By Greg Amy, Connecticut State Activist
Check out Part 1 Here.
Another environmental concern with the Federal decree is disposition of the bought-back vehicles. Obviously, these vehicles cannot be re-sold until they are fixed, assuming a fix is ever found. (I don’t expect VW can fix these engines to the Feds’ and CARB’s satisfaction in a reasonably economical manner without significantly hurting performance, economy, and interior space. And even if it happens the “fix” will be expensive and may not even resolve the issue.) More troubling, the Feds will not even allow VW to export ‘un-fixed’ cars to a market where they do meet the emissions regulations! I find that ridiculous, given how clean these engines actually are. Why not force VW to do a “Cash for Clunkers” swap in Delhi or Mexico City where old-vehicle-diesel pollution is killing people, and in the process improve air quality in both locations? I‘d not be surprised if those vehicles actually cleaned the air as they drove around!
Instead, these ‘un-fixed’ returned vehicles are going to be scrapped; well, per the decree, “rendered inoperable by removing the vehicle’s Engine Control Unit (“ECU”) and may be, to the extent possible, recycled to the extent permitted by law.” At least they moved away from the proposed decree’s requirement of punching a 3” hole in the side of the engine blocks and bisecting the frames in at least two locations. But consider the environmental damage of these buyback/salvage cars: the environmental costs of delivery to dealership, from dealerships to staging areas, drainage and storage of fluids, crushing, sorting, recycling, and landfills. And then there’s the environmental cost of producing all the new replacement cars–it’s been said that the buyback might be environmentally worse than the crime. Can’t we just leave the cars on the road to live a normal life cycle and plant a bunch of trees instead (and maybe give Al Gore a Tiguan)…? In aggregate, if it’s worse for society than just letting them be then why are we doing that?
Why indeed? Revenge? Vengeance?
$14.7B for ‘crimes against the environment.’ Compare that to fines given to Takata (airbags), Toyota (accusations of unintended acceleration), and GM (key/ignition failures), things that actually killed people. You can (and should) crush VW’s lawlessness–and send a message to the industry–through forcing compliance and significant fines. But if you crush vehicles and thus overall societal and environmental value in the process you have failed in the overall endeavor. I don’t think that’s supposed to be the intent, but don’t I expect our “leadership” to take that into consideration?
So what now?
Well, I suggest VW will eventually make this situation whole for the majority of affected TDI owners. In December 2015 VW offered a $1000 TDI Goodwill Program ($500 VISA gift card, $500 VW dealership credit, 3 years roadside coverage). It has agreed to buy back all affected vehicles at reasonable trade-in prices plus a $5100 “we’re sorry” check. Go to vwdieselinfo.com and vwcourtsettlement.com to learn more. Alternatively, owners can wait for a solution to be developed at which point the car could be fixed and the owner will receive that $5100 compensation. Note that owners have until September 1, 2018 to make a decision.
As an owner of one of the affected vehicles–a 2010 Jetta TDI Sportwagen–my initial reaction upon learning of this was “whoa!” As a racer constantly looking for rules loopholes, I followed that up with a “hah, that’s clever!” As a citizen, I’m more concerned about the reality of these emissions regulations and environmental effects. In the end, it seems to me that these regulations, and the subsequent decree, are designed for a singular purpose: to get the oil-burners off the road and replace them with electric vehicles. As a diesel fan (I also have a Ford Excursion diesel), I am upset that Volkswagen pulled this end-run and has, in a lot of ways, walked right into a trap set for passenger car diesel engines specifically and internal combustion engines as a whole. Volkswagen has announced they will no longer sell diesel-powered vehicles in the United States and with limited exceptions other manufacturers have clearly decided this is not the market for their diesel options. This is unfortunate.
For our part, we are in no hurry to turn in our car. We enjoy the vehicle, it continues to serve us well (just did a 3500-mile roundtrip to visit family, swallowed everything we needed plus a large dog in a crate). Further, given VW’s agreement, as long as we do not put more than 1,042 miles per month on average on the car, the buyback offer will not decrease (and if we do, it’s at about $35/5000 miles) so it’s fully depreciated. Also, as long as the vehicle is “operable under its own 2L TDI power” it is eligible for buyback, so even if the vehicle is totaled by the insurance company but still drivable, we can get our full VW compensation (so maybe we save some money by dropping collision insurance?). Emissions are covered under extended warranty as are some key high-failure items (e.g., exhaust flap, high pressure fuel pump, others). Finally, this older vehicle is cheaper to insure and property taxes are significantly lower.
I suppose we could always decide to do nothing; after all, no one is going to come to our home and confiscate our car (right…?). However, it remains to be seen how states will handle emissions testing and registration on affected vehicles. A table of all affected VINs has been provided by VW and released by the courts, so it’s possible that states with emissions testing may choose to not re-register TDIs unless provided proof of repair. Maybe there will be a burgeoning TDI market in Montana?
Finally, another part of the Federal decree is that VW must either repair or buyback 85% of the affected vehicles or it will face a fine of $85M per 1% of the fleet it misses, or about $17,500 per vehicle. I’m guessing at that point they’ll be “highly motivated” to cut some deals on new cars…you just never know.
So, overall, it just makes rational sense to continue driving it until September 2018. There’s truly no downside other than you don’t get to buy a new car. Maybe a “fix” will come, maybe it won’t. And if it doesn’t we’ll surrender the car back to Volkswagen in 2018 for a big check, and look into replacing it with one of their fuel-efficient turbo gasser wagons (it is highly unlikely to get replaced with an electric vehicle). Or, maybe we’ll pocket the check and I give my wife the GTI while I daily-drive my V8-diesel-powered Ford Excursion…how’s that for unintended consequences/perverse incentives…?
One of the most important lessons I learned in B-school was not about spreadsheets or numbers, or forecasts or financial documents, it was that “corporate culture comes from the top”. We had many a conversation about failures of companies that resulted from the corporate culture that the leadership created, either intentionally or accidentally. Values and mission statements hung on the wall are nice, and look great in company documents, but how you live them day-to-day has a much greater affect. History will decide who/what/when this all came about; expect a movie starring Matt Damon soon.
I sure hope that works out for the rest of us.