Volkswagen Weirdly Still Has Faith In Diesels

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Photo: Volkswagen

Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.


1st Gear: A Diesel Kind Of Headache

Behind all the flashy reveals at this year’s Geneva Motor Show, there is some real concern over the future. With the death of diesel looming, automakers are scrambling to figure out how the hell else to build fuel-efficient cars.

The constant for automakers will be the European Union’s CO2 goals. How they plan on achieving them is still a bit muddled, according to Reuters. They can either “re-engineer existing vehicles at huge expense, restrict sales of some profitable models; or risk hundreds of millions of euros in penalties.”

Volkswagen, of all companies, had something rather bizarre to say about it:

Others are clinging to the hope that the image of the latest Euro 6 diesels may yet be rehabilitated, and their fortunes restored.

“I am worried,” Volkswagen (VOWG_p.DE) Chief Executive Matthias Mueller said in a Reuters Television interview.

“But it’s our job to solve these problems,” he said. “I’m firmly convinced that diesel will experience a revival.”

Volkwagen?? The company that created that diesel defeat device that kicked off this whole thing in the first place?

This statement is especially weird when you remember that Volkswagen recently unveiled plans to invest $82.5 billion on electric cars. That kind of figure makes you think it’d abandon the whole idea of diesels, wouldn’t you?


Personally, I don’t think anyone should be holding out for diesels. There’s been a cultural shift in the way we look at them and electric cars are just more favorable in that regard.

2nd Gear: No Faith In The OEMs

There’s so much new tech coming out for electric cars and autonomous driving that it’s making my head spin. Not for certain investors, though. They seem to think that component suppliers and not the automakers will pull ahead first in this massive shift in technology.


Reuters spoke to a few investors and they mentioned support for suppliers like Aptiv, Valeo and Continental more often than big companies like Daimler, VW or Peugeot. The outlet points out that this is a result of how component companies are accounting for a larger and larger part of a car as they get more complicated.

From the story:

It is also an acknowledgement that the big innovations are happening as much in the auto industry’s scattered supply base as in the design hubs of the big carmakers, also known as original equipment manufacturers (OEMs).

“We ... feel the structural growth opportunities and visibility in the suppliers is higher than for the OEMs where more uncertainties exist, debt is higher and margins/returns typically lower,” said Marcus Morris-Eyton, European equities portfolio manager at Allianz GI.


EVs are still enormously costly and risky for automakers. Investing in them usually requires a “slash and burn” tactic: Moving funds from other aspects of the company toward the new tech. And even so, once a company manages to produce an electric car, it still won’t sell in high volume right off the bat. So there’s also that to deal with.

3rd Gear: Come Back

Yesterday, news broke that Gary Cohn, Donald Trump’s top economy adviser is resigning. He is expected to leave in the coming weeks. People are concerned over this. Germany is concerned.


Cohn was understood to be a “moderating voice in the White House,” according to Reuters. Germany seems to have hoped that he would be able to curb Trump’s talk of imposing huge tariffs on metals.

Germany’s Economy Minister Brigitte Zypries told the outlet that Berlin will cooperate with whatever the other EU states decide to do, including responding in “an appropriate manner” if the U.S. introduced tariffs on aluminum and steel.


She hopes things don’t come to a trade conflict, though:

“I hope Trump changes his mind,” Zypries said.

The minister said she was convinced that trade ensured prosperity for all if it was based on mutual understanding.

“It’s very important that there are advocates for this in the White House,” Zypries said. “That’s why I’m worried about the latest signals coming from the USA.”


What a time to be alive.

4th Gear: U.S. Consumers File Suit Against Kobe Steel And Toyota

Last year, Kobe Steel, Japan’s third-largest steelmaker, admitted to falsely labeling products that it supplied to over 500 companies worldwide.


On Monday, a proposed class-action lawsuit was filed in San Francisco federal court against Kobe Steel and Toyota, according to Reuters. It accuses the companies of violating consumer protection laws and also engaging in fraud by covering up the use of sub-standard metal in cars.

From the story:

According to the complaint, Toyota’s Prius, Camry, Land Cruiser and Lexus vehicles have all been manufactured with “sub-standard” steel, aluminum and copper.

The plaintiffs allege that Toyota and Kobe Steel both violated federal and state consumer protection laws by claiming that the vehicles complied with U.S. quality standards.

Monday’s 40-page lawsuit outlines the ways in which the companies allegedly concealed poor metal quality. It demands compensatory and punitive damages of an unspecified amount.

According to the complaint, at least six Toyota car models sold or leased to U.S. consumers were manufactured with substandard metal from Kobe Steel. Plaintiffs said the metal could impact vehicle safety and performance.


In addition to the proposed suit in California, four other people in Canada have also proposed class-action lawsuits against Kobe and its associated subsidiaries. On top of that, the company is also going through a probe from the U.S. Justice Department.

Yesterday, Kobe revealed that its data fraud has been going on for nearly 50 years. It “found new cases of impropriety, widening the number of affected clients to 605, including 222 overseas.”


Wow! These probes and class-action lawsuits sound like just the tip of the iceberg, then.

5th Gear: A New CMO For Cadillac

At the very end of last year, Cadillac’s global chief marketing officer Uwe Ellinghaus announced that he’d be leaving the company due to “personal reasons.” And it looks like his replacement has been found.


Deborah Wahl will be the brand’s new global chief marketing officer, starting on March 26, the company announced in a press release. Wahl’s experience includes time with McDonald’s, PulteGroup, Chrysler, Lexus and Ford.

It’s interesting that GM would choose to hire outside of its existing employees again. After all, Ellinghaus came to the company after working with Montblanc and BMW. But maybe a fresh perspective was what was needed.


Wahl will be working out of the brand’s Manhattan offices. It’ll be interesting to see where she takes it.

Reverse: Happy Birthday, Janet!


Neutral: Are You Holding Out For The Return Of Diesel?

Do you think diesels are going to make a comeback?



Isn’t GM is putting out diesel economy cars that are clean and leading MPG? Cruze, Malibu, Equinox, Colorado, any others? I think Cadillac is getting some diesel power plants, obviously the Colorado’s twin, Canyon. Full size light duty trucks are getting what GM has hinted will be an all around class leading 3.0 straight 6 diesel mated to a 10 speed.