Volkswagen is already dead, but doesn’t want to admit it

Even with more than 18 Billion Euro so far that Volkswagen had to put aside for penalties, damage payments, and buy-backs that followed the revelation of the Diesel cheat scandal, the problems are far from over. Now the first verdicts come in from Germany. Cars equipped with the cheat device technically lose their operation license, if they cannot be repaired. This forces Volkswagen to buy those cars back from their owners.

The Volkswagen-brand is not the only one, Audi is also involved. And recent doubts were cast on Mercedes, when simple math showed discrepancies. Calculating the numbers of how much of AdBlue – an ammonium liquid that neutralizes NOx – is required would add up to hundreds of liters. With the costs included.

In 2003 Consumer Report-magazine tested a Mercedes SUV by driving 25,000 Kilometer through the US. When the testers brought the car to the mechanic, they had to add 28 liters AdBlue for the costly amount of 317 dollars. But even that quantity seemed to be too low. Experts looking at Mercedes’ claims calculated that in order to guarantee this amount of NOx-reductions owners needed to use an AdBlue-quantity of five percent of the used gas.

But back to Volkswagen. Its Management is busy getting the money together – if they are not busy blaming the Diesel scandal on their customers. The cash cow for the Volkswagen group is not Volkswagen. The majority of the profit comes from Porsche, Audi, and financial services. According to rumors Audi for instance had to send 4 billion Euro to the mother.

With the latest German verdict, which killed Volkswagen’s surprising interpretation of European law as making the cheat device legal, a Pandora’ box was opened of penalties and damage payments of up to hundred billion dollars. Billions that Volkswagen does not have and which actually should be used to invest into future technologies.

Just for comparison: the 18 billion Euros that Volkswagen has to put aside for the US is a multiple of what Tesla and Google spent so far on developing electric vehicles and self-driving cars. Tesla’s development and infrastructure cost are in the relatively low billions. Although Google does not comment on its development costs for, analysts estimate the annual amount for self-driving cars at 30 million dollars.

Imagine what Volkswagen could have done with the 18 billion dollars. And now VW not only has to pay penalties, where the final amount is still unclear, but also should have invested that money in future technologies such as electric vehicles and autonomous driving. At the same time Volkswagen should reckon that the announced 30,000 job reductions in the next 10 years are far from being sufficient. We are talking about a company with a structural problem of employing too many workers, due to the blend of ownership-structure, influence of work council, and politics. Pile on that the dismal sales figures since the beginning of the scandal, and we are talking about job reductions of up to ten times the number of employees. That’s half of today’s Volkswagen work force.

At the same time it becomes more apparent how damaged the Volkswagen-brand already is. No matter which automotive forum you look at, the recurring statements are the same: “I drove VW for many years, but such a car I will not have in my house ever again.”

So far Volkswagen was able go on and keep up the impression that it won’ get as bad, due to the time the justice system takes. But in a short time we will see how Volkswagen will be stripped of its parts. The cash cows like Porsche will have to be sold to have cash. The Volkswagen-brand itself will disappear, it’s just way too damaged. Also Audi’s fate is unclear given the deep involvement in the scandal. And politics won’t be able to save the company either. Too much has happened in the past that cast doubts on ethical behaviors of management and work council and that make government help unpopular. Also the automotive jobs there will be lost one way or the other.

We witness the death struggle of the company. VW-CEO Matthias Müller is just the undertaker. The deathly blows were given by the former managers Piëch and Winterkorn. Volkswagen is already dead, but doesn’t want to recognize it.

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