The VW AG Scandal - Page 2 - Porsche Macan Forum
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post #11 of 911 (permalink) Old 09-19-2015, 06:39 AM Thread Starter
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The EPA has the power to levy fines, the DOJ is initiating a criminal investigation and has directed a recall. The affected vehicles will have significantly reduced performance once the proper emissions controls are applied. I think the class action liability is extremely high.
Also, I would assume that the bankruptcy rules in Germany are different than those of the US. Maybe Germany will have to have some kind of bailout for VW. I don't know, but I'm glad I'm not a shareholder right now - which is another group that will likely have a class action due to the company not abiding by its fiduciary duty.
The fact the this was a willful act will destroy any chance of leniency, I believe. The effects of this will reverberate for at least a decade.
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post #12 of 911 (permalink) Old 09-19-2015, 07:27 AM
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Originally Posted by MarkInMd View Post
The EPA has the power to levy fines, the DOJ is initiating a criminal investigation and has directed a recall. The affected vehicles will have significantly reduced performance once the proper emissions controls are applied. I think the class action liability is extremely high.
Also, I would assume that the bankruptcy rules in Germany are different than those of the US. Maybe Germany will have to have some kind of bailout for VW. I don't know, but I'm glad I'm not a shareholder right now - which is another group that will likely have a class action due to the company not abiding by its fiduciary duty.
The fact the this was a willful act will destroy any chance of leniency, I believe. The effects of this will reverberate for at least a decade.
I have spent a few hours reading articles on this and they all contradict each other but the last one i read does claim that VW admits it (see below) . If this is true it's horrible news .This article lists the recall models . I'm surprised they didn't list the Toureg TDI .

http://www.nytimes.com/2015/09/19/bu...T.nav=top-news

"Agency officials issued the car company a notice of violation and said it had admitted to the use of a so-called defeat device. "
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post #13 of 911 (permalink) Old 09-19-2015, 07:28 AM
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Sure it's a hit to brand credibility, but there's a long line of automakers in front of Volkswagen. (See Honda and its air bags, Toyota, Ford, and GM - all had massive recalls for cutting corners and failing to disclose known defects.) It's business as usual, and the consumer moves on.

As to the hit to bottom line, it's way too early to tell. The fines and penalties are often subject to a legal challenge which produces a negotiated settlement years later that teh company knows it can handle. (See the BP Deepwater Horizon $18.5B settlement with the Feds and several states.) The consumer class action suits and derivative actions, if not settled at a number feasible to VW, may result in runaway verdicts years from now, but if they do Chpt 11 BK will provide needed relief and leverage to reduce the number to a more manageable sum. (See Texaco and how it addressed the Pennzoil verdict.)

Not too worried about Porsche (or any other band in VAG stable) at this time.

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post #14 of 911 (permalink) Old 09-19-2015, 07:43 AM
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Wow - that is horrible that they intentionally lied to the government and most of the consumers about their diesels. I am a diesel enthusiast and is the only car that I buy and would be ticked off if I had purchased one of those cars that VW labels as "Clean/Green Diesels". I am surprised it did not affect all brands VW diesels, including the Touareg, Audi Q5, A6 and Porsche Cayenne.

VW was already struggling selling cars in the US compared to Honda, Toyota, etc.... This might really hurt them.
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post #15 of 911 (permalink) Old 09-19-2015, 08:51 AM
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it makes you wonder about the corporate culture that exists at VAG that this could happen. VAG will survive just like some of the more recent recall issues hasn't taken down Dodge/Chrysler or Toyota.....but why would a consumer buy from what many will perceive as a deceptive company. Easy solution....make VWs even more affordable and many in the US will overlook it.....folks go for deals. US VW sales are struggling, and it will only get worse.

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post #16 of 911 (permalink) Old 09-19-2015, 08:52 AM
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Since Porsche falls under the VAG umbrella and Volkswagen is potentially liable for up to $18 BILLION in fines, what happens to Porsche
Nothing.

There is no way the fine will be $18B. Kia/Hyundai did the same thing with, 1,000,000 cars and was fined, effectively, $300M in a settlement. This is 500,000 cars. Do you think DOJ, is going to fine VAG $18B? 2014 VW profit was $12B. Even if they fined them, they have nearly 40B Euros in cash.

DOJ will do a settlement, more than the Kia/Hyundai fine due to the willful act, maybe up to a magnitude greater, maybe up to $3B. There will be a press release saying how shameful this is and the EPA takes this stuff seriously, and then back to business as usual.

If VAG went out of business, what happens to Porsche? Since the Porsche SE owns VAG (51%) whose assets far exceed $18B, its just not going to happen. This is a case of too big to fail. But if push came to shove, I would expect the family to just start another small Porsche manufacturing company to preserve their heritage.
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post #17 of 911 (permalink) Old 09-19-2015, 09:08 AM
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Sure it's a hit to brand credibility, but there's a long line of automakers in front of Volkswagen. (See Honda and its air bags, Toyota, Ford, and GM - all had massive recalls for cutting corners and failing to disclose known defects.) It's business as usual, and the consumer moves on.

As to the hit to bottom line, it's way too early to tell. The fines and penalties are often subject to a legal challenge which produces a negotiated settlement years later that teh company knows it can handle. (See the BP Deepwater Horizon $18.5B settlement with the Feds and several states.) The consumer class action suits and derivative actions, if not settled at a number feasible to VW, may result in runaway verdicts years from now, but if they do Chpt 11 BK will provide needed relief and leverage to reduce the number to a more manageable sum. (See Texaco and how it addressed the Pennzoil verdict.)

Not too worried about Porsche (or any other band in VAG stable) at this time.
...cutting corners and failing to disclose defects, while criminal, is not as high a crime as willfully designing a car for deception in order to skirt emissions laws and to fool the consumer with fake performance specifications!! This will surely result in higher consequences for VW, the world's largest manufacturer of diesel cars!! The model will be known as "The VW Deceptive Diesel!!" Truly sad!! Heartbreaking!! What other yet-to-be-discovered deceptions might be built into their product line??

Since this has been going on for years, I suppose it might be considered a futile attempt at survival in the face of competition. But there are better and lawful ways to beat competition!!


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post #18 of 911 (permalink) Old 09-19-2015, 09:42 AM
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I'm not defending what they did: it's not defensible. Just trying to insert a bit of perspective on the whole BK thing. This is a company with close to $90B in shareholder equity and $10.8B in net income (2014). A bit tight these days on free cash flow, perhaps. The sky is not falling on them, notwithstanding the intent behind their actions.

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post #19 of 911 (permalink) Old 09-19-2015, 09:47 AM
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post #20 of 911 (permalink) Old 09-19-2015, 09:58 AM
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@Aprilia850 - that's funny!
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