"So, Randy, what is your take on the whole Volkswagen crisis?"
Seems to be that everyone thinks I have the answer to what was happening at Volkswagen AG, let alone Volkswagen of America. It is a hot subject due to how Volkswagen handled the crisis with stop sales, executive turnover and a jumble of numbers that are confusing to anyone following this story. Though my responsibility as one covering the automotive industry is to put my byline on the line and state what facts were available in this forum, I was hesitant to do so.
Why? I was busy with other things, first off. Secondly, the story needed around the clock care that I could not commit to. Plus, there are the readers, social media followers and other friends who already had their own opinions one way or another about the subject that my own words would be frankly meaningless.
Who wants to read what I had to say about the Diesel emission crisis at Volkswagen? What kind of perspective could I bring that would be different and distinctive than what anyone else had said or writer? What information am I sitting on that no other journalist, blogger or social media enthusiast already had?
That was my corner that I got pinned into.
However, I could state some considerations I once brought forward in a Facebook post about this topic. Obviously, there were root causes to this issue. There was the pressure to meet various emissions standards in order to sell diesel engine automobiles in places with the most stringent laws. This has been exacerbated by a disagreement on emissions standards and fuel composition between the USA and the European Union.
The latter is an interesting twist, since diesel engine vehicles outsell gasoline ones in Europe. EU emissions standards are constantly updating, yet are still not on the level of what they should be over on this side of the world. To be fair, no one is in agreement on emissions standards, period. This includes the divide between the ten states that adopted the ultra-stringent California Air Resources Board (CARB) standards and the rest of the USA.
Volkswagen wanted to meet these emissions standards – based on using the CARB standard as a benchmark – sell more diesels. They know how cost effective diesels are in the long run against hybrid electric ones. The pressure was on to achieve these marks for the sake of sales.
This is where it gets more interesting. Volkswagen wanted to reclaim its former glory as being the best-selling foreign brand sold in the USA. Toyota, Nissan, Honda and all others from Asia had already left Volkswagen in the dust. It did not help that Volkswagen had its own battles with quality and reliability of their products in periods between the last air-cooled VW was sold in the USA to today’s award-winning MK 7 Golf.
Also, Volkswagen of America tried to give their customers what they wanted, while cultivating conquest customers with different products. Let us be honest, the current Tiguan is severely outclassed by the rest of the compact crossover/SUV segment. The Touareg is too expensive, yet it was made clear that it wanted a more premium audience. There had been criticisms of the current Jetta being "too cheaply made" to compete with the Toyota Corolla, Honda Civic and the rest of the compact class. I do see that changing as the Jetta is improving towards going back to infusing more quality materials with a car that offers plenty of advantages over its competitors.
On the other hand, the Passat is roomier than the Toyota Camry. Yet, not a lot of people are buying it because Volkswagen fans would rather have the European version of the same car instead of the enlarged North American version built at the new Chattanooga, Tennessee plant. It also baffles me that the Golf Family is such a good lineup of cars, it has not yielded more than 10,000 units per month!
If sales leadership is not being met, how will Volkswagen of America ride out the crisis?
It was just announced that Volkswagen has a new strategy. As reported in Automotive News, Group CEO Mattias Mueller wants to concentrate on yielding profits over growth in vehicle sales volumes. This means possibly reducing the number of models offered across all brands in the Group. OK, great, but it makes me wonder how much this will affect VWOA and other Group brands sold here.
For starters, Volkswagen is still committed to expanding the Chattanooga plant to add another vehicle line – a mid-sized crossover – to the mix with the North American Passat. TDIs are still on stop sale until further notice, while VWOA has reached out to current owners on remedies for their vehicles.
These moves are in the right direction, yet it makes me wonder how much Wolfsburg (global headquarters) will have to come down on Herndon (USA headquarters) to ensure that product quality, a focused lineup to meet global and localized needs and to which "alternative" propulsion options will keep them relevant in this market.
That is the most important piece – relevance. The earlier of talk of doom has been squashed with caveats that VWOA will be here to stay. We need choices in this market, but we need products to be competitive on the level that will meet what the marketplace will be offering. They need a Tiguan that rivals the Toyota RAV4, Honda CR-V, Ford Escape and Nissan Rogue. They need people looking at the Passat on an equal basis with the Toyota Camry, Nissan Altima and Honda Accord. They need a Jetta to be more attractive to buyers than the Corolla, Civic, Ford Focus, Hyundai Elantra and Chevrolet Cruze. They also need to sell more Golfs to show Mazda3 customers what a full lineup of compacts can be.
Plus, Volkswagen needs to deliver that mid-sized crossover to be completely competitive with the Ford Explorer, Honda Pilot, Toyota Highlander and Kia Sorento.
These are just trivial items. The fundamental thing Volkswagen – VWOA, global brand management and Group – has to do is to keep on top of the situation and prepare for the next wave of this crisis. The numbers of vehicles affected is still unresolved, as well as which markets and timeframes were affected. Even today, I look at what was proposed for a recall and just know that something could go awry down the line. The root causes for this crisis – disagreement on emissions standards setting off the conditions for allegations, mea culpas, and a game of musical chairs company-wide – are simply seen as trivial to a software code under scrutiny.
Yet, my opinions based on root causes and management missteps will not resolve the issue. Nor would it gain or lose favor among your eyes and thoughts. There is so much that is in disagreement, confusion and simply just allegations that still keeps the wounds untreated. With answers unresolved and further reprimands looming by governmental authorities, this story is far from over to make any further judgments on this matter.
I am at the point where I could only digest facts – real, hard numbers and honest causes – and could only steer away from the speculation and pontification found across the media net. If one thing I wished would have been done better was that some of my colleagues take a few steps back and gather only the facts that were from reliable sources and report on them. It is the ethical way of doing this. Some of my colleagues have stuck to this methodology – and I applaud them for doing so.
However, we are driven by getting the story out first. We are driven to get that first impression from social media. We may have lost focus on the story and not feed memes to the social media following masses. Hence why I stayed out of the coverage and not use my outlets to delve into the abyss, as have other outlets already have done. In the end, it is about seeking honesty and understanding how to deliver those honest answers.
Right now, I have no honest answers as to what happened or what will come next. That should be the job of more reliable outlets to divulge for you – not me.
That is my take on the Volkswagen diesel emissions crisis.
All photos by Randy Stern