Written by: Izaak Zabel
Over the past few years, Volkswagen, a German car company, has been recognized for more than its accomplishments. Only recently did that recognition hit the consumer's idea of the cars they have known and loved. The 2018-2019 models of the Volkswagen Golf and Jetta with the TDI motor has US Environmental Authorities shaking their heads. The 2009 jetta won “Green Car of the Year”. For those people that want a sporty, functional yet fuel efficient car don’t look towards a Toyota Prius, however, a Volkswagen diesel engine.
The term “TDI” is a turbo-diesel vehicle that gets upwards of 40-50 mpg on average. Once they hit the market, over 500,000 were sold in the US alone in about 14 months. Other competitors are now itching to start adding turbo production to cars, squeeze every drop of gas out of their engines. As nice as these cars are for fuel efficiency, they aren’t for the air. The VW manufacturer had cheated the system.Every 3-4 years or so, every licensed car must be “emission tested.” The purpose is to prevent any vehicles from polluting the air with too rich fuel. An O2 sensor checks the amount of exhaust coming from the system in two places, to tell the computer to use less or more fuel. Volkswagen completely failed at their job to follow those guidelines. The investigators discovered that the Passat and Jetta models spewed 30 times the allowable level of nitrogen oxide. German automakers passed this by adding to the cars computer an “emissions mode.” “It is to be assumed that the authorities will subsequently examine VW systems to determine if Volkswagen has installed test recognition into the engine control software (a so-called defeat device).” says the director of the Environmental Authorities.
This incident almost caused the diesel branch of VW to declare bankruptcy . Every owner of these cars were making a financial decision whether or not to keep the car or sell it back to the dealership for almost half of what they had paid for the car. The value of these cars significantly dropped to an all-time VW low.As I am a Volkswagen enthusiast, I am fairly biased to the situation. I would say whether I believed in the company or not, the best choice for that situation would be to hold on to your VW. Over half a million Sedans, SUVs, and crossovers from VW were apart of this scandal and will be recalled, including a $25 billion fine towards VW for allowing this to happen. VW stock will plummet and this will cause the majority of people to cash out and sell their car back to the dealership. But this would be the best time to buy a stylish and fuel efficient car as an investment.
Works Cited
BerkeleyJr. “Volkswagen to Recall 83,000 Vehicles to Settle Allegations of Cheating Emissions Tests.” CNBC, CNBC, 20 Dec. 2016, www.cnbc.com/2016/12/20/volkswagen-strikes-deal-to-address-80000-polluting-diesel-vehicles-judge-says.html.Hotten, Russell. “Volkswagen: The Scandal Explained.” BBC News, BBC, 10 Dec. 2015, www.bbc.com/news/business-34324772.
Parloff, Roger. “How VW Paid $25 Billion for Dieselgate - and Got Off Easy.” Fortune, Fortune, 6 Feb. 2018, fortune.com/2018/02/06/volkswagen-vw-emissions-scandal-penalties/.
First of all Izaak, I think you had a great paper. It really captures how poor ethical decisions of a company have very real and legitimate consequences. Cutting what may seem like small corners, an emissions test that only happens once every 4 years, almost bankrupted the diesel branch of the company. I am going to have to politely disagree with your last statement you made in your paper. I think you might have mixed up VW stock with their cars when talking about what would be a good investment. I do think that you could buy a cheap VW car now, and they might be the cheapest they would ever be. And it is a good investment strategy to buy things when they are cheap, but you overlooked one simple thing. Cars are terrible investments. Their value starts depreciating the instant you take it out of the dealership, you need to constantly keep repairing them, and buy gas for them. In the long term, cars are more of a liability than an asset. You should invest in VW stocks, not cars.
ReplyDeleteI want to just let you know how much I appreciate the flow of your blog post. It was extremely easy to follow, yet still thought provoking enough for me to form my own opinion. After reading it, I realized just how little I know about cars. I know that driving any automobile at all contributes carbon into the air, but I didn’t realize just how serious the issue is with the nitrous oxide that we pollute. A point you bring is that the value of a VW car is at its lowest point today because of their O2 emissions disaster, but this makes me wonder how that would have impacted the world years ago. There is a lot more awareness about our environment now than ever before. I wonder if this would have been an issue at least 15 years ago.
ReplyDelete10/10/19- Isaak, as a fellow brethren I extend my compliments on this fine piece of work. Something that is in the best interest of any blog post is an impartial stance in which you captured. My big question is, knowing that the emissions test is a requisite every 4 years, why did they sell these cars in the first place? It makes sense if they produce cars that are very fuel-efficient, there aren’t that many contemporary super fuel-efficient cars out there so in theory there would be a high demand for them. You have your conventional gas guzzler that may not be the best option for a lot of people, I mean who wouldn’t want better gas mileage? All in all, I applaud you for keeping an impartial stance and crafting a fine post.
ReplyDeleteI believe that this blog was very well written and very persuasive. I did not realize how much these cars we drive everyday could be such an issue with paying for gas, repairs, and other annoying things that come along with it. The air gets polluted by the gas that comes out of the car, and it just causes problems for us all sometimes. I do think that you could buy a cheaper car and have a great deal come out of it whether the car is good or not. In the long run, things would work out a lot better and be more beneficial for whoever had bought these types of cars.
ReplyDeleteI heard about this situation a few years back and thought that Volkswagon might plummet because of it. I have had a actual experience with these cars because I was interested in buying one of the cars that was sold back to the dealership. They are not fast because of the diesel feature and therefore was not impressed by the car. I think that the smart move for Volkswagon would have been to buy all the cars back from the owners for a minimal difference in what they paid. This would have made customers much happier and would have kept the fans of there brand in the loop. Instead this outbreak really caused a lot of people to suffer and therefore lost a lot of supporters because of it.
ReplyDeleteIsaak, as a fellow brethren I extend my compliments on this fine piece of work. Is this scandal the reason that car companies have not made TDIs before this? Of course this is a risk reward situation, but the fact is, they would find the emissions problem at some point. It was only a matter of time. Now VW is losing money from these cars. The sales pitch was perfect in the consumers eyes, but the product has to be by the rules. Ultimately, is there any way to put diesel in cars efficiently and clean, or does deisel only belong in trucks?
ReplyDeleteI personally drive a passat and I had no idea about this scandal. What are some ways that we could cut down on emissions besides selling our cars? I use my car most of time to only get to school and back home, is this still as impactful? I also find it surprising that VW has not completely plummeted because of this scandal and hopefully they improve their cars substantially.
ReplyDeleteI think that this article was very well explained. I personally don't know a lot about cars and things going on in the car industry and I think you easily explained it for someone like me to understand. I recently was looking for a new car and my friend had mentioned to me how VW's are very cheap and she bought hers for not a bad price. Now after reading your article I can understand why now and why people are selling them. I had no clue this was even going on at all but now I am glad to know.
ReplyDeleteI liked how your blog post was very different than others it was a breath of fresh air to the blog, yet it still has a connection to personal finance and economics. I enjoyed reading this blog and hearing about the situation along with hearing your own stance on the situation with your point of view. I wonder if this will effect other companies too as they try to compete with VW to create the same car but for it to actually work this time. Thanks for sharing this interesting topic with us.
ReplyDeleteThe amount of money that VW is losing is a lot, not only they had to pay a fine but they also had to buy back a bunch of cars. It not only made their company look bad, it also made other customers car depreciate in value. Many might see the name Volkswagen and not want to buy a car. This scandal caused a lot of damge to VW
ReplyDeleteI completely agree with keeping your VW. In terms of opportunity cost, it isn't worth losing half of its value to go change companies. The question is whether VW cars will eventually be recalled or not in certain countries. Since the cars haven't been passing the emissions standards and climate change becomes a larger issue in the United States and around the world, how far will the consequences go.
ReplyDeleteI agree that it is a smart decision to hold onto the car. I don't really understand why so many people decided to take a huge loss on the car and sell it off. This clearly occurred as there is no demand for the car, but after these problems are solved the value of the vehicles could greatly increase as many people have already sold them off. It is just a matter of not selling off when there is a lot of panic.
ReplyDeleteThis situation has not only cost VW a lot of money but have also earned them a bad rap among consumers. This may take VW a while to bounce back from as consumers may be wary and untrusting to buy their vehicles in the future. This ultimately falls on the company as this is a problem that never should have never slipped onto production models. However, I agree with your claim that current owners should hang onto their cars as they already bought the car and they shouldn’t just accept a huge loss on it.
ReplyDeleteWhile VW is to blame for failing the emissions test. I would like to look at the other side and ask why did the government let this go over a minimum of 14 months. IF these emissions test are so cared for that VW is being fined billions, Why would the government not test the emissions before the car was legally for sale.
ReplyDeleteAlthough VW is to blame for breaking laws that they definitely know they aren’t allowed to break, I am a little confused on how the government allowed them to sell over 500,000 cars in a 14 month period without discovering that all of these cars failed their emissions tests. Shouldn’t every new car that is produced by any car company needs to have emission tests run on it before it hits the market to guarantee that the car passes these tests? Because these cars weren’t tested and the government has finally figured out that the cars don’t pass emissions testing it is now the consumer's problem to figure out what to do with their car. A consumer should be able to buy a brand new car and not even have to think about if it passes emission tests because it always should. Consumers are losing thousands of dollars because VW cheated their way to get better gas mileage for their cars and the government didn’t run early tests like they should have in order to stop VW from cutting corners and breaking laws. Should the consumers who bought these cars get their money back because these cars are no longer legal to drive or should the consumers suffer because they made a purchase and didn’t know?
ReplyDeleteI found your topic very interesting as the idea of a diesel engine within a sports car is a unique factor within the automotive world. I also found the VW emission test predicament quite shocking as the government allowed them to sell over 500,000 vehicles within a 14 month period disregarding the fact that there emission system was breaking laws. I feel this is the governments fault as they were lazy in regards to properly ensuring VW was following all laws and this is going to result in an overall burden for the consumers of VW.
ReplyDeleteThis post was quite interesting. I agree with others, as I am also asking how these vehicles went undetected in terms of their emission levels. It is also very impressive for the company to sell so many with broken restrictions. The end of the blog was very enlightening too, to say that because the company is at a low right now that it is a good time to invest is very wise in a sense.
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