VW slumps to first quarterly loss in at least 15 years | Hacker News Reader

VW slumps to first quarterly loss in at least 15 years

reuters.com

41 pointshappyscrappy72 comments

I don't buy the implication that this didn't go up extremely high in VW. I'm sure they'll find some low level drone(s) to take the fall like normal, but generally speaking if they were engineering and building cars which they KNEW couldn't pass emmissions it had to have been a concerted effort to cheat the system inter-departmentally, which means coordination, which means senior management involvement.

The CEO has already been fired, but for something this big it won't just be the low-level types that get fired.

>The CEO has already been fired

...with a 67M severance package

https://www.washingtonpost.com/news/on-leadership/wp/2015/09...

Half of that is a pension already earned, not severance, and the other half is a theoretical calculation from the article based on the maximum severance he could receive.

Earned? Accrued maybe, but I don't think earned is the appropriate word.

It was earned in the same sense that any income or salary is earned. It's agreed upon payment exchanged for an agreed upon service. It was just as much a part of his compensation as his base salary.

The implication is that he did not deliver agreed-upon services.

It's extremely uncommon to have to pay back compensation when one is fired.

The board has the option of denying the severance entirely if they think that he did not deliver the requested services.

> It's extremely uncommon to have to pay back compensation when one is fired.

I'd imagine it's extremely uncommon to incur $18B in fines, either.

I'd say that's actually more common than employees being required to pay back all their compensation from their job.

I'm sure legally he's entitled to the money.

That does not imply he did his job properly.

> That does not imply he did his job properly.

That would not be surprising given that he was fired.

Unless you're suggesting that an employee who is fired should have to pay back all the compensation they were paid, I honestly don't see what you're trying to argue here.

The real problem here is that companies mistakenly place such an incredible amount of confidence in their CEOs and therefore offer them extraordinary leverage in the negotiations. They become convinced that they've found the one person in the world who can lead their company into the future, and once that belief has settled they're willing to pay almost anything to keep that person.

In an extreme case, let's say an employee was a total fraud, filling out timesheets and never coming to work. It would make sense to take all compensation back.

At a certain point of literally not doing what you were paid to do, on purpose, at the very least all bonuses should be revoked. Signing bonuses should require a certain amount of honest effort before they lock in, and exit bonuses should require the same or more.

I agree when we're talking about that extreme, but I don't think we have evidence that their CEO was a total fraud. He was just the figurehead of a scandal that may or may not have involved him, and if it did involve him that doesn't necessarily mean he held sole responsibility. In fact, this notion that he wasn't performing his agreed upon duties might be spectacularly false if the whole executive team was in on it. For all we know his resignation was simply a PR stunt to make it seem as if the company is recoiling in shock at the revelations.

It's very true that we don't have the full picture yet.

If he has even moderate responsibility, I don't think he deserves any bonuses or similar he got. It doesn't take 'full' responsibility.

But maybe he had almost none, and it's fine.

He wasn't fired, so he shouldn't be getting a "severance package". He resigned. He shouldn't be getting anything for the tens of billions of dollars in damage caused to the company. I wish CEOs stopped being rewarded for screwing up.

What's worse is that VW is still pushing the narrative that only two engineers are at fault here, and it refuses to blame the CEO, even though it keeps finding millions and millions of other cars affected by this.

I wish CEOs stopped being rewarded for screwing up.

CEOs typically aren't rewarded for screwing up, they get rewarded for signing up. Any severance package is most likely negotiated before they they take the job so as to get them to show up in the first place.

Now why it's that way is a different discussion. Want me as CEO of GroupOn or Yahoo? Damned straight you're giving me a severance package whether I screw up or not, otherwise I'm taking a less risky job. But CEO of VW? WTH does the company need to offer a severance package for that gig?

> Want me as CEO of GroupOn or Yahoo? Damned straight you're giving me a severance package whether I screw up or not, otherwise I'm taking a less risky job.

Why? Tons of employees take on this risk when joining a startup, and they don't get a huge severance package. Risk should be aligned with reward - if you succeed you should be very well compensated for a risky gig, but if you fail you shouldn't also be very well compensated. The only reason these large CEO severance packages exist is because other CEOs sign these deals, and who doesn't want to be on the "heads I win tails you lose" side of a deal.

Why?

I said why: I'll take the equally-well-paying and less risky job over at FoobarCorp, which is turning a profit and shows no signs of doing otherwise for the foreseeable future, where I might be employed for a good long while and leave without a black mark on my resume. If I'm going to have the albatross around my neck of not turning around an already screwed company, you're paying me whether I turn it around or not.

Don't shoot the messenger, I don't like it any more than you do. I'm just laying out what the current incentive system is. Should Fiorina just scraped by on her $4 million/year (or whatever it was) salary, and made big stacks from her options when she turned HP around? Sure, just like the rest of us. But that, unfortunately, isn't the way it works. Instead the rest of us get to sit around saying, "hell, I would have been happy to fuck up HP for half that amount", because we're not members of the "get paid whether you do a decent job or not" club.

Tons of employees take on this risk when joining a startup, and they don't get a huge severance package.

Yes, but tons of employees don't get hired into key roles that can make or break a company.

It's no different than the packages you see tech companies give "rock stars" who are nowhere near the CEO level. If they really want the person, they'll bend over backwards to throw guaranteed compensation at them.

The rule is: the guys who can sign checks, all sign them for each other. No other logic need be applied.

Shouldn't their salaries be enough as a compensation?

>I wish CEOs stopped being rewarded for screwing up.

They're honouring his contract, not "rewarding" him.

>and it refuses to blame the CEO

How much "blame" can the guy take? VW is huge. It's unlikely he knew about the issue, and even more unlikely that he was "in" on it. Is he responsible, as CEO, for the issue? Yes. Hence, he resigned.

He resigned, with a potential €60 million payout coming his way. More than firing is due here - people should be going to jail for criminal fraud.

>More than firing is due here - people should be going to jail for criminal fraud.

How about they prove criminal fraud before we talk about locking people up?

Someone committed criminal fraud. You don't accidentally put a defeat device like this into a car.

Someone high up is going to prison for this. The Germans are pretty fierce with regulatory failures.

General Motors - which knew about their broken ignition switches for over a decade - got away with a 900$m fine. That defect killed at least 124 people.

I also recall the problems with exploding Firestone tires on specifically Ford vehicles from the early 2000's that probably killed around 250 people and injured thousands. Firestone was fined $500,000 and I can't seem to find a record of Ford being fined anything except settling and losing as well as losing a couple of lawsuits as a result of it.

VW fraud likely killed almost one hundred Americans but far more Europeans.

http://www.ibtimes.com/volkswagen-diesel-scandal-2015-emissi...

And probably saved equally many lives, by reducing CO2 per kilometer by almost 20%.

And they got bailed out by the US taxpayers.

I am just astonished at the outrage over some skirting of an arbitrary number in an emissions standard, in contrast to the comparative yawn over the things other automakers have done that they knew would actually kill people.

Diesel emissions kill tens of thousands of people each year.

It's probably hundreds of thousands across Europe. VW's scam has added to those deaths. VW killed far more than 150 people.

you're way off

http://www.latimes.com/business/la-fi-vw-pollution-footprint...

http://www.sciencealert.com/scientists-estimate-the-death-to...

while pollution will affects almost everyone on earth, the cumulative effect is not that much and pollution is not a major cause for deaths to begin with

http://apps.who.int/gho/data/node.wrapper.ENVHEALTH3?lang=en...

From your link:

> At present, outdoor air pollution kills in excess of 3 million people every year, and automobile exhaust is a significant part of the problem.

Are you talking about this bit?

> the harmful nitrogen oxides emitted by Volkswagen’s affected diesel vehicles – which the US Environmental Agency claims were 40 times higher than the legal level – could be responsible for as many as 106 deaths in the US between 2009 and 2015.

That's the US, where diesel is not as common as Europe.

Your link says that:

> From a global perspective, the actual death toll could be much higher.

600 000 premature deaths and of the diseases caused by air pollution in the WHO European Region in 2010

http://www.euro.who.int/en/media-centre/sections/press-relea...

Some percebtage by car, of which some percentage by diesel cars, of which some are wv, of which some have defeat devices.

Edit: sorry totally misread parent post

> hundreds thousands death caused by the pollition increase from the defeating device

I didn't claim that.

[Citation Needed]

Air pollution kills 60,000 people per year: http://www.independent.co.uk/news/uk/home-news/air-pollution...

NO2 kills about 2,600 people each year in London.

> The effects of the gas are particularly pronounced in London, where the Greater London Authority already recognises that it prematurely kills 2,600 Londoners each year;

http://www.telegraph.co.uk/motoring/car-manufacturers/volksw...

Across Europe this is easily tens of thousands of people and it's easily an order of magnitude over 150.

NOx emission from road cars is only a percentage of air NOx > like, 34% [1]

VW market share is about 20% of that [2]

so about 4000 deaths if they polluted their fair share, but since they polluted 20% to 40% more that's about 2000/year additional deaths?

numbers are all over the place however, too many uncertainties and unmeasurable factors.

also my number doesn't come anywhere close to other estimates[3]

[1] http://uk-air.defra.gov.uk/assets/documents/reports/aqeg/nd-...

[2] http://www.thetruthaboutcars.com/wp-content/uploads/2015/01/...

[3] http://www.sciencealert.com/scientists-estimate-the-death-to...

Polluting the environment kills people too.

And CO2 kills also people. VW's cars had far lower CO2 emissions than competitors.

That remains to be seen. CO2 is fairly innocuous, and already makes up a large percent of the volume of air. It's theorized that it leads to climate change (that being said, 8000 years ago Europe was also in an ice age, yet it thawed without mankind's help), but for the present time the amount of deaths that can be directly blamed on CO2 from cars (remember, people and animals create more CO2 than vehicles) is non-existent. Even if mankind's CO2 use does tip the scale enough to definitively kill millions, more CO2 is produced from power plants, ships, industrial ranching and burning forests than is produced by cars (especially VW cars).

On the other hand, the other gases released by diesel-burning automobiles do show direct health consequences, and VW has done the most to propagate diesel vehicles...

> CO2 is fairly innocuous, and already makes up a large percent of the volume of air.

Its fairly innocuous at naturally occurring levels, which are not a "large percent" of the air. Nitrogen, Oxygen, and -- if you want to be extremely generous and say that "almost 1%" is "a large percent" -- Argon are the only things that have a remotely plausible case for being a large percent of the atmosphere, and together make up around 99.9%.

Carbon dioxide makes up a large percent of the remaining ~0.1%, but...

> CO2 is fairly innocuous, and already makes up a large percent of the volume of air.

397 ppm, to be exact, or 0.0397%.

Just because no number of people were killed at present doesn't mean it's not a serious offense.

Well, that's what happens when your software lies.

At least EFF had a small win here https://supporters.eff.org/civicrm/mailing/view?reset=1&id=1... despite losing the fight against idiotic CISA.

They feed roughly 600.000 people worldwide (without suppliers) and have been around for more than 70 years. Just saying.

The article mentions €6.7bn set aside, but their trimestrial loss is $3.48bn only. IANA-financial-analyst, but they're still profitable after scandal. Here are a few points of comparison:

- Revenue 2013: €197 billion (over 1 year)

- Profit 2013: €6.4 billion (over 1 year)

So the scandal cost them 1 year of profits, 3% of their revenue.

I'm surprised that in the US their sales didn't take nosedive, I take that to indicate their customer base has a very enthusiastic and fundamental core... Which is good for them. If this does not shake their confidence, then nothing will, and if this is the case worldwide, VW will survive this scandal largely unscathed, relative to the size of this scandal. For a while it seemed like their viability was very much in question, now it seems beside some large write downs and some lean years, they will survive.

Generally speaking I haven't seen a whole lot of stress about the situation from the VW owner clubs I'm part of. The common mentality is that VW had to cheat the rules by a 3rd party in order to deliver the quality of vehicles they've grown to love and they don't necessarily blame VW for that, they blame the regulations.

Personally I'm a bit skeptical that my next vehicle will be VW. I'm sure I'll give them a test but they won't be as favored to me as they could be simply because there's doubt of honesty in my mind now. Have they pulled some scam on my car that's yet to be caught? Is everything I've been promised on the brochure guaranteed or did they skirt some other regulation or standard?

VW is a giant company and they're sitting on a giant pile of cash. Anyone that thinks this was going to kill VW is not very bright.

This will affect their status perhaps as the world's #1 automaker, but they'll be around for a long time.

And they’re partially owned by the government of the largest nation that doesn’t run a deficit™, so even if they’d be at risk of default, no politician is willing to fire 600'000 thousand people.

Fundamentally, I don't really care that they tried to cheat emissions tests. At least when it comes to a purchase decision. The regulators did a bad job at making the testing procedure giving manufacturers a pretty strong motivations to cheat. I expect others to get caught doing similar things.

I'd buy another VW because the one I have has done a good job of getting the little things right in ways other cars I've owned didn't.

We'll just see if future new buyers feel the same way regarding their ethics surrounding abiding to emissions regulations.

So far, it would seem people are forgiving them, but that may or may not change depending on findings regarding other cheaters, if any, but, in the least, this has the potential to change consumer preference in fuels, given one is not as undirty as originally claimed.

Ford did the same thing in 1997. Companies seem to recover.

Honda as well: http://www2.epa.gov/sites/production/files/2014-06/documents...

I wonder if we are going to discover similar emissions skirting in over manufacturer's vehicles soon.

Already done. It's funny how the press is only talking about VW but meanwhile there are first tests showing that many other manufacturers do/did the same.

http://www.theguardian.com/environment/2015/oct/09/mercedes-...

That wasn't "the same". In those cases, they optimized for the kind of environment the tests have (which regulators encourage as that test is supposed to be representative). They didn't have the computer detect whether a specific run was a test, as VW did.

VW cars exceed legal emissions 40 times. There is a reason for no preventing to use this cars?

They can be re-programmed to stay within emissions. The user just might feel the driving experience worsens as a result.

Some of them will need new hardware to reduce NOx emissions in real-world driving conditions.

No other car makers get their emissions tested in real-world driving conditions, so that's irrelevant.

They do now.

http://www.autonews.com/article/20150929/OEM04/150929814/gms... new-diesel-pickups-first-to-get-extra-scrutiny-from-epa-carb

I don't think the government can say "you were lied to about your car, stop using it" also VW can't force people to get the recall, why would you want to get a recall that worsens the performance of you car.

It's reasonable for governments to tell owners that they must get a software update or stop using their cars after some reasonable grace period while also forcing VW to compensate owners for their losses in doing this (eg. reduced performance). Essentially protect the environment as intended while getting VW to foot the bill.

The recall is mandatory for the consumers if they want to continue operating their car, at least here in Germany.

Of course they can say that. I think you are stating an opinion on this specific case and I'm sure you can imagine cases that may be a bit more extreme where you would reasonably say that the government shouldn't allow these vehicles on the road. But... I personally have the opinion that if these vehicles are polluting so far over the standards set as reported then they shouldn't be allowed to be driven or pay a "carbon tax" or be forced to get the upgrade, etc.

Couldn't they force the hardware/software modifications when people go in for yearly inspections?

Not all states have inspections.

Most older cars and plenty of current SUVs/trucks still put off worse emissions. Should they be banned from use as well?

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