VW Uproar, Underlined By Stock Market Panic, Will Subside.
“When the Titanic went down, people still travelled across the Atlantic. Share prices will recover when investors realise how stupid this was”
The reaction to Volkswagen’s problems with diesels has been hysterical and exaggerated, while regulations curbing automotive carbon dioxide emissions to save the planet from global warming have burdened VW and the industry with huge costs, but with little impact on the climate.
That’s the view of a couple of experts from either side of the Atlantic, as the crisis threatening to engulf VW after it admitted cheating EPA clean air rules entered its second week.
Garel Rhys, emeritus professor of Motor Industry Economics and director for Automotive Industry Research at the Cardiff Business School, said the automotive industry will return to normal soon, unless something very nasty emerges.
“The VW problem was made worse by panic in the stock market, probably made worse by computer sell programs being triggered too,” Rhys said.
VW shares lost another eight per cent today, for losses approaching 40 per cent in the last 10 days. More news emerged to unsettle VW shareholders, including German prosecutors opening a criminal probe into former CEO Martin Winterkorn. The German government also asked VW to provide a plan by October 7 outlining when its vehicles will meet national emissions requirements.
“When the Titanic went down, people still travelled across the Atlantic. Share prices will start to recover when investors realise how stupid this reaction was. I don’t see any long term effect as long as nothing worse comes out. It’s not like Ralph Nader and “Unsafe at any Speed”, not general laxness, not something that directly affects safety.” Rhys said in an interview.
In 1965 Nader published a book pointing out safety defects in American cars, and in particular with the Chevrolet Corvair.
Rhys pointed out that serial recalls by Toyota and General Motor had no lasting impact.
Holman W. Jenkins, Wall Street Journal columnist, said Europe, where diesel cars represent around 50 per cent of new car sales, has induced a huge policy error.
“For a meaningless cut in Greenhouse gas emissions, Europe got higher emissions of nitrogen oxides and diesel particulates. While claims of thousands of additional deaths from this diesel pollution are questionable, Europe now realizes it converted half its cars to diesel for no good reason,” Jenkins said in the Wall Street Journal.
“If carbon dioxide is a problem, cars were never the solution. Cars and light trucks account for less than eight per cent of global emissions; U.S. cars and light trucks account for less than three per cent. U.S. car makers are being required by government to spend hundreds of billions on fuel-mileage improvement in the name of global warming that will have virtually zero impact on global warming,” Jenkins said.
Meanwhile in Brussels, green lobby group Transport & Environment raised pressure on politicians to “do something”, with its report showing CO2 emissions claims from manufacturers for their new cars in Europe in 2014 now show a 40 per cent gap between official claims and on the road performance, up from eight per cent in 2001. This is heading for 50 per cent by 2020, according to T&E. T&E said three Mercedes models, one BMW and one Peugeot were already showing a 50 per cent shortfall.
The Wall Street Journal’s Jenkins said if there is a CO2 problem it is with power plants and heavy industry, and he criticized the Economist magazine for calling for more rigorous testing “to make sure cars achieve their meaningless emissions goals,” politicians who accept huge costs on behalf of the public in order to pose as saviours of the climate which will have no impact on climate change, and businesses which play along out of self-interest or fear.
Cardiff Business School’s Rhys said reports predicting the death of diesel were way off the mark.
“94 per cent of world trade is powered by diesel in one way or another; massive ships, cars, harvesters, railways locomotives generators in hospitals,” Rhys said.
“Vehicle makers have to show that they are fully in keeping with the needs of society by their CO2 performance and the needs of humans because by avoiding the production of noxious gases. But normalcy will return before too long for VW and the industry too unless something worse happens. People want cars, and VW, which makes excellent ones, will have to repair its position in the market,” Rhys said.