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Concern Spreads to BMW (self.investing)

dvdmovie1 が 投稿

http://www.bloomberg.com/news/articles/2015-09-24/bmw-drops-on-report-that-x3-diesel-s-emission-exceeded-eu-limit

BMW AG fell as much as 9.3 percent in Frankfurt after a German magazine reported that the X3 xDrive 20d sport utility vehicle emitted as much as 11 times the European limit for air pollution in a road test, adding to concern that the investigation weighing on Volkswagen AG may spread to other manufacturers.

“There is no function to recognize emissions testing cycles at BMW,” the Munich-based company said in a statement in response to the report. “All emissions systems remain active outside the testing cycles.”

May be nothing, but people/media are clearly looking for the possibility of other "VW-like" situations.

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[–]Indefinitely_not 47ポイント48ポイント  (73子コメント)

Well, honestly, the more car manufacturers are involved in this practice, the less likely it seems to me that authorities will extract large fines from the manufacturers. At the end of the day, it is not the manufacturer but the consumer that pays the price of the fines, and if only VW gets a large fine, people can simply switch to cheaper alternatives. If the fine is imposed on virtually all manufacturers, it will turn out to be a 'hidden tax' as all manufacturers will have to increase prices. Having more parties involved would definitely take some of the heat off Volkswagen.

[–]pyroxyze 26ポイント27ポイント  (4子コメント)

Some car manufacturers have no exposure to diesels in America. Mazda has diesels worldwide, but they couldn't get the emissions down to American standards so they don't sell them here. If it's only a few manufacturers, I think they'll get moderate to heavy fines.

[–]a4bh3 14ポイント15ポイント  (1子コメント)

Was going to say, a lot of car companies are probably pissed that VW and perhaps other German companies were cheating to get into the U.S. but they couldn't.

[–]KalimasPinky 14ポイント15ポイント  (0子コメント)

Vw has also been used as a standard for clean. I don't know how many people I have heard extol vw efficiency and cleanliness.

[–]CydeWeys 0ポイント1ポイント  (0子コメント)

Frankly, if they won't or can't build diesel cars that don't pollute way more than gasoline-powered cars for equivalent mileage, then they shouldn't be allowed to sell them here, full stop.

[–]yuckyucky 5ポイント6ポイント  (7子コメント)

it may be taxed on many manufacturers but not all, and not all equally. the taxes should, in theory, hit the worst offenders the hardest (VW/Diesel car makers?), hit other more lightly (japanese/US carmakers?) and others not at all (Tesla?).

[–]ChaosMotor 8ポイント9ポイント  (22子コメント)

Seems to me that prison is a far more effective resolution for corporate malfeasance than fines - fines are simply incorporated into the cost of doing business.

[–]GG_Henry -1ポイント0ポイント  (21子コメント)

Prison won't solve anything. It will only bring out scapegoats. What all these companies and their shareholders actually care about is the bottom line. Seriously do think sending some mid level engineer to jail will effect the board of directors in anyway? Do you think the board had knowledge of this? If they did they surely distanced themselves.

Prison and fines may be the best deterrent. Fines effect the bottom line, ie the company and prison may deter future mid level engineers from cheating.

[–]ChaosMotor 0ポイント1ポイント  (20子コメント)

What all these companies and their shareholders actually care about is the bottom line.

I can assure you that they care more about not going to prison than they care about how rich they are.

Seriously do think sending some mid level engineer to jail will effect the board of directors in anyway?

No. But I think sending a few C-levels to the hoosegow would have a big impact.

ie the company and prison may deter future mid level engineers from cheating.

It's wildly disingenuous to think a mid-level engineer would have the authority to enact something like this.

[–]GG_Henry -5ポイント-4ポイント  (19子コメント)

Wildly disingenuous? Shouldn't even dignify you with a response. If you had any idea how much engineering is done to cars nowadays you would know decisions are made by mid level engineers everyday. The c-levels, as you call them, just care about results.

[–]ChaosMotor 2ポイント3ポイント  (18子コメント)

If you had any idea how much engineering is done to cars nowadays you would know decisions are made by mid level engineers everyday.

I'm an engineer, so... And you're arguing a strawman point that is frankly, stupid. Nobody said engineers weren't making decisions. I'm saying engineers wouldn't be making THIS decision.

The c-levels, as you call them, just care about results.

Results like, meeting CAFE standards by any means possible. I can assure you that software to trick CAFE measurements was not an idea that an engineer thought up out of the blue. That is a decision made from on-high.

[–]GG_Henry -5ポイント-4ポイント  (17子コメント)

Love when "engineers" make shitty assumptions. You'd think you'd at least understand basic logic and reason.

Your saying there is no way a mid level engineer made this decision. However you simply do not know. Your making an argument from ignorance.

The proof will come out or it won't. I'm not interested in sitting around and pretending.

[–]ChaosMotor 0ポイント1ポイント  (16子コメント)

Love when "engineers" make shitty assumptions. You'd think you'd at least understand basic logic and reason.

Love when whatever the fuck you claim to be make shitty assumptions, then accuse everyone else of doing exactly what they're doing. You'd think you'd at least understand basic logic and reason.

I'm not interested in sitting around and pretending to know.

Except that's exactly what you're doing, dipshit.

[–]GG_Henry -1ポイント0ポイント  (11子コメント)

On second thought don't even bother responding. Your post history tells me enough. No need to sit around and discuss this with such a crude uneducated individual.

[–]ChaosMotor -3ポイント-2ポイント  (10子コメント)

Fuck you, I'll respond when and were I want, asshole. I guarantee you I have more education than you do, fucktard.

[–]GG_Henry -2ポイント-1ポイント  (3子コメント)

Ha-ha. All I've said is we don't know what happened. Please tell me what assumptions I've made.

[–]ChaosMotor 0ポイント1ポイント  (2子コメント)

You telling me that my assumption is shitty necessitates that you have assumptions about what happened, dumb ass.

you would know decisions are made by mid level engineers everyday

Embedded assumption: That engineers made the decision.

The c-levels, as you call them, just care about results.

Embedded assumption: The c-levels did not make the decision.

Prison won't solve anything. It will only bring out scapegoats.

Embedded assumption: Legal action would not be able to trace blame back to the actual parties.

Compare this to your other embedded assumption above that it was a "mid-level engineer" who did this. Welp... then why are you assuming that scape-goats would exist? Seems your assumptions are in conflict.

Seriously do think sending some mid level engineer to jail will effect the board of directors in anyway?

Embedded assumption: That a mid level engineer will be the scapegoat. Note the conflict with your other assumption that it was the decision of a mid level engineer. Whoops! That's twice that you've embedded assumptions about the responsibility lying above the engineer but that the engineer will be a scapegoat.

Do you think the board had knowledge of this?

And now you change position again to assume the board wouldn't have known.

prison may deter future mid level engineers from cheating.

Now you're pushing back to an assumption that it was mid level engineers, which is different from your prior statements that the mid level engineers would be scapegoats.

In conclusion, your arguments are:

  • Predicated on assumptions
  • Self-contradictory
  • Inconsistent

You're all over the goddamn map here, and you're accusing me of making arguments from ignorance, and not understanding basic logic and reason.

It's pretty clear that you have no fucking clue what you're talking about, champ.

[–]CaptainBrysO 11ポイント12ポイント  (26子コメント)

I hope not. Fine them all as much as volkswagen and use the money to offset the destruction they've done.

[–]Franks2000inchTV 14ポイント15ポイント  (8子コメント)

Yes, we'll take the money and put it in the magic destruction offset box!

[–]mynewaccount5 7ポイント8ポイント  (2子コメント)

This comment is pretty useless. Yes, good job, youre right, there is no such thing as a magic destruction offset box. But surely you arent trying to suggest that there is no way to offset destruction to the environment? Because that is what your sarcasm is suggesting but that would be a pretty silly conclusion dont you think?

[–]Franks2000inchTV -5ポイント-4ポイント  (1子コメント)

The original post was pretty thorough in explaining what would happen if many companies are discovered to use similar devices, and does a pretty good job of explaining why fining all the companies would be useless in that case.

I felt given how complete the argument was there, I was free to mock the simplistic thinking in the reply with sarcasm without worrying about the quality of the discussion.

Also, if you think the money from the fines will be used for environmental purposes, I have a used 2012 VW Golf TDI in great condition to sell you!

[–]mynewaccount5 0ポイント1ポイント  (0子コメント)

It might not have been the most comprehensive reply but it was still valid. And it is fair to take issue with the simplistic nature of his reply and that he seemed to mostly ignore the above scenario and did nothing to say why he thought the above poster was wrong, but using sarcasm to imply that it is impossible to offset environmental destruction is even less useful.

Perhaps if you'd said something like "Yes because it's that easy to fine them all that money" or "Well as long as you hope not, I'm sure we have nothing to worry about" Or something to that effect.

[–]CydeWeys 0ポイント1ポイント  (0子コメント)

It just goes into the Treasury. The fines are punitive, to prevent other companies from trying the same illegal practices in the future.

[–]CaptainBrysO 0ポイント1ポイント  (3子コメント)

Or you know, carbon credits? Or research into cleaner tech.

edit: What the hell? These are viable ideas for mitigating the effects of pollution.

[–]Wulfnuts 9ポイント10ポイント  (2子コメント)

Yes.... That's what they'll do with the money

[–]CaptainBrysO 4ポイント5ポイント  (1子コメント)

I'm stating what they should do, not what's going to happen.

[–]b3team 0ポイント1ポイント  (0子コメント)

Ok, so the only thing that will trip up your plan is reality

[–]Kriegenstein 0ポイント1ポイント  (0子コメント)

Destruction is a bit sensationalist.

A bit of perspective. A mere 15 of the largest container ships generate more NoX than all of the cars in the world. All of them.

The amount of "destruction" involved here is nil. Shake your tiny fists of rage elsewhere.

[–]RLWSNOOK -1ポイント0ポイント  (3子コメント)

I'd like them just to use the money to buy the cars to get them off the roads...

[–]yuckyucky 4ポイント5ポイント  (2子コメント)

getting all those cars off the road instantly would be economically destructive. at this point it is about harm minimisation, including economic harm. maybe the cars need modification, for example, to run clean all the time.

[–]RLWSNOOK -3ポイント-2ポイント  (0子コメント)

Yeah God forbid used car prices go up rather than dropping like 10% a year

[–]theorymeltfool -3ポイント-2ポイント  (0子コメント)

Except for the fact that driving any car does more economic harm than good.

[–]theorymeltfool -2ポイント-1ポイント  (4子コメント)

And how much destruction have they done?

[–]a4bh3 2ポイント3ポイント  (1子コメント)

Looks like it's only the German companies.

[–]josiahstevenson 1ポイント2ポイント  (4子コメント)

have to increase prices

What has changed about marginal cost and demand after the fine?

[–]Indefinitely_not -1ポイント0ポイント  (3子コメント)

Oh, I didn't know the market for cars is a market with perfect competition.

[–]josiahstevenson 1ポイント2ポイント  (2子コメント)

It's not -- but if demand were such that they had pricing power, wouldn't they have already been exploiting that to the fullest? That is, they won't raise their prices, because if they could they would have before this.

If anything, the deisel cars and cars from these brands are now less attractive to consumers relative to their closest substitutes. If nothing changes in marginal costs, prices will fall for these cars, not rise, and shareholders will take the hit.

[–]Indefinitely_not -1ポイント0ポイント  (1子コメント)

It depends, if all/a lot car manufacturers have to increase their prices simultaneously, I would assume that - depending on the elasticity - consumers would either (a) simply accept the price, or (b) buy a cheaper model (albeit with a higher profit margin for the manufacturers, to make up for the fines).

[–]josiahstevenson 0ポイント1ポイント  (0子コメント)

have to increase their prices

Again, what's the compulsion coming from? The fine is a fixed cost; it has no bearing on what price they "have to" charge -- unless maybe it exceeds the discounted present value of their profits.

[–]Vortesian 0ポイント1ポイント  (0子コメント)

Yup. This is why it needs to handled as criminal fraud against company executives in order for there to be any kind of deterrent effect.

[–]funkeepickle 0ポイント1ポイント  (0子コメント)

At the end of the day, it is not the manufacturer but the consumer that pays the price of the fines, and if only VW gets a large fine, people can simply switch to cheaper alternatives.

That is not how business works at all. I'm frankly shocked to see this ignorant comment at the top in /r/investing.

[–]bicameral2 0ポイント1ポイント  (0子コメント)

Couldn't we avoid fines by putting people in prison for epic fraud?

[–]kodered 14ポイント15ポイント  (0子コメント)

Two other studies by ICCT showed that BMW’s X5 SUV and 13 other BMW vehicles tested comply with legal requirements on emissions of lung-irritating nitrogen oxides, BMW said.

Looking at the white papers, this is correct. So judging by this, BMW most likely did not have an emissions test defeat system in their software.

Edit: Looking at the article again, it was some German car magazine that conducted these new BMW tests in house, not the ICCT group which exposed VW. Also, the article mentions that the ICCT found that 15 new cars did not pass the EU tests. But what it neglects to mention is that the tests conducted were for the new Euro 6 requirements which are not yet enforced.

BMW might be in the clear regarding this scandal.

[–]makken 5ポイント6ポイント  (3子コメント)

Hmm.. On a phone, so can't look into this too deeply, but

  1. AFAIK, unlike VW, BMW has not been a target in the investigation with EPA.

  2. The original report that exposed VW tested a BMW and it passed.

  3. As long as BMW doesn't "cheat" the required lab test for certification, there shouldn't be any action against them even with the higher emissions.

Looking at BMW stock, they seem undervalued with a forward PE of 8.7, revs grew 20% yoy.

Given that, I'm willing to make a small speculative bet on them. Does anyone know what their ADR ticker is? I've been looking at BMW.DE

[–]Stevepac9 0ポイント1ポイント  (0子コメント)

BAMXY I think

[–]josiahstevenson 0ポイント1ポイント  (0子コメント)

BAMXY is 3:1 BMW.DE

[–]bonestamp 0ポイント1ポイント  (0子コメント)

Given that, I'm willing to make a small speculative bet on them.

BMW also said their next generation of vehicles are all going to leverage PHEV and/or hybrid technology for performance and efficiency gains (no performance/efficiency compromise, but there might be a price compromise). As emission standards become more strict, electric assistance is the obvious way to get there and BMW seems to be the most (publicly) interested traditional automaker in that goal. So, I think your bet is probably a fair play for multiple reasons.

[–]ferr4ri 16ポイント17ポイント  (9子コメント)

I'm thinking to myself... If everyone fails this test,does it mean that the standard that was imposed not well designed?

[–]epoxyresin 20ポイント21ポイント  (0子コメント)

It means that diesel is not a particularly clean fuel source, at least in terms of this type of pollution.

[–]bvman 3ポイント4ポイント  (0子コメント)

It means a manufacturer like VW can sell a diesel car cheaper then BMW and Benz and claim the same fuel efficiency.

[–]EchelonHD 6ポイント7ポイント  (1子コメント)

As long as alternative technologies can adhere to the standards, there is nothing wrong with them.

If diesel cannot meet the standards over time while petroleum engines can, it should be interpreted as the government gradually phasing out diesel technology.

It would be the manufacturers' faults if this happens abruptly because they've been cheating tests for all this time.

[–]puterTDI 0ポイント1ポイント  (0子コメント)

The standards for diesels and the standards for other vehicle types are different.

The assumption being made here is that the standards for diesel are equivalent to the standards for gasoline. That may very well be the case but we do not know that.

[–]miscsubs 4ポイント5ポイント  (0子コメント)

It's a bit more complicated than that. The emission tests are different in each country and mostly done by the manufacturer themselves. The regulators check the results and do some random testing at times.

The EU standards are (surprisingly perhaps) a bit more lax. The manufacturers can do things to increase efficiency -- like removing side mirrors. Some of these have been banned lately but I'm sure there are many other tricks they empoloy to push the numbers down.

Basically everybody does "cheat" within the allowed rules. VW went beyond that boundary. There's no indication yet that BMW did. But we'll see.

[–]CydeWeys 0ポイント1ポイント  (0子コメント)

It means that testing was not thorough enough and was too easy to defeat.

There's no reason in principle that you can't make a clean diesel vehicle. They exist. They simply require more complicated emissions scrubbers than gasoline-powered vehicles do. The ethical solution be to simply spend the extra $1,000 or whatever and make the system properly. The unethical solution, and the one that apparently companies have been using, is to cheat the test.

[–]scottieducati -4ポイント-3ポイント  (2子コメント)

The standard is ridiculous. NOx is a byproduct of very efficient diesel combustion. So what do you do? Regulate the shit out of it and kill efficiency, while using more fuel to try and burn it off. F*cking genious guys. (I know NOx is harmful, but in the context of diesel for LIGHT DUTY cars in the US (<1% market share, if that) it makes zero sense to trade having 75+ mpg cars for a little less NOx.

[–]bonestamp 1ポイント2ポイント  (1子コメント)

it makes zero sense to trade having 75+ mpg cars for a little less NOx

But it's not "a little less", the numbers actually make sense. If you're getting 4x the fuel economy and 40x the NOx, then the higher emissions are not offset by the higher fuel efficiency. If it was 4x the fuel efficiency and 4x the NOx then that would be fine.

[–]scottieducati -1ポイント0ポイント  (0子コメント)

I'm not talking about the amount of NOx over the EPA limit, I'm talking in general... there should be a balance. The fundamentals of the chemistry involved between gasoline combustion and diesel combustion are different, the standards for what they put out should be different too. The EPA recognizes none of this, as they don't want balanced and fair regs for diesels as it puts foreign brands at a marketplace advantage compared to US brands which prefer to downsize gasoline and hybridize their fleets. It's picking winners and losers.

[–]abacabbmk 3ポイント4ポイント  (2子コメント)

I am surprised there is no third-party emissions testing of consumer vehicles (ie: brand new being sold by dealerships). Just pick up a random one off the lot and test it. One test per model.

[–]chickeeper 0ポイント1ポイント  (1子コメント)

I actually heard a report that about mpg and how that gets adjusted now. Since manufacturers rate the cars it is always at optimal or sometimes false advertising. Just look at Kia and Hyundai. They over estimated the efficiency of there cars. The EPA is helped out by consumers reporting in real world numbers. The EPA can then investigate the vehicles based on that information. It is pretty difficult to test all cars all years. Consumers do most the fact finding it seems.

[–]abacabbmk 0ポイント1ポイント  (0子コメント)

Interesting.

I think performing the test on all cars released each year wouldnt be too difficult. I think what it might come down to is budget to do so though. In that case, you would just test a random sample of new releases each year. At least the deterrent is there and its unlikely a company can get away without having one of their vehicles tested for a long period of time. Would also be a big push back from manufacturers, which may have political implications.

[–]wifichick 0ポイント1ポイント  (0子コメント)

Do they use a N-ox system requiring maintenance? If yes, they are probably clear.

[–]EchelonHD 0ポイント1ポイント  (2子コメント)

The good news is that fines for each individual manufacturer will be smaller as the environmental regulation cheating scandal spreads. Volkswagen will no longer be at risk for paying onerous penalties.

The car companies may still have to bear the burden of recalls and civil lawsuits if they are compelled to fix the problem with the offending vehicles, however, and that could still lead to billions in cost depending on the scope of the problem and the solution.

The bad news is that if widespread cheating is found in light weight diesel vehicles, this may quickly lead to the a steep decline or possibly even death of the product category. This will have longer term negative implications for diesel manufacturers as consumers are forced revert to alternatives like gasoline and electric vehicles.

It is unclear whether diesel heavy manufacturers can recover from this scenario and regain their old marketshare by converting diesel customers to petroleum. Certainly while some may others may never do so as other petroleum-/electric- heavy brands find an entrance opportunity.

Ultimately, this does not make manufacturers like Volkswagen much more attractive investments. The short-/immediate-term damage is significantly reduced but there is now greater long-term risk.

[–]marcusxavier1 5ポイント6ポイント  (1子コメント)

I know this is r/investing but why is volkswagen recieving smaller fines "good" news? They willfully circumvented a system which is there to minimize the negative global effects of their product. The fine shouldn't be reduced because "others were doing it", although that may end up happening.

[–]EchelonHD 3ポイント4ポイント  (0子コメント)

It's "good news" for Volkswagen investors. That's what I meant.

[–]kmp11 1ポイント2ポイント  (1子コメント)

NY times has a really good article that might support that VW and BMW might just be the first in line. Also how this has been a pattern from the industry since its conception. Good read...

http://www.nytimes.com/2015/09/24/business/international/volkswagen-test-rigging-follows-a-long-auto-industry-pattern.html

[–]chickeeper -2ポイント-1ポイント  (0子コメント)

That article is perfect. Basically saying this is yet another bump in design that will be forgotten about by media. Just seems like we need government control agencies just keep companies in constant check.

[–]dsfox -1ポイント0ポイント  (7子コメント)

In my opinion the VW situation is not as clear cut as it is being portrayed. In any testing situation, people are going to optimize their performance for that situation, whether it is schools prepping students for standardized tests, graphics card manufacturers optimizing specific benchmarks, or car manufacturers recognizing contrived test conditions.

[–]barpredator 4ポイント5ポイント  (5子コメント)

This would be more akin to schools sending in other students to take tests for the dumb ones. There is no "optimization" here, only flagrant cheating at all of our expense.

[–]dsfox -4ポイント-3ポイント  (4子コメント)

Not exactly. Every car they produce has the software to recognize the test conditions and go into the low emissions mode. Its not like they prepared special cars for the test, or changed the results after the test was performed. They produced a product that has features that just happen (wink wink) to make it perform well under those specific conditions.

[–]Iniamyen 3ポイント4ポイント  (2子コメント)

In his/her analogy, the "kids" would be the chunks of code controlling the emissions of the vehicle, not the cars themselves. It's still an appropriate analogy.

[–]pipplo -1ポイント0ポイント  (0子コメント)

I think it's closer to dsfox's analogy, but it doesn't make it less of a problem. Testing needs to be improved to avoid this.

VW 'trained' their cars on exactly how to pass the emissions tests in certain scenarios. The cars don't perform as well outside of those conditions.

Schools train their kids to pass very specific standardized tests by memorizing specific tricks/questions, etc but the students don't perform well outside of those testing conditions.

It's pretty much the same. i.e. If you just drove a VW down a long straight freeway with no speed or steering changes it would still pass. Allegedly they just detected less steering / pedal movement and modified the engines behavior based on that.

Analogies are never good for comparision :)

[–]dsfox -1ポイント0ポイント  (0子コメント)

This might work if we had a policy of "no chunk of code left behind."

[–]CydeWeys 0ポイント1ポイント  (0子コメント)

You are performing mental gymnastics. The cars produce up to forty times as much NOx pollution as the standards allow. That is a flagrant violation of pollution laws, and statistically speaking, is causing hundreds of premature deaths worldwide per year.

The point of the law is to reduce pollution. The point of the tests is to ensure compliance with the law. The point of VW's programming is to violate the law and to cheat the test. There's no more nuance than that. They've even admitted this themselves. You're going to lengths to defend them that even they themselves are not willing to go to. They've admitted the exact wrongdoing that you're trying to claim they're not guilty of.

[–]lawschoolbound 0ポイント1ポイント  (0子コメント)

The problem is that the EPA has rules that very specifically forbid this. The car knowing that it is being tested and changing its behavior falls under having a defeat device which is clearly banned. And you'll notice that VW is not even trying to argue that they were within the rules, they know they broke the law and got caught.

[–]satin_rules -1ポイント0ポイント  (0子コメント)

Mercedes Diesels ftw

[–]tax31254 -5ポイント-4ポイント  (0子コメント)

lol called it...