The 7 Billion Dollar Question

posted on Nov 09 2015 by Ryan Plavenieks

The 7 Billion Dollar Question

Amidst the scandal of the rigged emissions figures, VW are rumored to be spending somewhere in the region of 7 billion dollars to rectify the rigged software, pay fines and cover any other associated costs.

Shortly after news broke that the VW groups were reportedly fixing emissions on millions of vehicles in the U.S. stock prices dropped and it looked like one of the biggest firms in the world could be in for a rough time.

A German news paper has described the emissions test rig as “the most expensive act of stupidity in the history of the car industry” and to be fair this could prove true.

As yet sales of VW branded cars took a plunge of 9.8%. Skoda only dropped a small amount by 3% and Seat also under the Volkswagen umbrella took a dive of 32.2% but can we attribute this to the emissions rigging? When you take into account the figures coming from Vauxhall and Ford on new registrations in the month of October. Ford was down 9% and Vauxhall 16%.

However, VW’s prestige brands Audi, Porsche and Bentley all grew or had increased sales compared to last year.

If we set aside the sales figures for a moment and forget about all the government bodies and News outlets baying for blood and concentrate on a few questions that people might not have thought of.

One such question might be “If VW were to cease to exist, what would happen to the workforce”?

Volkswagen employs nearly 600,000 employees worldwide. Unless a rather deep pocketed buyer were to step in and take over there could be quite a few people lined up at the job centre should the gates at Dresden be closed. Though it does look like this is already happening to some degree.

If you thought that it would be just the employees affected then what about the other people and companies associated with VW? Suppliers, franchises, showrooms race teams and finance houses may all feel the knock on effects. With such a large global workforce surely there must be global complication should the worst happen and surely a large dent would be made in the global economy. Dark times indeed.

This leads us on to another important question we must ponder. Are they too big to fail?

Just like the banks in 2009. Would VW be deemed too big to fail? Have they worked themselves into such a position that regardless of the decisions they make and the paths they take for their own financial gain a company the size of Volkswagen could not be allowed to fail?

I would hazard a guess that if VW needed a bailout by the German government they wouldn’t have to wait long for the coffers to be opened even if that meant exploiting customers trust and breaking the law.

It seems like it’s a catch 22. Most of us wouldn’t want to see such a large workforce out of a job and most of us wouldn’t want to be taxed or pushed further into austerity because of a few crooked suits at the top of the chain.

I think that whatever happens to Volkswagen over the coming months and years the scrutiny will still be firmly on manufactures and their processes and as other brands have already been linked with emissions fiddling more than ever they will be watching their backs.

The world’s love affair with the automobile shows no signs of dropping off.

New models, ideas and technologies by brands are pushing the envelope to continue the desire the customer has for cars. So maybe the question shouldn’t be what if VW were to fail? But as consumers should the question really be, do we really care?

That’s the 7 billion dollar question!