VW prang for German pride
It is only two years since VW’s bosses believed the car company was speeding towards global domination. In May 2013, Forbes magazine published a piece entitled ‘How Volkswagen will rule the world’, outlining chief executive Martin Winterkorn’s ambitions.
By 2018, Winterkorn confided, he expected to be running ‘the world’s most profitable, fascinating and sustainable’ car maker.
Critics in the car industry gasped at his hubris – correctly, as it transpires.
Far from being the world’s most wonderful car company, VW is at this point the planet’ s least-trusted.
As for Herr Winterkorn – a talented goalkeeper, according to Forbes – he is left disconsolately picking the ball out of the back of his net.
Apart from the impact on VW, which has seen billions of euros wiped off its market value, the affair raises wider questions about the supposed invincibility of the German manufacturing machine.
‘VW: Made in Germany ist ein Scheißdreck wert,’ screamed the headline writers of the Bundesdeut- sche Zeitung. If my A-Level German serves, this politely translates as: ‘VW: Made in Germany isn’t worth a fig.’
the notion of teutonic industrial perfection was always impossible to live up to, but the killer aspect of the VW scandal is the dishonesty.
It is more akin to the Libor and forex-rigging at the banks than to disasters such as BP’s Deepwater oil spill, in that it involves deliberate, cynical cheating rather than accident and incompetence.
For a company that sells itself on its upmarket and dependable image, VW’s loss of trust is deeply damaging. Car makers in other countries including the UK should not indulge in schadenfreude as it may emerge VW is not alone.
For Germany, however, this scandal strikes at the heart of national pride. the car industry is a totem, a key element of its self-image as the eurozone’s virtuous manufacturing hub.
It is by far the biggest car maker in Europe, producing around half of total vehicles by value and around 52pc of total components, according to Professor Garel Rhys, president of the Centre for Automotive Research at Cardiff University.
the country has thrived by selling premium cars and white goods, with customers prepared to pay extra for prestige and reliability.
VW’s cheating threatens to undermine consumer confidence more generally, just as malpractice by the big banks in the UK has dragged down the reputation of the City as a whole, innocent and guilty alike.
Nor will the debacle do anything to help Chancellor Angela Merkel in her efforts to bring recalcitrant eurozone countries to heel. the behaviour at VW will be seized upon by those who, for self-interested rea- sons, wish to erode Germany’s moral authority. Another disappointing element, so far overlooked, is the tarnishing of efforts in the car industry to drive down vehicle emissions.
According to the Society of Motor Manufacturers and traders it would take 50 new cars to generate the same amount of pollutants as a sole vehicle made in 1970. that is quite an achievement, but one that has been comprehensively overshadowed by the cheats at VW.
Time, gentlemen
PUBS group Mitchells & Butlers chucks out its directors with the impatience of a landlord keen to clear the bar at closing time.
Analyst Mark Brumby of Langton Capital says the company has had five chairmen, five chief executives and three finance directors in the last six or seven years, but the list of unceremonious ejections is so long he can’t quite be sure.
As with football managers at ailing clubs, this begs the question of how much the man at the top – and it still is usually a man – can be blamed for underperformance, particularly if his tenure has been short. the musical chairs at M&B will have cost shareholders a fortune in pay- offs and hiring costs, as well as creating an atmosphere of instability.
Unless new boss Phil Urban really is a miracle worker, he is unlikely to be able to effect a singlehanded transformation.
Glencore sinks
WHEN commodity trader Glencore floated on the stock market back in May 2011, the image of the company was of a ruthless, but lucrative, operator.
One of those qualities has proved to be lacking. Despite the presumed brilliance of billionaire boss Ivan Glasenberg, the shares have fallen 80pc lower than their 530p float price and yesterday dipped for a while below £1 for the first time.
the company upset City institutions by failing to give existing shareholders pre-emption rights in a recent placing at 125p a share. Considering how the price has fallen since then, the complaining investors might have had a lucky escape.
Glencore’s top bosses piled in, however, and some fund managers believe now is the time to invest for a turnaround.
Be that as it may, it is not a good moment for Glasenberg to make enemies in the City.