Today, the EU Council of Ministers is meeting in Brussels. On the agenda: To make Europe’s law against defeat devices more toothless than it already is. At first glance, defeat devices that switch off exhaust treatment seem to be as verboten in Europe as they are in the U.S. – until you read the fine print. According to EU rules, defeat devices are allowed “if the need for the device is justified in terms of protecting the engine against damage or accident and for safe operation of the vehicle.” Let’s see how that works.
In my latest post at BloombergView, I look at Donald Trump and Hillary Clinton’s attempts to tap into the populist anger over the auto industry and am left wondering why neither is willing to attack the automakers who actually received bailout money. Trump has taken on Ford’s decision to double production capacity in Mexico and Clinton has attacked the supplier Johnson Controls for relocating to the UK in an “inversion” deal with Tyco, yet neither of these alleged automotive evildoers come close to matching the perfidy of the two bailed-out automakers. To wit:
General Motors, which received a $50 billion bailout, has received a net federal tax advantage of $52 million over the last three years in spite of billion-dollar profits, thanks to a controversial government decision allowing it to carry tens of billions of dollars in operating-loss credits through bankruptcy. GM is also leading the way on importing vehicles from China, and has focused its global export and R&D strategies around that huge potential market in the years since taxpayers bailed it out. Just like Ford, GM is doubling its Mexican production capacity, spending $5 billion on new assembly jobs south of the border.
Meanwhile, FCA isn’t even based in the U.S., having fled to a U.K. tax domicile after receiving more than $10 billion in bailout funds. Putting Fiat’s Italian plants in front of the line for new production, FCA anticipates that its North American production will remain flat through 2018 while imports from outside North America will expand to more than 10 times 2013 levels
This is at the heart of populist anger over the auto industry: Even if the bailout was necessary as an emergency measure, it’s failed to change the behavior of the firms who benefited from it or to deliver any reversal in the fortune for U.S. workers. Fiat-Chrysler survived to become a foreign firm by every possible metric, and GM became a tax-dodging Trojan horse for Chinese cars. And yet no American politician — Democrat or Republican, establishment or renegade — seems able to even identify these real culprits.
Not convinced that the automakers we bailed out are bad corporate citizens of the US? Read on…
Where will the next dieselgate shoe drop? Informed observers are convinced it will be at GM. This weekend, the London Times published tests that show Vauxhall’s Corsa, Astra and Vectra diesel cars as “among the most polluting models on Britain’s roads — typically emitting twice the level of toxic nitrogen oxides (NOx) seen from rival manufacturers’ cars.” [Continue Reading]
Nine months into the year, it becomes evident that in all likelihood, Volkswagen will once again miss its stated goal of becoming the world’s largest automaker. Nine months into the year, Toyota is nearly 100,000 units ahead of VW, with the gap expected to widen slightly by year-end. [Continue Reading]
The dieselgate tsunami sloshed from America to Europe, causing widespread damage. If the allegations of a German environmentalist group hold water, the scandal is about to swash right back to America, and deep into Detroit. GM’s EU subsidiary Opel is being accused of being just as bad as Volkswagen, while using defeat devices in diesel engines used in the company’s Zafira MPV. Will it ever end, and if yes, where? [Continue Reading]
We’ve suspected for some time that more automakers would be caught up in the Volkswagen emissions cheating scandal, and the first new perpetrator has apparently been identified: General Motors. GM CEO Mary Barra’s insists that VW-style software cheating on emissions tests “is not a condition that exists in our vehicles,” but the German environmental group Umwelthilfe has sponsored tests that throw that claim into serious doubt [English press release in PDF format here].
In testing of the Opel Zafira 1.6 CDTi, performed at the Bern University of Applied Sciences, GM’s diesel engine passed NEDC cycle NOx tests performed on a two-wheel (single-axle) rolling road but emitted two to four times the Euro6 limit for NOx when the same test was performed on a four-wheel rolling road. This strongly indicates that a software “test mode” exists for this engine, although Opel insists that “The software developed by GM does not contain any features that can detect whether the vehicle is being subjected to an emissions test.” But, says International Transport Advisor Axel Friedrich, “I have no normal, technically plausible explanation for the emission behavior of the Opel vehicle.”
The Chinese new car market, good for rapid growth for nearly a decade, suddenly went negative. Early indicators show that the decline continues. Who will be most hit if/when the China market turns real sour? [Continue Reading]