What Were They Thinking ?

I personally found much of the treatment of BP by the US legal system following the oil spill in the Gulf of Mexico to be totally shabby and lacking in any sense of ‘justice’. It was clear that BP because it was a “foreign company” was going to be treated far more harshly than any American corporate would be under the same circumstances because in these situations the US Courts are totally xenophobic.

Plus US politicians just can’t resist the chance to attack “Johnny Foreigner”, to make them look strong to the electors and because we, non US citizens don’t have a vote there, a cheap and easy win for them.

The Cost of Doing Business

Just like the constant perils of civil litigation for pretty much any reason because there is a US ‘Lawyer Industry’ ever hungry for business, it is part of the cost of doing business in the USA. To be fair in this the US if you do business in places like China or Russia, they also don’t play by ‘your rules’ either but by their own and you have to accept that this is the way it is, so…

However and unlike both Russia and China, the potential pitfalls of trading in the USA are very well known, they may be xenophobic but there are clearly laid down rules and lots of precedents to guide you along your way. You can start with the obvious in that it is very well known as a “sue crazy society” so even though you may take all reasonable steps to deal with things at the national level, you need to be aware that you can be hit by litigation from the very local level and “class actions” are pretty common

Sheer Lunacy

So with all this in mind, what on earth did VW Group have in their minds over this ? What total and complete idiot thought that this was a good idea ? How did such a decision that effects some 11 million cars globally ever get taken in the first place and then be sustained over very many years without somebody realising what they were doing was deliberate fraud ?

Now although the exact details are not yet known or fully acknowledged apart from it being a ‘software’ issue, VW pretty quickly put their hands up to this which seems to indicate just one thing, they knew what they were doing and it was a deliberate and concious act on their part to do this. The problem being that if you start from this position, it can only go from bad to worse and worse.

Petrol or Diesel it matters not, only a total Muppet in Europe actually believes the mpg figures put out by motor car manufacturers which bear little relationship to real world performance. If these figures are not to be trusted, those concerning ’emissions’ are treated pretty much the same and in the UK, the motorists main concern is what the VED (road tax) band and cost the particular model attracts.

The big problem for VW is not just that they fiddled the figures to give them a competitive advantage over their competitors which would be subject to “unfair practice issues”, they have gone further and broken the law by messing with the emissions data. This not only puts them in line for substantial and punitive fines but also, criminal proceedings against named individuals within the company.

The other factor is that the reason the US can be a harsh environment for overseas companies is because whilst there is often big money to be made in hitting on “foreigners” there is as importantly, lots of political capital to be made by doing the same so this story breaking in the run up to a Presidential election next year is to say the least, “very unfortunate”, they can expect lots of shit shovelling coming their way.

The Road Ahead

The problem for VW is that this case will drag on for a very long time, not only will there be the Federal Authorities to deal with but there will be lots of individual civil litigants to deal with so the financial costs in the USA will amount to £ billions. The longer the case drags on, the greater the damage to the VW brand not just on new vehicle sales but on the residual values in the second hand market which feed directly into new sales.

Apart from the US, at the time of writing it looks as though there maybe investigations in 10 other countries on the same set of issues so the whole thing is not just expensive to the bottom line but in terms of any fines, litigation costs and also loss of revenue through depressed sales volumes.

There is only one thing that can help VW mitigate this disaster and that is if most other volume companies are found to be using similar tactics but it would have to be MOST. It won’t stop VW suffering substantial financial harm but it would lead to a speedier rehabilitation in public esteem if “They were all at it !”

But whether it was just VW or many others engaged in this activity, I can only come back to my starting point and ask in amazement, bafflement and any other similar word or phrase; “Just what on earth were they thinking of, what total dumb arse thought that knowingly breaking the law in the USA was a good idea and wouldn’t be noticed eventually ?” The key difference between BP and VW is that in the case of BP, it was an accident, with VW it was deliberate and that carries consequences.

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