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Old 09-29-2015, 03:38 PM   #201
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Meanwhile, Audi has confirmed that they have 2.1 million cars that somehow share the same test cheating code as VW engines do. It's unclear how many other manufacturer's may be affected. Independent testers last week have linked BMW, Opel, Citroen and Mercedes to engines which exceed allowed emissions in real-world driving tests, although Mercedes is contesting the results and denying any involvement in cheating. Still a lot more details to be discovered.
In everything I've read there's still a distinction between what VW did with their 2.0TDI (Golf, Jetta, Beetle, Passat & Audi A3's) - and what "independent testers" have reported.

There's been a discrepancy in test results and real world emissions in the US & Europe for a long time, that's not a secret. Probably always will be in that real world conditions vary dramatically, there's no clear baseline.

What distinguishes VW is they knowingly used "cheating code" to substantially cheat the test (NOx reportedly 10X to 40X the US test limit), to a much greater extent than the known discrepancy.

It may turn out that other automakers have deliberately cheated, but so far what VW did is not the same as other automakers.
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Old 10-02-2015, 10:30 PM   #202
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Good article on the "problem" and the timeline of events:

Volkswagen: A Decade Of Deception - Full Chronology | Zero Hedge

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The scandal swirling around Germany's largest listed company had its beginnings in an attempt to crack the U.S. market, the missing link in VW's global footprint. But, as Handelsblatt details, what began as expansion ended in deception (piecing together the events that led up to the scandal, based on the facts as they are currently known).
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Old 10-03-2015, 11:29 AM   #203
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From a stock perspective, this reminds me of CAT and NAV in the heavy duty world where diesel dominates. CAT bet all their chips on a unique emission technology and ended up withdrawing from the on-highway market. Their engines were very popular in a variety of chassis before they withdrew from the market around 2008. Recently Navistar made a similar bet on unique technology. Their stock collapsed and they nearly went out of business but have reversed course using technology sourced from Cummins. Both Cat and Nav seemed to feel they were the smarter than everyone else in deploying their individual proprietary technologies. It looks like Navistar will recover but they never set out to deceive anyone. Cat's engine mis-step caused more harm to dealers and customers than the company itself. Their stock decline is based on the global commodity slowdown.
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Old 10-03-2015, 11:50 AM   #204
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Good article on the "problem" and the timeline of events:

Volkswagen: A Decade Of Deception - Full Chronology | Zero Hedge
That is a good read, thanks! It will be interesting to watch this play out. We may find out how much VW can be fined without going out of business.
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Old 10-03-2015, 12:38 PM   #205
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That is a good read, thanks! It will be interesting to watch this play out. We may find out how much VW can be fined without going out of business.
Yes, they are getting hit from all sides. I love their cars, but the company is so arrogant to deal with, especially on warranty issues. The U.S. dealers are probably going to feel slow sales for a long while.
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Old 10-03-2015, 02:18 PM   #206
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Yes, they are getting hit from all sides. I love their cars, but the company is so arrogant to deal with, especially on warranty issues. The U.S. dealers are probably going to feel slow sales for a long while.
They deserve getting hit from all sides. The played the game and cheated and got caught. Time to pay the piper and suffer the long term consequences of being dishonest in order to make a buck. I for one will never buy a VW product.
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Old 10-03-2015, 06:24 PM   #207
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I can't believe the German Govt would let VW go under. Aren't they significantly state owned? Not to say shareholders don't get wiped out.


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Old 10-04-2015, 02:03 PM   #208
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I can't believe the German Govt would let VW go under. Aren't they significantly state owned? Not to say shareholders don't get wiped out.
Lower Saxony holds 20% of voting rights and 12.7% of capital.

Also Qatar 17%. Go figure.
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Old 10-04-2015, 02:19 PM   #209
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I can't believe the German Govt would let VW go under. Aren't they significantly state owned? Not to say shareholders don't get wiped out.
They won't go under. The US EPA and other country regulators will probably hit them $ hard, but their goal will be punish VW, not bankrupt them. No matter how wrong they were/are, there is a limit to how much of a $ hit they can absorb. If the fines/penalties are too great, they'll declare bankruptcy and re-organize in some manner - regulators don't want that. We keep reading 'as much as $18B' - that deliberate media sensationalizing despite the supposed calculations.

From what I have read, they are less concerned about government/regulatory fines, and more concerned about litigation from dealers/customer groups. There will undoubtedly be some frivolous lawsuits WRT to $ amount. But again, there is a limit to what VW could pay without going under.

If the collective fines are too much, VW will declare bankruptcy/re-organize, all sides will litigate for years, and ultimately settle for a (much) lesser amount they can afford and stay in business. By then we'll all have long forgotten about it, it'll be a footnote deep in the WSJ, and 99.9% of us will never notice. Happens all the time.

We've all heard about the woman who was awarded $2.86MM by a jury after burning her thighs with scalding hot McDonalds coffee. But you rarely hear that verdict was set aside and settled for $640K much later, even though McDonalds could have easily paid the original $ amount (bad precedent).
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Old 10-04-2015, 07:29 PM   #210
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They won't go under. The US EPA and other country regulators will probably hit them $ hard, but their goal will be punish VW, not bankrupt them. No matter how wrong they were/are, there is a limit to how much of a $ hit they can absorb. If the fines/penalties are too great, they'll declare bankruptcy and re-organize in some manner - regulators don't want that. We keep reading 'as much as $18B' - that deliberate media sensationalizing despite the supposed calculations.

From what I have read, they are less concerned about government/regulatory fines, and more concerned about litigation from dealers/customer groups. There will undoubtedly be some frivolous lawsuits WRT to $ amount. But again, there is a limit to what VW could pay without going under.

If the collective fines are too much, VW will declare bankruptcy/re-organize, all sides will litigate for years, and ultimately settle for a (much) lesser amount they can afford and stay in business. By then we'll all have long forgotten about it, it'll be a footnote deep in the WSJ, and 99.9% of us will never notice. Happens all the time.

We've all heard about the woman who was awarded $2.86MM by a jury after burning her thighs with scalding hot McDonalds coffee. But you rarely hear that verdict was set aside and settled for $640K much later, even though McDonalds could have easily paid the original $ amount (bad precedent).
How would they ever declare bancruptcy? They would give the company to creditors? I think not. Porsche owns 50% and the state of Saxony owns 20%. As a company they made 16 Billion last year, they could easily afford costs of up to 30 billion so bankruptcy is not an option
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Old 10-05-2015, 07:22 AM   #211
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How would they ever declare bancruptcy? They would give the company to creditors? I think not. Porsche owns 50% and the state of Saxony owns 20%. As a company they made 16 Billion last year, they could easily afford costs of up to 30 billion so bankruptcy is not an option
So we agree. Bankruptcy is a legal proceeding, it does not always mean 'going under' as the earlier post (below again) suggested.

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I can't believe the German Govt would let VW go under. Aren't they significantly state owned? Not to say shareholders don't get wiped out.
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Bankruptcy offers a business a chance to start fresh by forgiving debts that simply can't be paid while offering creditors a chance to obtain some measure of repayment based on what assets are available. In theory, the ability to file for bankruptcy can benefit an overall economy by giving persons and businesses another chance and providing creditors with a measure of debt repayment.
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Old 10-05-2015, 07:44 AM   #212
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Bankruptcy is a legal proceeding, it does not always mean going under if that's what you mean.
It is very rare that the current shareholders continue as owners if a company declares bankruptcy....

Sure, you get rid of debt etc.... but you also get rid of 100% of common stock holders....


The only time I have heard of current shareholders having any ownership in the new company is if there is a huge loss carryforward they want to keep... IIRC, that is lost if you wipe out current shareholders..... but like always I could be wrong and this is just strange thoughts in my brain....
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Old 10-05-2015, 07:50 AM   #213
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Looks like even VW thinks this could kill company....
Volkswagen Groups's incoming chairman warned managers that the automaker's diesel-emission scandal poses "an existence-threatening crisis for the company" as new details emerged about how the debacle unfolded.
Also said it probably will not.... But not much in the article as it is USA today.....

Top VW exec warns emissions crisis could kill company
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Old 10-05-2015, 07:59 AM   #214
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Looks like even VW thinks this could kill company....
Volkswagen Groups's incoming chairman warned managers that the automaker's diesel-emission scandal poses "an existence-threatening crisis for the company" as new details emerged about how the debacle unfolded.
Also said it probably will not.... But not much in the article as it is USA today.....

Top VW exec warns emissions crisis could kill company
Negotiations 101, VW has the luxury of using the media to push back. Who benefits from "killing" VW, mostly everyone loses...

The bottom line, as deplorable as their actions were, when all is said and done (years from now) VW won't "go under." But they will be changed.
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Old 10-05-2015, 09:19 AM   #215
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Looks like even VW thinks this could kill company....
Volkswagen Groups's incoming chairman warned managers that the automaker's diesel-emission scandal poses "an existence-threatening crisis for the company".....
Top VW exec warns emissions crisis could kill company
It their reputation (along with fines/recalls) is so damaged that they can't sell sufficient vehicles to cover costs and remain competitive, it could be the start of a death spiral. Or takeover target.

I doubt it'll come to that but the possibility does exist.
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Old 10-05-2015, 11:05 AM   #216
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Negotiations 101, VW has the luxury of using the media to push back. Who benefits from "killing" VW, mostly everyone loses...

The bottom line, as deplorable as their actions were, when all is said and done (years from now) VW won't "go under." But they will be changed.
I think you are underestimating the effect of punitive damages awarded by a "jury of peers" in the US. How often does a jury, wrapped in the cloak of 'gut feeling', always take into account the concept of "not strangling the goose enough to kill it"?

Take, for example, that infamous McDonald's lawsuit. The Civil jury awarded the $2+ million verdict. Yes, the judge later reduced it...but the jury did still come up with the verdict of that insanely high dollar amount.

Imagine HUNDREDS of such juries in session, for various groups of VW dealers and owners, suing for loss of vehicle value, loss of profits (dealerships). Even some people who might create a class action for environmental/health impacts for the public, given the much greater pollution from the cars that can noticeably, negatively impact health given the extent of the excessive pollution.

You have a car company that intentionally went out of its way to deceive the public. In some respects, this is truly different from any other case.

It's not like the asbestos lawsuits - no true negligence and intentional deceit on the part of insulation manufacturers. Plus, the public doesn't really buy much insulation, it's more a wholesale/trade clientele. So there isn't as much impact by a public that leans more on "feelings about a company" versus hard science, like a company would probably be more rational about.

It's not like tobacco lawsuits - people can get addicted to tobacco, so they are still going to smoke. Not like a lot of the tobacco demand is going to be reduced by a document showing tobacco executives knew tobacco was damaging.

Many people purchased VW cars specifically because of the combination of the pollution control/performance. If that changes to truly meet requirements, then they have a car that they bought which was a fraud. There could be hundreds of thousands of cars VW must buy back, which they MIGHT be able to resell at a substantial loss compared to what they bought it back at.

Then add in the hundreds of dealers who's businesses are permanently impaired due to customers losing faith in VW. All of the investments they've made in their dealerships, which now could maybe break-even at best, and for many , undoubtedly losing money and forced to close. They will sue VW for loss of their businesses.

Even some dealership employees will probably get lured in by class-action lawyers for loss of jobs due to the deceptive practices by VW which hurt the dealerships and caused them to close, thereby making employees lose their jobs.

True, not every VW lawsuit will result in billions of damages - but look at how some civil juries rule for punitive damages. If there ever were a case where punitive damages apply due to the intentional deceit by a company, this is it. Some juries will arrive at lower results, but all you need is a few to come up with sky-high verdicts to start making a serious impact. Add in all of the lawsuits mentioned above, and it adds up really quick.

I would be surprised if VW does not declare bankruptcy and undergo reorganization due to the lawsuits, combined with reduction in demand by the public.
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Old 10-05-2015, 11:51 AM   #217
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So we agree. Bankruptcy is a legal proceeding, it does not always mean 'going under' as the earlier post (below again) suggested.
Perhaps my comment was not clear. Just to clarify, this is the exact opposite of what I intended.


Originally Posted by jazz4cash
I can't believe the German Govt would let VW go under. Aren't they significantly state owned? Not to say shareholders don't get wiped out.




Again, anything is possible, but I believe the company will survive this scandal. I wouldn't buy the stock, though.
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Old 10-05-2015, 11:55 AM   #218
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We can debate all day, time will tell...
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Old 10-05-2015, 12:04 PM   #219
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Negotiations 101, VW has the luxury of using the media to push back. Who benefits from "killing" VW, mostly everyone loses...

The bottom line, as deplorable as their actions were, when all is said and done (years from now) VW won't "go under." But they will be changed.

I doubt very seriously that VW will 'go under', ie, not exist at all....

They are large enough to be able to take the hit and continue as a company... the question is how small are they going to end up.... and will the current shareholders own them when all is said and done....

So, if you are a current shareholder and you lose everything I would bet that you would say they went under even if there is a VW years from now.... but shuttered up and no VW brand cars.... I doubt it will come to that....
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Old 10-05-2015, 12:11 PM   #220
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So we agree. Bankruptcy is a legal proceeding, it does not always mean 'going under' as the earlier post (below again) suggested.
No the German government will NEVER NEVER NEVER let VW go through a bankruptcy proceeding as the owners of the assets would change even though the business will continue. There is zero chance of any legal bankruptcy procedure I think
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