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Update: I made a decimal flub. The math is corrected. Thanks to commenter ChemEng for pointing it out. We’ll post a new piece on Monday.
There’s no denying it: Volkswagen cheated. It confessed to the crime of emitting up to 40 times over the legal limit allowed for NOx. We learned yesterday (and the day before, to some degree), that Volkswagen will fix the vehicles that can be fixed, if owners so choose.
But what happens to all those diesel cars, which are perfectly good aside from emitting more NOx than they should, if owners decide to cut and run? And what happens to all those vehicles that can’t be fixed? Volkswagen has vowed to buy them back from customers — to which I ask, what then?
There are few options Volkswagen can employ to unload the massive windfall of cars coming its way, and none of them are particularly environmentally friendly.
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I worked at a Ford dealer in Silicon Valley from 1994 to 1999. It was a transitional time in the car business; a time when old-school car guys told war stories about back-lot portables stocked with sales incentives, while young consumers arrived with astonishingly accurate invoice and holdback information. We packed payments, sold $79 undercoat for $1,500, and occasionally found customers smarter than us.
By 1999, more than 40 percent of Americans were online and the Internet was democratizing information everywhere. If someone asked me then if the retail auto environment would be different 17 years hence, I would have emphatically responded yes.
I would have been wrong.
The car business and the customer experience are all but identical. The biggest change is perhaps the relocation of the smoking area.
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The temperature was already well above average on Friday, September 18 when the Environmental Protection Agency issued Volkswagen a steaming-hot Notice of Violation of the Clean Air Act. The seriousness and accuracy of the allegations are now well known. Emitting up to 40 times the allowable limit of nitrogen oxides is no small infraction, particularly when done with intent. And as a result, heads quickly rolled and resigned at the Volkswagen Group. The company continues to reel from the impact of its malfeasance as new penalties are imposed.
What has been going on at EPA Headquarters? Gina McCarthy was the agency’s Chief Administrator when the scandal broke. She is still in charge. Christopher Grundler has been at the EPA since 1980 and was the Director of the Office of Transportation and Air Quality (OTAQ) on that warm fall day. He too, remains at his post. Despite calls for resignations from lawmakers, such as Michael Burgess House R-TX, no senior EPA staffers are known to have been dismissed with cause related to the VW scandal.
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There’s not a more uncomfortable phone call for a car dealership’s finance manager to make then asking a customer to come back to have their finance or lease contract rewritten. This is typically caused by sales managers — the people most despised by finance departments — who spot deliver a vehicle based on their wrong guess about the rate or term a lender would approve the deal. Needless to say, the vast majority of these rewrites result in a higher monthly payment for the customer.
A couple of years ago, a finance manager at a Los Angeles Mercedes-Benz dealer told me and a Mercedes-Benz Financial colleague of mine about the day he picked up the phone to fix the opposite situation: the dealership had miscalculated the taxes on a client’s lease on a black ML350 Bluetec SUV and they needed the client to return and sign a new lease agreement reflecting payments of $14 per month lower than the original contract.
He called the customer with the good news only to hear, “No no no! Payment good. Payment good. We OK!”
After he hung up, he thought, “We just got snookered. That ML is probably on a slow boat to China and the factory is going to kill us.” Read More >
Refuting a report that many Volkswagen managers were involved with a widespread cheating scandal involving 11 million cars worldwide, at least three different regional offices and hundreds of employees, the automaker’s top brass has other ideas.
“No one has spoken with me,” Volkswagen’s CEO Matthis Müller told reporters on Thursday according to Reuters. “You got the information from some sources who have no idea about the whole matter.”
Set us straight then, Müller. Tell us how hundreds of confiscated hard drives and terabytes of data from multiple offices — those are VW’s figures, not ours — and more than 380 interviewed employees contradict a report that a department was scared shitless to raise their hands and admit failure to higher ups? Because that case is shaping up quite nicely. Read More >
Ford is bringing back the Bronco. This is not a fantasy. It is not a request. And although our friends in Dearborn are not ready to talk about it, we do not need their official confirmation to see why a genuine Bronco will be back in showrooms in as few as 24 months.
The return of the Bronco starts with the incredible emphasis Ford places on its leadership in trucks, which secured the company’s survival through the great recessions and have enabled Ford’s return to profitability. The Bronco may not be a truck, but its return is inextricably linked with the parallel stories of the returning Ranger and the evolution in SUV buying patterns.
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The North American Car and Truck/Utility of the Year finalists were announced Tuesday and clearly the jurors read our September handicap — and completely mostly disregarded our odds.
According to jurors, the finalists for 2016 North American Car of the Year are the Honda Civic, Chevrolet Malibu and Mazda MX-5 Miata. The finalists for the 2016 Truck/Utility of the Year are the Volvo XC90, Nissan Titan XD and Honda Pilot. The winners will be announced at the North American International Auto Show in January.
Let’s review the finalists and definitively state in each capsule why that car will absolutely win: Read More >
Volkswagen has spent over two years trying to block the publication of a research paper which reveals a key hacking vulnerability in many of their models as well as thousands from other manufacturers. According to Bloomberg, a team of researchers discovered the vulnerability in 2012 and notified Volkswagen in May 2013. Instead of working with the researchers to resolve the issue, Volkswagen argued that the paper would increase the risk of theft and sued them to stop the publication. Read More >
Automakers have collectively spent tens of billions of dollars trying to concoct
schemes sales campaigns that make consumers perpetual debtors instead of long-terms owners.
$129 a month. 0-percent financing. Move the decimal point here and the first payment there. Sprinkle a healthy amount of small print, toss in some advertising that pushes the right buttons, and keep driving down credit standards to the point where you maximize your long-term profits.
It takes the right financial recipe — and an awful lot of money — to keep any automaker in the black. The mathematical truth of the auto industry is that automakers can’t do anyone any favors, anywhere, if they don’t successfully cater to a healthy audience that embraces debt as a long-term financial proposition.
So with that said, how should automakers cater to the keepers among us? Those new car shoppers who buy once, and then try to keep their cars until they are often times worth more dead than alive?
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At the conclusion of this year’s Pikes Peak International Hill Climb, Mercedes-Benz issued a release claiming a new record: the Mercedes-Benz C250d 4MATIC was the fastest production diesel to ever make it from base camp to summit. Driven by Uwe Nittel, the compression-ignition, tri-star sedan navigated the mountain’s 156 corners in 11 minutes 22 seconds.
Since the manufacturer-favorite Nürburgring has imposed speed restrictions at certain high speed sections and outright banned hot lap record attempts, a new battleground is needed.
Will that frontline be in Colorado?
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