On deciding on the compensation to VW owners, VW supposedly hired attorney Kenneth Feinberg (the go-to guy on such matters) to be an independent resource on determining the appropriate compensation. Now whether VW follows those recommendation is another thing, as so far they have not made good decisions in handling this fiasco.

  33. Kit Gerhart Says:

    28 I suspect around 600 rpm is about the right idle speed for your Explorer. Even 4 cylinder cars now have idle speeds of ~700 rpm. The more precise fuel control with EFI allows lower idle speed than with older cars.

    My new Corvette idles at about 600, with a fairly highly tuned engine. I suspect the similar, but lower powered versions of the same engine in trucks idle even lower.

  34. Kit Gerhart Says:

    22 VW has only one gas car that I’d consider, the Golf Sportwagon, which has exactly zero direct competition in the U.S. market.

  35. Kit Gerhart Says:

    17 At KSC, I’ve seen a photo or two of astronauts with their Corvettes. I think Jim Rathmann, 1960 Indy 500 winner, and Melbourne Chevy dealer provided the cars to the early astronauts.

    If I had one of the TDI’s, and liked it, I’d want a lot more than “market value” for my car. I make it a point to keep my cars in perfect condition, both mechanically and cosmetically, but “market value” doesn’t reward that as much as it should.

  36. Todd T Says:

    #31 As the article mentions Kenneth Feinberg can’t provide a settlement fund disbursement as yet. “My hands are tied as long as VW and the authorities have not overcome their differences,” Feinberg said.

    Feinberg goes on to say: “Look at my prior cases: 97 percent of the victims of September 11 accepted my offer. At GM and BP it was more than 90 percent, too. That has to be my target for VW,” Feinberg said, adding that the car maker had granted him full authority to decide on the compensation.

    “It is a purely business transaction, less emotional.”

    At GM and BP the fund was established to deal with loses that can only be remedied financially, since a life can’t be restored, and losses in income can only be replaced.

    I think some, not all, owners of TDI’s might be a bit more emotional than Feinberg estimates. And this focal group could be quite difficult and cause a good deal of unwanted drama, further adding to the disruption of brand’s recovery.

  37. HtG Says:

    35 But settling with Feinberg is quick. He cuts you a check without you hiring a lawyer and waiting through years of legal process.

    Ken carries a stick too. (I read he likes opera, so this kind of melodrama is nothing new to him)

  38. HtG Says:

    …through years of an uncertain legal process… I should have written.

  39. Todd T Says:

    Yes, but if you give up your car, and get a check that doesn’t allow you to buy a new car you like half as much, what kind of settlement is that? Certainly not one, you’ll tell people about while extolling the appreciation you have for the brand.

  40. HtG Says:

    Maybe Feinberg intends to pay out more than the cars were worth before the scandal. vw may be willing to pay some “good will” money to get this crap behind them. I guess the key is the US authorities; what do they want to achieve?. Some executive heads on spikes, perhaps?

  41. Kit Gerhart Says:

    The one recent (2011 or 2012) TDI owner I know plans to keep, and “run out” the car, unless forced to do otherwise. That could change, if the buyout offer is good enough, but he likes the car.

  42. Kit Gerhart Says:

    39 I’d think the EPA would want them cleaned up, or out of the country. Is that your thought, HtG?

    The Passats may be clean-upable, since they have urea injection.

  43. Todd T Says:

    #40 You might not be far off with the heads on spikes, I suspect that’s their desire, more-and-more as this drags out. If VW pays more than value, then I go back to my first comment here, why not spend the same money and end the dispute entirely?

  44. HtG Says:

    42 I don’t know what EPA wants. But I think the situation is very complex. Didn’t Dept of Justice lawyers travel to Germany to talk to their counterparts? Aren’t suppliers to vw being investigated?

    But I’d like to hear how Kim Jung Un spins 500,000 diesels into a great victory over the capitalists aggressors.

  45. HtG Says:

    43 because vw lied to the US EPA for a year until confronted with insuperable evidence. That’s a big deal for law enforcement that relies on industry self regulation.

  46. Todd T Says:

    At this point I do think EPA wants a pound of flesh. DoJ filed suit against VW in January to open the doors for fining in coordination with EPA. Here’s one sticky point that a buyback doesn’t resolve:
    Every state’s Attorney General could file a claim under state laws for violations of advertising fraud/deception. Customers were sold a car with specific specifications (namely a “clean diesel”), and were delivered a car substantially different.
    Many moving pieces to the puzzle, and VW is trying to put pieces in place in the wrong order, or is trying to ignore the existence of pieces all together.

  47. RumNCoke Says:

    Can one of you automotive Big Brains explain to me why Datsun’s “signature grille” looks exactly like everyone else’s?

    Maybe Infiniti should bring back their giant WWE championship belt logo that they launched with years ago. Now THAT was a signature.

  48. Bob Wilson Says:

    Well there are alternatives revealed during the Super Bowl (link on my name.)

    As for von Braun and his team, they brought a lot of engineering excellence. One thing I quickly learned is the difference between engineers who have access to the engine test areas and everyone else. It is the difference between pro-football and the rest.

    Bob Wilson, Huntsville AL

  49. Kit Gerhart Says:

    48 I need to be careful with the way I drive my red Prius when there is big police presence. Mine is a gen 3, though.

  50. Ziggy Says:

    @29 My 2012 Jeep Liberty with the 3.7 liter V6 idles when warm at 500 RPM, so 600 for your Exploder doesn’t seem odd to me.

  51. cwolf Says:

    As a result of the VW fiasco I wonder if they will try to place more emphasis on more expensive brands to increase profits, thus worsening VWs future in the American market.
    And with the same idea, FCA purchase of pollution credits is forcing them to produce more Eco-friendly small cars in the future, yet no one wants them. And to add confusion, they are building a new Jeep truck plant in Toledo. I can’t make sense of it!
    I don’t think I’ll put my money on either company in the near future.

  52. Kit Gerhart Says:

    Unless Fiat has some competitive cars that can be Americanized in the future, FCA’s long-term prospects look dim. For now, the idea of making only trucks, and big, aging cars might make sense, but today’s cheap gas won’t last forever.

  53. Kit Gerhart Says:

    51 Europe is where damage control will be most important for the VW brand. They are a very small niche brand in the U.S. They need to deal with the lawsuits and criminal actions, though, even if they exit the U.S. market.

  54. Earl Says:

    After hearing Bob Lutx’s comments about that VW Chairman Ferdinand Piech being a dictator type gives credence to what I’ve said all along. That is that VW has too many ‘Adolf’ types in the Company. Anything to achieve ‘Volkswagen uber alles.

  55. Rick Wakefield Says:

    Regarding the Super Bowl ads:
    I think the best ad was from Honda, for thge Honda Ridgeline.

    The one with the sheep singing the Queen song only when the truck owner wasn’t near them.

    Very clever ad. I enjoyed it so much I looked it up on-line and found the on-line version to be better due to the sheepdog talking more at the end of the commercial.

    It was very good and caught my eye and ears.

  56. HtG Says:

    Yes, I hope the wrong people don’t take the fall. Like Lutz, I was also saying that there was a problem in the vw culture, beginning from the top. We’re seeing M. Mueller take some steps to change things, but that’s a big company.

  57. OMEGATALON Says:

    VW has to be generous because they’re still vulnerable to a potential class action lawsuit for fraud where they may need to repay full price of their cars and litigation fees.

  58. HtG Says:

    55 ditto. I liked that Ridgeline ad. Who represents those sheep?

  59. Danny Turnpaugh Says:

    OK, How about buying a VW diesel and putting plates on it from a junker that is never driven and not worrying about it. I knew a lawyer that had plates on his Porche that were for an 60 something olds station wagon, he saved hundreds in fees and if he were to get caught the fine would be small compared to what he saved. so much for honest lawyers.

  60. Kit Gerhart Says:

    There are probably now “TDI futures” being traded, gambling based on speculation about buy back values.

  61. Chuck Grenci Says:

    For the idle speed posts (above): if you have a code reader that can list you engine operating parameters, plug it in and check your rpm’s digitally; your dash tach may not be representing you actual rpm. 600, though, is not unheard of; though 650 is a generally accepted value (depending on vehicle, number of cylinders and also whether the a/c compressor is on/off).

  62. HtG Says:

    60 Would you like to speak to a salesman at Goldie, Kit? They’ll be happy to sell you some risk.

    Really though, you know there’s derivative products being traded in vw so people can gamble on the path of this scandal. Deutsche Bank is prolly the biggest player.

  63. Rob Says:

    So 20 years from now after the VW’s have been rounded up destroyed or at least shipped ouot of the country. If I lied and said I sold it but stashed it in a garage I wonder if it would be worth anything if for nothing else but being rare?

  64. ukendoit Says:

    Thanks, Kit, Ziggy, & Chuck.

  65. Mike O Says:

    I bought an 09 Jetta TDI new out the door for $25,500. I love it, they can have it back for $25,000 I’ll eat the $500. It’s only 1/3 used at 140,000 miles.