Corriere Canadese

  TORONTO - It’s a new era when CEOs publicly exclaim that no one is interested in buying their company, despite their every effort to sell [to any bidder, at any price]. Last week, in the wake of VW’s admissions of guilt before charges in the USA, the Italian Press - no friend of Sergio Marchionne, CEO of Fiat Chrysler – was overloaded with stories about the rejected “suitor” looking to unload his wares.

“I am knocking on all doors”, he moaned, “but no one is answering”, or so he is quoted by one Daily.  Not to put too fine a point on it, but it probably has something to do with the fact that the few potential buyers, Volkswagen (which he has been courting for years), may once again be in serious difficulty.
VW, an automobile and financing conglomerate based in Lower Saxony, Germany, had revenues of $305.2 Billion Canadian in 2015, $ 2 Billion net profit after taxes. Then it ran afoul of the USA Environmental Protection Agency and attendant, legislatively mandated Clean Air Agencies.
Over the last two years, investigations (followed closely by Industry, Sectoral Analysts and researchers) of the Auto giant and its production and marketing practices centered in, but not exclusive to, the USA have revealed an organization with a culture bereft of any moral compass.
Its “take no prisoners approach” to the marketplace and its consumers make the proponents of the Wild West ethics in Business look like Choir Boys, if not saints.
In the words of one Industry analyst published in Forbes Magazine, “they stretched the limits of the Law” to establish roots in the US market; sometimes acting as if they were above it. They got caught.
Once the darling of the Industry (flirting briefly with top spot world-wide), it now faces the daunting task of meeting its obligations and reputation recovery. Several of its senior managers and engineers face the risk of time in jail. 
The government of Germany may itself be implicated. That of the federated state of Saxony certainly is. Of its 610,000 employees (2015 data) 110,000 (18%) are in Germany. The relationship between management, government and the unions are blurred at the best of times – the unions are guaranteed 8 of the 20 members of the board.
The government of Saxony, population 8 million, holds 20% of the voting shares in the company and a veto over the company’s strategic decisions.
One of them was to design and develop technology that would make their diesel-powered vehicles pass the Clean Air Agency Boards requirements guiding permissible (safe) emissions. VW decided to concentrate on the trap and defeat mechanisms to “cheat the system” and “dupe the public”. 
North Americans do not as a rule favour diesel powered cars, contrary to Europeans who represent 75% of the diesel market. The problem is that diesel emits up to 40x the acceptable level of carcinogenic Nitrogen Oxides (NOx) than gasoline. According to the European Environmental Agency, 500,000 deaths were attributable to NOx induced carcinogens in 2014.
VW essentially assured the American public and authorities that its products were not only efficient but safe for humans and the environment. Americans showered VW with subsidies. Now they are suing the government of Saxony to recover over $66 million. Spain is likewise attempting to recover $72 Million CDN.
VW has admitted guilt and agreed to pay $5.4 Billion CDN to US authorities for deliberately exceeding the NOx emissions levels, for falsifying reporting data and for unfair business practices and other issues. And, it is continuing to pursue criminal charges against senior executives. Other Nations are following suit.
Is it any wonder that VW, already owner of the Lamborghini brand, responded to questions about their potential acquisition of FCA with the laconic “it’s not on our radar”?

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Joseph Volpe

Joseph Volpe

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