Photo: Porsche
For the past month or so, Volkswagen's Dieselgate scandal has started to transform - some would say to evolve even - from a PR nightmare to a massive and global screw-up that could cause the loss of thousands of jobs and immeasurable economic consequences for a large number of adjacent companies.
Some see VW as an individual entity, but you should keep in mind that around 600,000 workers depend on the German car giant's health. Not to mention the hundreds of large or small parts suppliers and technological partners that will need to cover their impending losses as well, despite not being directly part of the problem.
I'm really not trying to sound like Chicken Little, but the sky IS falling for the Volkswagen Group with every passing week. Last week, the carmaker announced that around 800,000 of its vehicles could be involved in another emissions scandal, partly connected to Dieselgate, only this time concerning CO2 figures exclusively.
“Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process. The majority of the vehicles concerned have diesel engines.” VW's related press release stated.
That last bit is crucial for understanding that the Wolfsburg apple has rotted from its very core and that around 11 million cars fitted with emission cheating software are only part of the problem with Volkswagen and its way of doing business.
Sure, you could say that the free market brought by capitalism influenced some companies, including Volkswagen, to try and reach the top by any means, no matter if those means are legal or downright ruthless. Whatever the reason and whoever is to blame, the Volkswagen Group is definitely not heading in a good direction.
Obviously, my string of thought is overly simplistic and is only based on a couple of hunches and poorly made calculations, but there is no way things will improve anytime soon. In fact, the entire Dieselgate and CO2 scandals smack of an impending doom, at least financially-wise.
Still think I'm an alarmist that is full of hot air? I would actually like to be that, but unfortunately, the numbers kind of agree with me. Apparently, just those CO2-affected cars (whose number could be higher than 800,000 if my hunches are correct) will cost Volkswagen around 2 billion euros. That's not an absurdly high amount of money for what was briefly the largest carmaker on the planet, but piling it on top of dozens of other billions needed to clean up the Dieselgate scandal it's definitely not good news either.
Let's leave Volkswagen as a carmaker aside for a minute, and focus on the most successful, regarding profit, sports brand under the big VW Group umbrella: Porsche. In 2015, the Zuffenhausen sports carmaker managed to best its 2014 sales with two months to go and it's still the most profitable carmaker on the planet when it comes to each vehicle sold.
That said, not even Porsche is safe from the fallout brought by Dieselgate, since the EPA also alleges Cayenne Diesel models in the U.S. were fitted with defeat devices to trick emission tests.
Since the Cayenne Diesel is only one model in a somewhat huge lineup, it's actually Porsche's smallest problem, both from an image and a sales point of view. No, the larger problem lies elsewhere, and it's related to Volkswagen's death grip on the sports carmaker.
Some of you probably remember that back in 2009, Porsche was this close to taking control of Volkswagen in a classic scenario of David versus Goliath, but sadly the scheme didn't work and the exact opposite happened. Nowadays, it is largely VW AG that pulls the strings in Zuffenhausen, with all the ups and downs that this move has brought.
On the upside, Porsche now has access to a larger pool of architectures in case it ever wants to expand more in the… people's car market. Unfortunately, there are many more downsides, and the biggest one of all is the fact that when VW catches a cold, Porsche will also start sneezing.
To put things into perspective, even though Dieselgate went official at the end of September and only about 10,000 Cayenne Diesels are allegedly affected in the U.S., Porsche's 2015 profits will receive a severe dent just because VW's shares went down. If the going gets even tougher - and I repeat, the Dieselgate prognosis isn't very good - Porsche's financial future may become even darker.
The saddest part is that it can't even do anything about it, since Zuffenhausen is connected to Wolfsburg via a pretty resilient umbilical cord. In short, if VW rises back to the top - which it won't, at least not anytime soon - so will Porsche, but the current trend is starting to have a negative curve. In a way, it's like in a Formula 1 championship where a driver becomes world champion before the end of the season - no matter if the second best-placed driver wins all remaining races, he still can't win the championship.
Let's not get ahead of ourselves here, though. Porsche is still in a very good place as far as its finances go, so good in fact that it still has the cojones to make cars for its slowly diminishing number of purist Porsche aficionados. Heck, there are rumors that the next GT3 may even offer a manual transmission once again, while the upcoming 911 R will most definitely be a purist's delight.
Then again, if we look 3 to 5 years into the future, the situation may not be as rosy. If I were in charge of Porsche's marketing department, I'd probably try and distance the brand as far away as possible from its VW hat in the upcoming years, no matter the technical synergies between the two companies. Something not unlike what Ferrari did under FCA with its recent IPO. The trouble is that it can't actually escape from the clutch of the Volkswagen Group, since it can't sell itself and become independent again, but it can at least do it from a presentation point of view.
Since some people no longer associate Volkswagen with flawless German engineering, courtesy of the string of lies that encompassed Dieselgate, they should at least not put Porsche in the same boat, especially since the sports carmaker has a very talented pool of engineers that have never designed a Volkswagen.
Can Porsche make it with only a couple of flesh wounds, or will it succumb in the same death pit as Volkswagen? It's hard to say.
I'm really not trying to sound like Chicken Little, but the sky IS falling for the Volkswagen Group with every passing week. Last week, the carmaker announced that around 800,000 of its vehicles could be involved in another emissions scandal, partly connected to Dieselgate, only this time concerning CO2 figures exclusively.
“Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process. The majority of the vehicles concerned have diesel engines.” VW's related press release stated.
That last bit is crucial for understanding that the Wolfsburg apple has rotted from its very core and that around 11 million cars fitted with emission cheating software are only part of the problem with Volkswagen and its way of doing business.
Sure, you could say that the free market brought by capitalism influenced some companies, including Volkswagen, to try and reach the top by any means, no matter if those means are legal or downright ruthless. Whatever the reason and whoever is to blame, the Volkswagen Group is definitely not heading in a good direction.
Obviously, my string of thought is overly simplistic and is only based on a couple of hunches and poorly made calculations, but there is no way things will improve anytime soon. In fact, the entire Dieselgate and CO2 scandals smack of an impending doom, at least financially-wise.
Still think I'm an alarmist that is full of hot air? I would actually like to be that, but unfortunately, the numbers kind of agree with me. Apparently, just those CO2-affected cars (whose number could be higher than 800,000 if my hunches are correct) will cost Volkswagen around 2 billion euros. That's not an absurdly high amount of money for what was briefly the largest carmaker on the planet, but piling it on top of dozens of other billions needed to clean up the Dieselgate scandal it's definitely not good news either.
Let's leave Volkswagen as a carmaker aside for a minute, and focus on the most successful, regarding profit, sports brand under the big VW Group umbrella: Porsche. In 2015, the Zuffenhausen sports carmaker managed to best its 2014 sales with two months to go and it's still the most profitable carmaker on the planet when it comes to each vehicle sold.
That said, not even Porsche is safe from the fallout brought by Dieselgate, since the EPA also alleges Cayenne Diesel models in the U.S. were fitted with defeat devices to trick emission tests.
Since the Cayenne Diesel is only one model in a somewhat huge lineup, it's actually Porsche's smallest problem, both from an image and a sales point of view. No, the larger problem lies elsewhere, and it's related to Volkswagen's death grip on the sports carmaker.
Some of you probably remember that back in 2009, Porsche was this close to taking control of Volkswagen in a classic scenario of David versus Goliath, but sadly the scheme didn't work and the exact opposite happened. Nowadays, it is largely VW AG that pulls the strings in Zuffenhausen, with all the ups and downs that this move has brought.
On the upside, Porsche now has access to a larger pool of architectures in case it ever wants to expand more in the… people's car market. Unfortunately, there are many more downsides, and the biggest one of all is the fact that when VW catches a cold, Porsche will also start sneezing.
To put things into perspective, even though Dieselgate went official at the end of September and only about 10,000 Cayenne Diesels are allegedly affected in the U.S., Porsche's 2015 profits will receive a severe dent just because VW's shares went down. If the going gets even tougher - and I repeat, the Dieselgate prognosis isn't very good - Porsche's financial future may become even darker.
The saddest part is that it can't even do anything about it, since Zuffenhausen is connected to Wolfsburg via a pretty resilient umbilical cord. In short, if VW rises back to the top - which it won't, at least not anytime soon - so will Porsche, but the current trend is starting to have a negative curve. In a way, it's like in a Formula 1 championship where a driver becomes world champion before the end of the season - no matter if the second best-placed driver wins all remaining races, he still can't win the championship.
Let's not get ahead of ourselves here, though. Porsche is still in a very good place as far as its finances go, so good in fact that it still has the cojones to make cars for its slowly diminishing number of purist Porsche aficionados. Heck, there are rumors that the next GT3 may even offer a manual transmission once again, while the upcoming 911 R will most definitely be a purist's delight.
Then again, if we look 3 to 5 years into the future, the situation may not be as rosy. If I were in charge of Porsche's marketing department, I'd probably try and distance the brand as far away as possible from its VW hat in the upcoming years, no matter the technical synergies between the two companies. Something not unlike what Ferrari did under FCA with its recent IPO. The trouble is that it can't actually escape from the clutch of the Volkswagen Group, since it can't sell itself and become independent again, but it can at least do it from a presentation point of view.
Since some people no longer associate Volkswagen with flawless German engineering, courtesy of the string of lies that encompassed Dieselgate, they should at least not put Porsche in the same boat, especially since the sports carmaker has a very talented pool of engineers that have never designed a Volkswagen.
Can Porsche make it with only a couple of flesh wounds, or will it succumb in the same death pit as Volkswagen? It's hard to say.
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