It's a Small World After All!

Jamie Lincoln Kitman

Jamie Lincoln Kitman | Oct 28, 2015

Like many an overwhelmed automotive journalist, I’d meant to take a good, long hiatus from my new full-time job -- keeping abreast of the VW scandal and related revelations about the world’s rickety automotive emissions control regime. Not only is the gig exhausting, but it’s also more than a little depressing. Things keep happening, revelations cascade forth like accumulated rainwater from a broken dike, and you wonder, who’ll stop the rain?

Answer: No one. The world’s carmakers, it turns out, have the long-range vision and ethical integrity of a roving band of rabid raccoons and the bad news keeps on rolling.

The chairman of the newly formed Automotive Ethical Oversight Committee declined to comment. (Kyle Miron, Flickr)

So what with our inviolable commitment here at Car Talk Plaza to keeping you informed, here’s another interim report. Now you can share in our exhaustion and solemnity from the comfort of your own home, while we wait to see what, if anything, happens to these evildoers. We still predict not much.

VW’s annus horribilis broke, in terms of media awareness, in the US of A. So I thought when I went abroad on other business, I’d be free, at least temporarily. Wrong-o. In Portugal and the UK, from where I have just returned, it was a roiling topic of conversation.

To give one example, in a recent issue of England’s Private Eye magazine, an unsigned “Letter from Berlin” (“Letters from...” being regular features in the Eye, which is excellent, by turns investigative and satirical) served to remind us why our initial response to Volkswagen’s epic misdeed – that it was dirty and rotten but no reason to think the company would ever go under, no matter how large the fines or how vicious the trial lawyers –– was accurate. As the magazine notes, the auto industry leads most every economic category in the Fatherland, including investment, exports, R&D and as a buyer of goods and services.

Angela Merkel with then-CEO of Volkswagen AG Martin Winterkorn (R) and then-CEO of Porsche AG Matthias Mueller. (Odd Andersen )

And if it isn’t a small world after all, like American carmakers, and Japanese ones, VW has important friends in high places. Carmakers are among the most active participants in Germany’s democratic system, not unlike the Koch brothers and some other leading donors here, in that they give political parties lots of money. BMW and Mercedes give the most -- BMW’s controlling Quandt family gave Angela Merkel’s Christian Democratic Union a 690,000 Euro tip in the 2013 Bundestag elections -- but both it and Daimler Benz also give generously to the Social Democrats.

Volkswagen avoids the donations preferring instead revolving doors and the old “friends in high places” strategem. Merkel’s former office manager, Michael Jansen, was, for instance, recently elevated to coordinate VW’s lobbying efforts in Berlin. Thomas Steg, former press officer of a previous social-democrat chancellor, Gerhard Schroder, heads VW lobbying overall. Merkel also receives briefings from Matthias Wissmann, who runs the Germany carmakers’ lobbying group, the VDU. A Christian Democrat, he was a transport minister in a former life. Meanwhile, over at Mercedes, Merkel’s former chancellery minister, Eckart von Klaeden, runs the lobbying show.

The coziness with the industry may explain why one of the first responses to the financial meltdown of 2008 in Germany was a roughly $8 billion cash-for-clunkers program, “About a third of which went for cars produced by Volkswagen and its brands.”

What's German for, "Regulations? We don't need no stinkin' regulations"? 

Unsurprisingly, then, German governments have also historically fought to soften Europe-wide emissions regulations, only just this year arguing for delay of a new CO2 test known as WLTP (worldwide-harmonized light vehicles test procedure) with language lifted directly from the industry’s position papers. Apparently further delay is in order as there is a suspicion that Volkswagen’s gasoline-powered vehicles (as opposed to diesel) also fail to replicate CO2 emission and mpg standards on the road. That’s just like what they say has happened with the American regulatory scheme, too.

Monthly sales figures are just in, and  this quarter, Volkswagen Group suffered its first quarterly deficit in more than 15 years. Volkswagen has fallen, as predicted, from first to third place in the hotly contested international sweepstakes to sell the most cars of all, falling behind a resurgent Toyota and GM for what promises to be a good, long while. Is there great irony in the fact that these two companies are the beneficiaries of Volkswagen’s illegal acts, given that both have been forced to come clean about their own serious infractions of law, morality and basic human decency within the past two years? Sure, why not?

Volkswagen sales floor? (Jez Arnold, Wikimedia)

Especially as, with time, the press has stumbled upon the fact that GM’s Cadillac division was fined in 1995(!) for installing “defeat devices” on 470,000 1991-1995 Cadillacs to override pollutions controls. The result: carbon monoxide emissions that exceeded the legal limit by up to 300 percent.  As the Detroit News reported recently, then-EPA Administrator Carol Browner observed that Cadillac’s offenders “caused enough additional air pollution to blanket a major U.S. city, such as Washington, D.C., with a 10-foot layer of carbon monoxide.”

Except the EPA’s 1995 fine – the largest it had ever levied against a carmaker -- was still only a paltry $11 million and a consent decree requiring that it be overseen expired in 2005. This should give VW further cause for hope. As should even smaller fines for emissions “cheats” handed out in recent years to Honda, Kia, Hyundai, and Suzuki, as well as several makers of Chinese motorcycles. The precedent they set needs to be broken, but it’s hard to believe it will.

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