Bye-Bye, V-Dub

Tainted 'Dub (Press Association via AP Images)

Tainted ‘Dub
(Press Association via AP Images)

The Volkswagen Group — which includes Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, and Škoda in addition to Volkswagen — is in deep doo-doo:

Volkswagen AG lost almost a quarter of its market value after it admitted to cheating on U.S. air pollution tests for years, risking billions in potential fines and a backlash from consumers in the world’s second-biggest car market.

The shares plunged as much as 23 percent to 125.40 euros in Frankfurt, extending the stock’s slump for the year to 31 percent. The drop wiped out about 15.4 billion euros ($17.4 billion) in value.

The stock market tumble is bad, but doesn’t effect the company’s fundamentals. To explain just how deep the doo-doo goes, here’s “Autoextremist” Peter M. De Lorenzo:

Even when the hippie microbuses and old school Beetles faded from the scene, VW managed to survive in the U.S. market against increasingly tough competition by at least delivering a modicum of value and Germanic driving fun in a select group of vehicles (Golf, GTI, Jetta) that still matter, despite stumblebum marketing efforts and a piss-poor – and well-deserved – quality/reliability reputation that just won’t go away.

Well, that VW – good and bad – is now officially dead. It died on the afternoon of September 18th, when the Environmental Protection Agency revealed that VW engineers had intentionally jury-rigged their diesel-powered vehicles to the calculated degree that they “contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test,” according to Cynthia Giles, an enforcement officer at the EPA. Basically, what VW engineers did is create software that electronically masked the true emissions level of its diesel-powered vehicles during the EPA test in order to pass it, but the real emissions of the vehicles were in fact nearly 40 times the level of pollutants allowed under clean-air rules.

This car company, which made its reputation with its “Think Small” charm and which continues to court the American consumer public with its “march-to-a-different-drummer” tone and its calculated, green-tinged, holier-than-thou persona, was caught red-handed by the EPA and exposed for what they really are: Manipulative gamers of the system who apparently would stop at nothing to sell the idea of “green” vehicles, even if those vehicles weren’t actually legal to sell in this country as presented.

When a company squanders its goodwill and its brand, it’s a difficult, time-consuming, and expensive effort to earn them back.

VW might be or less finished in the US market for a while to come.