As everyone knows by now, Volkswagen admitted that nearly 482,000 of its “clean diesel” cars were actually pollution monsters equipped with special software designed to evade government emissions testing. As The Guardian reported, an analysis suggests that the amount of pollution caused was “roughly the same as the UK’s combined emissions for all power stations, vehicles, industry and agriculture.”
BuzzFeed rounded up news on the many class action lawsuits that have been filed, quoting me as saying, “the car you own is not the car you thought you bought. … Whenever you sell these things, you’re going to lose some value.” At the moment, it’s hard to know where to start on that value. Certainly, the cars will lose value when the fixes imposed by the recall are installed, because they’ll likely have worse mileage and lower horsepower. But there might be even greater economic harm than that, and the answer depends on why Volkswagen embarked on such a massive fraud.
The most likely answer is that the pollution controls probably had a negative impact on the car’s overall durability — they made the engines run hotter, made the cars wear out faster, and caused the car to get worse gas mileage than it would have without the pollution controls.
If that’s the case, then the damage is even greater than just a loss in horsepower or mileage. The cars just won’t be as durable and reliable as they should be. It’s difficult to imagine what could be more harmful to the resale value of a car than a generalized loss of reliability. Nobody buys a diesel Volkswagen to race it on the track with a maintenance crew on hand; consumers buy them for everyday use.
The most incredible part of this story is just how blatant the scam was, and how Volkswagen was able to do it for six years without anyone being the wiser. The scam wasn’t even exposed by a whistleblower, but by West Virginia University’s Center for Alternative Fuels, Engines and Emissions, which discovered the problem while actually trying to show the benefits of diesel passenger vehicles by way of testing a BMW, a VW Passat, and a VW Jetta.
Continue Reading Volkswagen’s TDI Recall And The Epidemic Of Corporate Secrecy