VW Cartoon 2 March

On the rebound after a crisis

March 4th, 2020

The adage that ‘no news is good news’ can easily be reversed for the media. Now, the catchphrase is, ‘only bad news is news’.

So, when Volkswagen announced late last week that profits are up by 17%, dividends increased by a third (and that it was still the world’s biggest carmaker) – hardly anyone took notice.

Just five years ago, the company was in meltdown following the emissions scandal; the gloom-mongers were forecasting its demise. The media was full of all those horror stories! Now the company is just another boring financial story.

So, what happened?

The apology. This could have been quicker in coming, but it did come eventually. And the company paid out. First in the US, and now 400,000 German diesel car owners are paid about $1,000 to $5,000 a day. Money is the best apology.

The scapegoat. Heads must roll, and one of these must be that of the Chief Executive. So – kicking and screaming – Herr Winterkorn fell on his sword. As did several other executives (some are in jail in the States – yuk), and still more are being investigated.

The reinvention. Suddenly, VW is at the forefront of electric car manufacture – up there will Elon Musk and his Tesla! The company is one of the biggest investors in the new technology, promising to build 26 million battery-powered vehicles in the next decade. From environmental vandal to saviour, in five short years.

So, if you an investor in Boeing, hold tight. Sure, earlier last month they discovered tiny particles in the fuel tanks. Before that, the embarrassing email came out (‘designed by clowns…supervised by monkeys’)! Things always get worse before they get better…

The company has done the apology bit, embarrassing and all as it is; the CEO has been fired (with $30 million) in his back pocket.

All that’s needed now is the re-invention! And this will happen. Boeing is TBTF – Too big to fail.

Have a good week.


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