22 November 2015

Is VW's Desire To Compensate Cynical?


VW is refusing to compensate European customers the way it is for the US and Canada. They say the compensation is for the North American region only. Someone at VW needs to do their homework. A newsreader in New Zealand who's husband bought a Škoda said they got a letter saying they would be getting compensation, larger than the US amount but consistent with exchange rate differences. Mind you VW brands are a not big sellers in NZ so they will not want to tarnish their modest reputation. I suppose the same applies to North America.

 In Europe there are many more customers that have been cheated. VW also know they have a docile and compliant customer base there. VW Group can do what they like in Europe and the high regard the various brands within the group are held means they won't leave just because they were cheated. VW would presumably say that isn't the case. So what reasons have they given for the different way of handling the situation?

US customers bought a vehicle specifically advertised as a "clean diesel", which of course they didn't get. They were also being enticed to buy a type of propulsion US customers don't normally consider, whereas in Europe diesels are very popular. North American customers pay more to run a diesel car but in Europe buyers receive tax benefits and - depending on the country - can pay less for diesel fuel than petrol. VW is of the opinion that European customers will be less inconvenienced by the cheating because plans for a recall are more advanced than in North America.

Personally I don't buy the spin VW are trying to put on this. It simply comes down to numbers involved and what they feel they need to do to pacify affected customers with a minimum of cost. Of course European VW owners are not being cut adrift, but in the end they will be less compensated by VW Group for the same problem. If that is fair to you, all well and good. If like me you believe the same problem should have the same response, then we would call it cynical. This leads me to question how sincere they are about the whole thing. Is VW simply upset at being caught, or treating the loyalty of their customers with anything but?

I always said it's not about the level of offending that counts, it's about the degree of contrition and desire to put things right as best they can. While European car ownership has differences to North America, the compensation variance is more than it should be. It seems cynical to me, but I may be wrong. It could be I expect too much from business.

6 comments:

Jaroslav Mikolášek said...

Hi Ray,

sorry for saying that, but reading through your recent comments on the topic, it seems that in spite of your experience, you are still missing the point...

You (and Americans) are talking about braching the law...
Europeans are talking about breaching a stupid law...

think about the difference. Consider for example why this is happenning:

http://bestsellingcarsblog.com/2015/11/czech-republic-october-2015-volkswagen-group-holds-51-of-market/

From the article, consider especially this sentence: It would appear that the emissions scandal that is rocking Volkswagen’s boat worldwide has been the best advertising for all brands of the group in the Czech Republic, with the four flagship marques all frankly outpacing the market…

What do you think?

RayCee Smith said...

Hello Jaroslav, I agree that VW isn't going to be hurt that badly by the scandal with regard to sales. The bigger cost is the recalls, compensation and fines.

On the overall subject, I am not talking about breaking the law but the morality of what was done. VW customers are loyal and their loyalty was repaid with a cynically dishonest, cheating product. One thing I have learned about life is if you cannot trust someone, then don't do business with them. I don't trust VW and I am unimpressed with their reaction to the problem. They think it is all an over reaction from the USA.

Other car makers who played by the rules were disadvantaged and sales were lost as a result, by these honest companies. They will never get any recompense if VW sales hold up.

I did an article looking at VW brand sales and overall they are down due to the cheating, but only in some countries.

So Jaroslav as you see, it is not about legalities but moralities. Thanks for writing.

Jaroslav Mikolášek said...

Hello Ray,

thank you for your reply...

I have been thinking about the difference between our two approaches - you find immoral cheating the law, I find immoral setting ridiculous law. You would punish those who breach the law (irrespective of its sense), I would celebrate those, who breach stupid law...

I hope, I am not going too far with this possible explanation:
the roots of the difference could come from the difference in the overall culture and national experience:
You are comming from the enviroment of a big empire/nation (meaning the British Empire). The key for existance and survinal of such a big states was througout the history a respect to rules. Wherever empires came, they were ruling. Once they stoped ruling and/or the people stopped listening, the emipire was erased from the map...
I am comming from a small nation locked among big countries. All these countries were comming and telling us what to do and which language to speak... Listening and adherance to these rules and laws, our nation would be already deleted from the map... That is why the key for our survival was to choose, which rules to apply and which rules to ignore...

If I apply the above to the diesel gate issue, I see the violance of the common sence endangering the automotive industry by the US law, that was not writen independedly, but under the interest of certain commertial groups. Under such circumstances, I appreciate the brave behavior of VAG showing the stupidity of law makers, ignoring the knowladge base and physical possibilities...
I also understand your approach demanding the respect to rules, However I still believe that for future development of automotive, VAG should win in this case...

Jaroslav

RayCee Smith said...

On your reason for a differing view, I think what you say makes sense.

On the point of the fairness of the motor industry being forced to reduce emissions through legislation - without any alternative that can reasonably replace fossil fuel - is not a just approach. Pollution is blamed on the car industry but governments offer no alternative.

Getting governments to agree on anything is thwarted by self interest overriding any agreed direction. I personally blame governments for the pollution as they do nothing to change the present polluting arrangement, leaving it all a car industry.

However, if the industry unitedly went to government and said "We cannot not make fossil fuel engines any more efficient without huge expense, so the ball is in your court", then maybe governments would do what they seldom have, give some unified direction.

That said, one company - on its own - cheating its customers and getting an unfair advantage over competitors has overstepped a line of fairness. It deserves to pay heavily for that.

That's how I was brought up to think.

RayCee Smith said...

I also meant to add I appreciate your comments. They are constructive.

Jaroslav Mikolášek said...

:)

just a small note to this sentence from your comments: "However, if the industry unitedly went to government and said "We cannot not make fossil fuel engines any more efficient without huge expense, so the ball is in your court", then maybe governments would do what they seldom have, give some unified direction."

Three weeks ago, there was an interview with the formmer president of ACEA that was in charge of negotiations with european commission on setting the emmission limits (EURO 4,5 and 6). According to what he said, all European car makers (through ACEA) managed to put together list of their proposals of how the new limits could/should be build, which levels it should/could reach and so on... Unfurtunatelly, the European commission negotiated the issue using emviromental committe, whose members are not technically educated people, but rather theoretical enviromentalists unable to understand technical arguments. Basically, european committe refused ALL proposals of ACEA... This is just to show how the goverments would listen carefully... (the article can be found here: http://auto.idnes.cz/rozhovor-ivan-hodac-acea-emise-dej-/automoto.aspx?c=A151101_192756_automoto_vok)

Note: as I am from time to time meeting some of the Bruxelles officials, I have to sadly confirm the theoretical approach of european clerks. So I understand, what the ACEA president said :(