Almost three years on from VW’s monumental lapse of judgement, the only thing that is clear amid the noxious murk is an overwhelming and potentially damaging lack of clarity.
Not simply a colossal failure and a swingeing indictment of VW’s corporate culture as espoused by the management style of former chairman, Ferdinand Piëch, the repercussions of VW’s 2015 betrayal are proving even wider and faster-accelerating than anyone might reasonably have anticipated.
The savage irony of course is the fact that as predicted on these pages, VW itself has weathered the fallout with more resilience than many had imagined and that, despite further revelations and ongoing lawsuits, VW management under the current leadership of CEO, Matthias Muller, appear to be successfully transitioning Volkswagen towards a post NOxgate future.
But while the collapse of the Wolfsburg mothership appears to have been greatly exaggerated, the speed in which the malign effects of diesel-based NOx and soot emissions has grown from media cause célèbre to outright paradigm-shift is as alarming for the industry as it is bewildering for the customer.
As anyone in the centre of a dust-cloud can tell you, it’s fiendishly difficult to see with any clarity and therefore the only thing of which we can be certain in the current environment is that there is little or no certainty to be had. We have known for years that all car manufacturers (in concert with a complicit testing regime) have been advertising misleading economy and emissions data – figures it would have been nigh-impossible to replicate in normal daily use.
We also know that, despite the concerted push towards petrol hybrids and full EVs, neither entirely stack up (as yet at least) as fully rounded solutions and come with their own set of user and environment-related issues. Outside of large, developed inner cities, the case for electric becomes increasingly tenuous and will continue to be of a questionable nature until such time as matters of charging infrastructure and generation are robustly addressed. And currently, in these Islands at least, this is palpably not the case.
What is increasingly apparent however is the broader argument in favour of diesel, in any shape or form, is as good as lost. While coming a good three years after the VW revelations and its grubby aftermath, matters are now unfolding with a speed and decisiveness that appears to have paralysed the motor industry. Across Europe, city legislatures have either enacted or are in the process of enacting partial bans on diesel powered vehicles and this week, a decisive ruling seems likely to accelerate matters further.
Having slapped a writ on the municipal authorities of Baden-Württemberg and North Rhine-Westphalia, German environmental lobbyists, Deutsche Umweltilfe have battled the judiciary to authorise diesel bans in the respective regional capitals of Düsseldorf and Stuttgart.
But following an appeal by the respective state legislatures, judgment was batted to the federal administrative court in Leipzig, who earlier this week ruled in favour of bans being enacted. This decision is expected to be a gamechanger. Even a partial ban in Mercedes-Benz and Porsche’s back yard could prove a watershed for both the industry and more importantly, the customer’s belief in diesel as a fuel with a future.
Nothing is worse for business than uncertainty and right now that is all customers are realistically being offered. Already this is driving such buyers who are prepared to commit one way or another from diesel to petrol and hybrid, especially in markets like the one in the UK, where DERV never quite achieved dominance.
Even in diesel-loyal France (73% of the market in 2012), diesel’s share of the market has slumped to 47% last year. So while in markets such as Italy and the Republic of Ireland, diesel remains predominant, the repercussions of Tuesday’s decision could be both sudden and (for the customer at least), expensive.
Already some manufacturers have publically flung their diesel allegiances overboard. Toyota (perhaps automotive’s canniest operator and never DERV’s greatest proponent) has publically announced it will discontinue diesel powerplants in their future car offerings, while this week it was reported that FCA is about to announce a phasing out of diesel by 2022.
Porsche’s recent decision to remove diesel options from its Macan and Panamera range is, on the surface at least, more of an issue of compliance than outright retraction, (they claim to remain committed) but it’s nonetheless conceivable that with a greater take up of petrol-hybrid models (already making up 50% of Panamera sales), demand will evaporate of its own accord.
What begins as an undercurrent, swiftly becomes a torrent. And with spokespeople from several leading financial analyst firms projecting a doomsday scenario for the fuel, the tide against diesel appears overwhelming. An Evercore ISI analyst told reporters in the wake of Tuesday’s ruling, “The result is… damaging to already battered diesel sentiment, which we should see reflected in continued decline in diesel market share and residual value estimates.”
And yet, a staggering lack of clarity for motorists remains. As expected, the industry and its mouthpiece, the mainstream motor press continue, King Canute-like to make the case for DERV. Meanwhile, Barclays are forecasting diesel’s share of new car production dropping to 27% overall by 2025.
What are motorists to do? Drive the diesel vehicles they purchased in good faith into the ground in the hope that draconian bans will be long in coming, or change out now and try to amortize some value? And in the latter scenario, what next? Petrol? Hybrid? EV? Not only is it difficult to arrive at a definitive, palatable or indeed affordable conclusion, it’s nigh-impossible to proffer any meaningful advice.
Even without the emissions issue, the motor industry is facing an existential crisis. EV development and the unstoppable (if ill-advised) push to full-autonomy would be sufficient to elicit outright panic in most boardrooms. To this add the sort of fundamental change of the kind that occurs once in several generations and the motor industry is faced with an unprecedented set of seemingly intractable challenges.
But this scenario will not be served by a code of Omerta. Silence will not retain customer confidence which is leaching away as Big Auto wrings its hands. Failure to handle this coming crisis will be painfully expensive and potentially life-threatening. Which self-inflicted coup de grace is it to be?