Economics · Modern Times

What A Mistake To Make!

In well heeled suburbs, there will be a Merc parked in every driveway
A Merc 500.
I can see by the clean styling that the Mammut’s had his hands on it.

There is something about a German car that the Americans love. The Americans love Japanese cars too, but somehow the larger Japanese cars simply don’t have the panache of a Mercedes Benz 500 series sedan. In well heeled suburbs, there will be a Merc parked in every driveway with the only difference being the colour of the individual status symbol.

One of the elements of such a symbol of an individual’s prestige is that these are vehicles built in Europe, specifically, Germany. They are well made and durable: ergo, you buy one and it’ll keep its value like nothing else will. Well, as long as it’s a motorcar, okay? Just look at the vehicles that are twenty years ol on the streets: half of them will be VWs, the other half Japanese. I did see a Renault the other day that was 22 years old, but it is something of a rarity in our day and age. My own VW Polo ‘Peppermint’ gave up the ghost at age 23. She was followed by an Opel Corsa that lasted two years until its seventeenth birthday.

The design might not have been much, what counted was that it lasted.
Not the most stylish of vehicles. Never mind, it lasted longer than one winter.

There is something about a German motorcar that makes it worth buying. I can’t answer for my sister, she drives Volvos. But then she’s a horse person too, and they tend to veer towards the Swedish vehicles for some reason. The fact remains that if you want a decent car that’ll stand the test of time, buy a VW. Or a Seat or any of the others, including these days, the Skoda. Long gone are the Skoda jokes, all of which ran along the lines of:

“Can I have a wing mirror for my Skoda, please?”

“Certainly sir,” says the busy mechanic, “it sounds like a fair swap.”

As you can imagine, all the vehicles share the basic geometry: same chassis, engine, transmission and so forth. There will be detail changes, but on the whole, a Skoda, Seat or whatever will be a VW with a different label on it. Mind you, there aren’t as many Skodas or Seats on the road after 20 years as there are VWs. Perhaps that’s because there aren’t as many sold in this part of Europe.

Speaking of the age of a motorcar in this way does put the American manufacturers at a serious disadvantage, though. Their style of car making was to assume that everybody bought a new car each year, and in the sixties when I was a little kid living in Canada, that was certainly true. American cars didn’t need to last long, and to reinforce the point that you’d need a new one, they’d fall to pieces after eighteen months or so. Just as a reminder.

When Nissan hit the US market with their down at heel designs, the response was muted. When it was realized that they didn’t fall to pieces after the first winter, the response altered somewhat. Add a fuel crisis in the 1970s and the market opened to the small motorcars that were built in Europe too. Small, efficient and trendy.

VW had its flagship Golf model, which was also available with a small diesel engine. Now I can attest to the efficiency of these things as my own Golf estate 1900cc diesel would average around 65mpg. For you Europeans, that’s about 4,2 litres per 100km. That is efficient in any person’s books, but then I did keep the revs at or around 3,000 and the speed at a consistent 55mph/90km.

I don’t know anybody else who got this kind of mileage from their Golf, estate or hatchback; I do know that I could squeeze more mpgs out of a car than anybody else I know. Or a van or a truck, come to that. It was the Golfs that were the consistent front runners if you wanted an efficient motorcar. Sure, it was a super-polluting diesel, but one has to reckon that ours was run on chip fat. 45p a litre instead of a pound at the pumps? If we were down the supermarket there’d be five litres of sunflower oil as well as one pack of toilet rolls. A pain to fuel the thing, but it cut the cost of running the thing.

It meant we could eat.

But the real problem for VW came from America. Whatever the technical ins and outs, there are a few salient features to the American’s putting the boot into VW and not anybody else. I’m not going to delve into the technicalities of common line fuel injection systems because the electronics is all Japanese. As is the software. The Americans stated that VW had added some software to tell if the vehicle was operating in a test environment – and this is entirely possible given that a modern motorcar needs to load well over a million lines of command line code as you turn the key. Yet there are clear reasons why the Americans chose to pick on VW’s diesels in the first place.

Well, in true American fashion, it’s a no-brainer. Well, it is if you know anything about American diesel cars: they’re big. This is a comparison made in a thread on Stack Exchange, comparing European and American diesels:

EUR: Ford Focus 1.5 Tdci with 120 HP (http://www.ford.co.uk/ConfigureyourCar/NewFocus/Studio)
USA: No diesel engine found (http://www.ford.com/cars/focus/specifications/engine/)

The smallest American diesel is around 2½ litres, the Germans ones are considerably smaller. It’s a truism to say that a small diesel in the US will be a VW. All the small Japanese cars run on petrol.

Note this fact, because te brainy guys in Washington spotted this too, and an opportunity: VW were out on a limb here! They were selling a car that nobody else made, that is to say, small diesels. What was a marketing advantage was an opportunity for a rapacious government.

With VW caught in their headlights, the US government pounced: suddenly it was everywhere in the media! A marketing campaign of the grandest kind, yet cost barely anything save the cost of a few phonecalls to supine agencies.

In the weeks that followed, a massive amount of money was demanded from VW, the result being a triple whammy. The Americans usually reckon on double whammies: heads, we win, tails, you lose. This was a real bonus for them!

1)VW’s share price would be hit and with a few whispers in a few ears, the Hedge funds could make a stack by shorting the share price.
2) VW’s profits would be decimated;
3) The third tidbit would be that Germany’s GDP would be nobbled and the US figures would be higher in comparison. Also, the German government wouldn’t receive as much tax from VW’s profits.

Those guys in Washington must have been rubbing their hands in glee. So were the Hedge Funds; the problem here for Washington is that they’re all registered in Delaware and so don’t pay any taxes. Never mind, who cares about tax revenues? It’s the GDP figures that make the US an AAA rated economy!

VW’s Mistake.

VW had made a very German mistake. The British and Americans think of Germans as arrogant, which to a degree is true. Albeit that as with all these statements, it’s actually truer of the British and Americans. Never mind that, the truth of the matter is that the Germans are simply hard headed when it comes to business. Ruthless might be a better word. It’s why they make such good managers and such good army officers; the balancing factor here is that their ruthlessness is well calculated – Americans and British just act. That makes their erratic behaviour the more dangerous.

The mistake VW made was to close its factory in America in 1988. This one oversight was their mistake. Rational thinking said it wasn’t worth keeping open. Only it meant that they had no leverage over the government. Who needs ‘leverage’ with a German government? If it’s reasonable, it’s taken on because it makes economic sense and is good for the country at large. It’s how democracies work.

Only with a government like that of the US, you’re either beating them with a stick or they’re holding it. Remember that Ford corporation took the US government to court for bombing their factories in Europe in the 1940s. Factories producing military vehicles for the German army the US was fighting a war with.

Ford won.

If American jobs are at stake, the US government will back down. Note that the major Japanese manufacturers all have assembly plants in the US. The emphasis is on assembly, albeit that some engines are now made there too. However, all the juicy bits – that is to say, profitable bits – that go to making a car, the electronics and whatnot, are all made at home in Japan. In any case, nobody else can make them, so what’s the point in making them in America when the Americans can’t handle that level of technology?? The Japanese corporations are safe because they employ Americans.

The other element that the Japanese have over the Americans is an impenetrable society. Add to this a level of canniness that few Americans possess – or come to that, Germans. The Japanese get on with their lives in the way the Japanese always have, and tell the American journalists whatever they want to hear. Whether it’s the truth or not makes pretty little difference to the Japs: they were done over horribly by the US and this is their sweet revenge. If you read anything in the mainstream media about Japan please disregard it. It’s the Japanese pulling the wool over the American’s eyes.

Suffice it to say that the Germans tend to tell the truth. The problem for the Germans is that they expect everybody to behave like Germans do, which is to say, to tell the truth. It works in business, it works in politics, why not use it everywhere as it, well, works. And believe me, there is no more powerful weapon than the truth. It’s also startlingly good for business. But that’s another reason why Germany still has businesses and America doesn’t.

The Americans will tell us that they have an economy, but that isn’t the whole truth.

In Conclusion.

One wonders if VW did cheat. This comment on the Washington Post speaks volumes:

“In any case, what I find most disturbing is that a “respectable” company like VW would engage in this behavior in pursuit of a relatively minor advantage in the marketplace. They really build a pretty good vehicle and they’re dominant in the diesel market, so what drove them to try a trick like this? The advantage was small, the likelihood of discovery fairly high and the potential penalty quite high. It seems very irrational to me, not to mention dishonest.”

Irrational and dishonest? Well, that’s the American mind for you. Isn’t the fact that Germans simply don’t think about tricks a factor in this entire argument? They don’t need tricks: it’s the Americans that do because there’s little else ot their economy. The only tricks the Germans do play is the ones that the Americans can’t understand, like the Stadtsanierung. And that was a trick played right before the American’s eyes!

Whatever the legalities, the Americans nailed a German company and struck gold.

Americans will still want to buy the VW Golf, even if sales of Golf Diesels decline.
The new Golf. No doubt there’s another on the drawing board…

There is one thing to note in this entire affair, though, and it should be pretty obvious by now. Whilst VW was nobbled by the US, VW still exists. They still produce decent motorcars, irrespective of what people say about the emissions tests. Even with this damage, VW will continue to produce motorcars for the foreseeable future. What’s more, Americans will still want to buy them, even if sales of Golf Diesels decline. Sales of VW’s petrol and hybrid versions (if such a thing exists?) will continue as normal.

VW’s reputation was dented, not written off.

All in all, the Americans stole a few billion dollars and massaged their economic figures for another year or so. The Germans don’t need to: they have businesses that make the figures, which need no massage. They simply don’t do trickery. Who needs this when they have a solid reputation?

Comments, please!

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17 thoughts on “What A Mistake To Make!

  1. Well, I was suckered by the propaganda. But then, I only was peripherally aware of the story, which indeed was all over the place for a week or so. It’s funny, but people think I’m cynical but the truth is I’m not skeptical enough. It’s just that folks don’t want to acknowledge how deeply dysfunctional the world in which we live in ( 😉 ) truly is.

    Liked by 1 person

    1. The Americans who do this kind of thing are extremely clever: in other words, their marketing is excellent. I don’t know anybody who disbelieves it! As you say, the Americans actually depend on people dreaming – that is to say, don’t want to acknowledge the dysfunctionality of our world. Without that, the propaganda would be worthless!

      Is it any wonder that people want to watch James Bond… rather than Trainspotting 2?

      Liked by 1 person

  2. Interesting arguments. In my family we’ve owned several different makes of cars over the years; five of which have been bought from new. Two Saab’s 2.0 ltr versions. The first ran for 10 years with just routine servicing and one clutch replacement. The second still in use in its 11th year with just routine servicing.

    We’ve also owned three VWs. The first a Polo had extremely spongy brakes. The second a mk 3 version of the Polo and the third a Golf Plus have both had approximately £1000 of remedial works each (thankfully under warranty). The Golf also presented me with a £400 air conditioning repair bill just out of warranty.
    As far as emmission cheating goes. VW has confirmed that they have undertaken remedial work to put right that which was wrong at its last service.

    The Japanese credit Professor Demming for their drive on quality. I understand his Photograph at Toyota is larger than the company’s chairman’s photograph. Although of late the Japs seem to have lost their way a bit on quality. At one stage Japan ran an annual Demming Prize. ( Ref: Dr Demming: The man who taught the Japanese about Quality – https://www.amazon.co.uk/d/Books/Dr-Deming-Man-Taught-Japanese-About-Quality/1852510854/ref=sr_1_1?ie=UTF8&qid=1487783212&sr=8-1&keywords=The+man+who+tau)

    A while back I was very fortunate in being asked to choose a company car. Colleagues opted for BMWs. I on the other hand choose the beautifully engineered Jaguar S type which was an absolute dream to drive. The thing that really sold it for me was the salesman’s pitch. He said: ” These cars are being built in factories on the site where they built Spitfires – and we are taking on the Germans again!” 😉

    Liked by 1 person

    1. I’ve come across Deming, an interesting chap. Mind you, the Japanese excel more in production methods than quality as such. Their main skill is in making all the little things nobody takes any notice of.

      Now, “VW has confirmed that they have undertaken remedial work to put right that which was wrong at its last service.” Can you give me an idea of what this required? Just plugging the car into the computer and pressing “enter”, perhaps?

      I’m glad you liked the Jag; my brother in law designed the wing mirrors for it. Well, I suppose he has to do something for a living.

      Like

  3. I can’t be sure but I think the technician had to type a password in: “Stayawayfrompoland”
    The wing mirrors – Proper Job!
    By curious coicidence I appointed the guy responsible for producing the J Gate for the automatic gearbox as our production engineer.

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    1. I can imagine the password being “Stayawayfrompoland” – after all, how many people know where it is?? Poland proper is half way between Poland and Ukraine (no problems for guessing there wasn’t much need to foment discontent there). The other half of today’s Poland was Germany…

      With this large area of agricultural land, Germany would have had an economy more like that of France. That is to say, balanced between industrial production and agriculture.

      Certain people in the West wanted it otherwise… and got it! Germany was hacked into three bits.

      Like

  4. Well that explains it. True story. On a group cycling holiday from Venice to Mantova, rather than stay with the tour guide the party of six Germans set off early, recognonitring all day. One day one foolish person in our group suggested: “Shall we follow the Germans?” To which I replied: “Don’t be silly they will be in Poland by now……

    Bye for now – a Bridge Four beckons……

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  5. I had a conversation with a pal yesterday who told me VW had admitted wrongdoing and that there simply was no room for any opinion other than that they had knowingly cheated, end of discussion, end of story, etc. He was irritated that I continued to express skepticism and wanted to know at what point I considered any evidence in any argument conclusive. I was a little amused by his being so exasperated but mostly I just wanted to get back to work in peace!

    Liked by 1 person

      1. For added irony, we had just been discussing credulity and media consumption just moments before. But he claimed the evidence had been methodically laid out in a thoroughgoing documentary film he saw in a hotel while traveling. A German doc, actually. I was struck at his frequent use of phrases like “there is no room for discussion, this matter is settled unequivocally.” Nothing is more likely to sew the seeds of doubt in me as a listener! The convo meandered into 9/11, the official version of which and to which my friend subscribes, though he concedes at least the US Gov probably let it happen on purpose, which is much farther than most Americans are willing to go.

        Liked by 1 person

      2. What is most intriguing in these situations is the gullibility of these people. Magicians know how to use subliminal images to establish a happening in the subject’s mind – a happening that is entirely imaginary.

        The subject will be entirely satisfied as to the veracity of all they saw… after all, who questions their memory? Until the magician describes the process whereby the person was duped into thinking the way they did.

        But I do not speak of these methods, even on my private blog.

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      1. They are more conjurors than magicians as such, even they have their own inner circle. They’re entertainers, though, and make a living doing this. For the serious kind, it’s a vocation.

        Like

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