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31 March 2018

Bad Egg?

On this eve of the Full moon and Easter, my choice in writing would be about sitting under the lunar rays with a glass of fine red and great chocolate. However, this is about cars that were sold Green yet were actually rotten eggs! And eggs-actly what is Volkswagen going to do with the smelly, stinky and dirty 300,000+ diesel VW’s recently bought back by the company? According to Steve Hanley, “when Volkswagen got caught with its pants down in the diesel cheating scandal that broke in September of 2015, it took a $25 billion hit in the US alone. Part of that number is for fines imposed by various federal and state regulators and part of it is the cost of buying back a large number of the more than 500,000 diesel powered cars it sold in America after 2008”.
According to Reuters, VW has paid $7.4 billion to US customers to buy back their cars. The buyback program will continue through the end of next year. A filing with the court says the company has sent 437,273 letters to US customers offering nearly $8 billion in compensation and buybacks. To date, it has repurchased more than 300,000 vehicles.
And what does Volkswagen do with all those cars after they buy them back? It stores them. And where do you store 300,000 vehicles? Anywhere you can, apparently. The company is keeping them in 37 so-called “secure storage facilities” scattered across the country, including a former football stadium outside Detroit, a shuttered Minnesota paper mill, and an abandoned airport in Victorville, California, that also stores decommissioned airplanes.
Last week, Volkswagen spokesperson Jeannine Ginivan told the press in a statement that the California location is one of many meant “to ensure the responsible storage of vehicles that are bought back under the terms of the Volkswagen” diesel settlements. “These vehicles are being stored on an interim basis and routinely maintained in a manner to ensure their long-term operability and quality, so that they may be returned to commerce or exported once U.S. regulators approve appropriate emissions modifications,” she said.
Volkswagen would like to take all those cars and resell then in other countries with less strict diesel emissions standards. What does that tell you about where the company’s heart is in this process? Does it make any difference if the noxious stew spilling from the tailpipes of all those cars enters the atmosphere in Brazil or Australia instead of the US? So far, US officials have steadfastly opposed any plan to re-export the cars until the emissions violations have been resolved. That’s good news for the environment.
Volkswagen could choose to dismantle the cars and add the pieces to its worldwide inventory as remanufactured or rebuilt parts. Seats, instrument clusters, suspension pieces, exterior trim, glass, and thousands of other components are interchangeable between gasoline and diesel powered cars. But taking the cars apart and shipping all those pieces around the world may cost more than the value of the parts when all is said and done.
In the meantime, the cars sit, soaking up time and money that could be put to more productive use. And despite all the revelations about how Volkswagen sought to deliberately mislead regulators around the globe into believing its diesel cars were marvels of German engineering, people are still buying V Dubs by the boatload. After sales slipped badly after the diesel cheating scandal broke, the company is back on top as the world’s largest car company by sales volume. It would be interesting to see how many people who sold their cars back to Volkswagen went out and bought another VW-branded automobile. Bad eggs, indifferent or otherwise, enjoy a full moon bath tonight, grab a glass of red, a chuck of chocolate and have a happy Easter!

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