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Volskwagen Diesel Gate

Overview
The causes
World domination
Top diesel country sales
Top CO2 emissions
Diesel gate effects
Can the carmaker's new boss drive it out of trouble?
My own solution

Overview

The German car manufacturer is involved in the companys biggest

scandal due to cheating emissions tests made in America when they


admitted that 11 million cars are equipped with a soft hack.

The Causes

Emissions of nitrogen oxides (NOx) from cars exhausts cause large numbers of early deathsperhaps
58,000 a year in America alone, one study suggests.

Therefore the scandal that has engulfed Volkswagen this month is no minor misdemeanour or victimless
crime.

The German carmaker has admitted that it installed software on 11m of its diesel cars worldwide, which
allowed them to pass Americas stringent NOx-emissions tests.

But once the cars were out of the laboratory and the software deactivated their emission controls, they
began to spew out fumes at up to 40 times the permitted level.

World domination
Largest car manufacturers vehicle sales, by region
2014, m

2.6

3.5

0.9

3.1

1.1

North America

3.1

Europe

0.7

Asia

1.9

Other

*Year ending
March 31st
2015
Source: Company

Top diesel country sales


Diesel cars efficiency comes from burning their fuel at a higher temperature, and that means they turn
more of the nitrogen in the air they use for burning into various oxides of nitrogen, collectively known as
NOx.

Diesel cars sales, 2013 or latest, m


Selected countries

This does not have global climate effects on the


same scale as those of carbon dioxide, but it has
far worse local effects: smogs and environmental
damage.
Moreover, the catalytic technologies used to deal
with diesel NOx emissions, as compared to the
petrol ones, require more complex and expensive
alternatives.
That does not affect large engines, but it is
problematic for small engines like those of cars.

0.1
0.3 0.2
0.3
0.5

1.4

0.6
1.2
1

Germany
France
Britain
India
Italy
Spain
Belgium
South Korea
United States
China

1.1

Source: International Council on Clean


Transportation

Top CO2 emissions


The EU has the highest standards in the world
for fuel efficiency and carbon-dioxide emissions.

Private cars

The problem is that these tough


limits do not correspond with the
reality of cars' emissions.
According to green pressure
group Transport & Environment
the gulf between stated fueleconomy figures and those
achieved by an average driver
has grown to 40% in recent
years (see chart).

European Union CO2 emissions


Certified levels, %
All cars

Company cars
45

33
30.5
25
19

20

14
9

18
14

10

13

Source: International Council on


Clean Transportation

*Levels achieved under


laboratory conditions

Diesel gate effects

Share prices Crash

The damage to VW is cataclysmic. The


companys shares have collapsed by a
third since its chicanery surfaced (see
chart).
It faces billions of dollars in fines and
other financial penalties. Lawsuits will
be flying their way to its headquarters in
Wolfsburg.
Chief executive Martin Winterkorn
resigned and the company is setting
aside 6.5 billion ($7.3 billion) to cover
the coming financial hit.

Volskwagen

All carmakers

140
120
100

105

120
110
100

100
90

85

60

But investors fear worse: in the first four


trading days since the scandal broke on
September 18th, VWs shares fell by
one-third, cutting its value by 26
billion.

Source: Thomson Reute

Can the carmaker's new boss


drive it out of trouble?

How to steer Volkswagen out of its deepening crisis?

The German car companys supervisory board gave the job to one of the favouritesthought
likely to succeed Mr Winterkorn even before the emissionsscandal erupted. But is Mr Mller,
currently in charge at Porsche,VWs sports-car division, the right man for the task?

That will be themain question for Matthias Mller, appointed as the company's newchief
executive on September 25th.

My own solution

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