November Letter

On a cool fall day sometime in 1981, we became a two diesel family.

Rewind back to 1978, and the motoring world was just a little simpler. Foreign cars were certainly present, but not intertwined within the American landscape quite like they are in 2015. I mean, you did not see any Toyotas running around on NASCAR tracks, and BMWs and Mercedes were not being produced in South Carolina and Alabama, either. No, you could still go to four of the five automotive divisions of General Motors and buy essentially the same exact station wagon, albeit with different grilles, tail lights and faux wood paneling. Our wagon was the Chevrolet Caprice Classic, a silver beauty with a dark red vinyl interior and dark wood panel stickers adorning its sides. This was the smaller newer generation of Chevy wagon by the way. Our prior one, a mammoth brown Kingswood Estate, would barely fit in a garage. It also had the venerable GM 350 cubic inch V8 motor; reliable and lots of torque, but thirsty for gasoline. Of course gasoline prices at that time were relatively cheap, even for the times. Average gas prices in the mid-seventies trended in the mid-fifty cent range. Starting in 1977, though, at the onset of problems with the Iranians, gas starting trending upward. We saw a jump to sixty-five cents in 1977, up another 12 cents (almost 20%) in 1978 and up to ninety cents in 1979. By the early 1980s, gas was averaging over a dollar – a scary concept to middle class families driving Chevys and getting roughly 16 miles per gallon.

Forget the price of gas, though. The real scare was the availability of gasoline. The Iranian crisis made buying gasoline in NJ something akin to buying a loaf of bread in a war-torn third world country; stations that had gas had long lines and they would sell out quickly. To help control the chaos, New Jersey’s government put an emergency gas ration law in place where an alternating license plate rule would be implemented. Days would alternate between “odd” number and “even” number plates. Of course, those families with multiple cars had an advantage, especially in those days before computers where it would be impossible for anyone to know if that license plate on your wagon just came off the back of your Cadillac.

My parents did not take risks breaking the law like that and we had our first “oops” moment before a summer vacation to Martha’s Vineyard. We were planning on taking the wagon, but a miscalculation in days left the tank half empty on the wrong day to fill it up. We would have to try to make it out-of-state running on fumes, as I remember. My dad shushed us for quiet from the back seat as we drove carefully, as if our silence would somehow improve our fuel economy. I recall that the ordeal eventually became a non-issue as the trip rolled on, but the effect on my parents’ sanity remained. For my dad, any kind of car-related problem meant a single solution – buy a new car to solve the problem.

I am not sure if diesel fuel was being rationed as closely as regular gasoline – I do not recall that it was, probably because the number of diesel powered cars here in the USA was exceedingly small. Volkswagen was exporting their diesel-powered Rabbit cars, Peugeot had a diesel sedan and Mercedes has a relatively large line of diesel cars, including the small (relative for 1979) 240D, the mid-sized 300D and 300TD and the flagship, S-Class sedan, the 300SD Turbo Diesel. I think it was the word “turbo” that enticed my dad. I mean, the Turbo Carrera was pulled from the Porsche line up because they thought it too fast for the US, right? What could such a device do to a diesel engine powering a two and a half ton panzerwagen?

Well, it was an amazing car. Truly amazing, even to a ten year old boy admiring German craftsmanship for the first time. The seats, the dashboard, the way all of the controls felt when you moved them, that large “hazard” button in the middle of the center console, the fluted rear tail lights and the front fog lights hanging from that big US front bumper – this was not my mother’s Caprice Estate wagon. The diesel engine’s performance really was not really noticeable to young me from the passenger seat. There was that glow plug light that you had to observe before starting the motor and there was also that glorious mechanical clattering from the engine. It was so syncopated, so precise, so German. This was a true machine, like the ticking sound you hear when you place a perpetual Rolex up to your ear. I still to this day roll down my window when a Mercedes diesel pulls up at a light, just to admire it. Of course, the car also performed reasonably well for a heavy sedan, and better still, it achieved fuel mileage unheard of for a car of that size. On a long trip, my dad would do the math in his head and announce the mileage to the car. “We just got 36 miles per gallon on that last tank,” he would exclaim excitedly. To be that comfortable in such a magnificent automobile and still get twice the mileage of a Chevy small block – truly remarkable.

The 300SD arrived in our house in 1980, I believe. Soon afterward my dad thought about adding a second diesel to the fleet. One day while playing outside, a silver Volkswagen Rabbit Diesel slowly puttered its way up our road, announcing its arrival from at least a quarter mile away with its symphony, Otto’s Cacophony in C Minor. My dad turned a handle to roll down the window, something I had not seen before. “What do you think, Drew?” he asked cheerfully.

I loved cars unconditionally at that age, so it could have been just about anything and I would have been excited about it. I was especially interested at this being another German car. A quick perusal of the interior told me that this was no Mercedes. “It must have come from a different part of Germany,” I thought to myself. I came to appreciate, though, that despite the obvious differences between the two machines, there were probably more similarities than most would give credit. The largest common denominator was how each car was true to its purpose, in an exacting German way. Where the Mercedes oozed hand-craftsmanship from every ounce of its being, the VW never let you forget that the people that screwed it together really cared about the details. The doors, especially when compared with the Benz, were impossibly light and thin, yet their little handles opened them with a pleasing mechanical feel, and they closed with a solid, if not slightly tinny “thunk.” The interior was all plastic, of course – but it was good plastic. And it did not rattle either, despite the tiny paint shaker of a motor that resided under its skinny hood. What really mattered about this car, though, was the gas mileage. Know how current Prius owners are happy about getting 50mph in their little hybrids? Well, if you will believe it, our Rabbit Diesel back in 1981 was returning 55-60mph on the highway and just under 45 around town. Even by current standards, that little car could hold its own.

Of course, there was a downside to the diesel goodness, and that was emissions. That Rabbit would fumigate bugs, birds, small animals and possibly some bicyclists any time it came close to going up a hill. Black soot would pour from its tiny tailpipe into the atmosphere. Evidence of the environmental crime could be found all over the back of the car in between washes, a black coating magnified by the shiny silver paint underneath. The Mercedes output was not as bad, probably mitigated some by its turbocharger. We did not talk much back then about the environmental impact of passenger car engines. I mean, the government had made big changes to our (unleaded) fuel, and by mandating catalytic converters well before the rest of the world. It was not until a couple of decades later, though, when the concept of “Global Warming” roared into movie theaters with Al Gore speaking to its “inconvenient truth.” Agree with Al or not, you have to admit that he jump started the conversation about the effect of our emissions on climate change.

It was not emissions that killed the diesel in the US – it was competition from the gas engine cars and the fact that gasoline became once again relatively cheap. Of course, in the rest of the world where gasoline is decidedly more expensive than on our home soil, diesels continued to make up a very large market share of new car sales. And with those sales came continuous research and development. Diesels became faster – much faster, in fact, to the point where they could outperform their gasoline counterparts with their massive, flat torque curves. They became quieter and more everyday-friendly, too. Most importantly, they became cleaner. Through vastly improved exhaust and emissions control systems, some manufacturers using an innovative additive of Urea (yes, a component found in urine), diesel emissions of some modern diesel cars are actually lower than gasoline counterparts. With the much stricter emission laws now in place within the US and in many other parts of the world, these technological developments have allowed the diesel car to return to the marketplace with a vengeance, competing against other environmentally-sound alternatives such as hybrids and electric cars.

I was especially pleased to see so many diesels in the Volkswagen, Audi and Porsche lineups in recent years. I always associated Porsche with VW and Audi. In fact, as a kid I had been told on the school bus by my school pal Brad Keating that VW actually owned Porsche. His evidence was the “VW Porsche,” as he called it – the Porsche 914 to the rest of us. I had looked it up in the encyclopedia in the school library because it was 1981 and Siri was not yet available. I found a picture of the 914, with a VW emblem clearly affixed. And on our VW diesel, the glass and various parts all included an Audi four ring logo along with the VW. Porsche dealerships and advertisements of the day were all in the name of “Porsche + Audi.” Deductive reasoning proved that Brad had to be correct – VW definitely must own Porsche. Of course, Brad and I were wrong back in 1981 (Siri probably could have told me that). Porsche had always been closely related to VW and Audi, as times more close than others, but never truly under the same ownership until 2012 when VW won the see-saw battle of takeover attempts with Porsche. With the Porsche brand under VW, there would now be more sharing of parts, technology and even platforms between the brands. Thankfully, the platform sharing guys seem to have stayed clear of the Porsche sports car lineups and focused instead on the SUV, and I suppose the Panamera, since it shares so much with the Cayenne. While Porsche still makes most of their own motors even on the SUVs, there was to be some sharing on the hybrid and diesel motors.

If you are going to share with anyone on diesels, who better than VW and Audi? VW has been making very fast TDI cars for more than a decade, even hosting a TDI racing series with identically prepared Jetta TDI Cup cars. Meanwhile, in the Audi racing camp, TDI technology has been a dominant force on the tracks around the world. Clearly, VW/Audi/Porsche has been sitting on top of the diesel world. That is, until a about a week ago when news broke about a scandal that would prove to loom large in the coming months.

The Germans are a prideful people. Even the German word for pride – Stolz – sounds like it describes something that is strong, stiff and unyielding. There is a bit of stubbornness in German pride and I think it is part of what it makes their people so strong and so good at what they do. They do not accept mediocrity and defeat is totally unacceptable. They are driven to levels of greatness in the products themselves that sometimes undermine other considerations, such as economics. Case in point, when the last 968 cars were rolling off the lines in the mid-nineties, they were undoubtedly the very best iterations of their line harkening back to the 924 – but they had also risen in price to almost challenge the 911 series cars. This was a problem that made those later cars languish on dealer lots, and in fact almost bankrupted the brand along with the also-expensive 964 series 911s. Nevertheless, you have to admire the Germans’ desire to put forth the very best of whatever they are making, whether it be a sports car or a coffee maker. To steal from Mercedes-Benz’s old company mantra – “Das Beste, oder nichts” (“The best, or nothing.”).

All this makes this recent VW scandal even more perplexing to me. As you probably have heard by now, VW Group has been accused of building diesel cars that include a sensor to effectively determine when they are being tested for emissions. When a testing condition is sensed, it engine control computer changes the engine mapping to drop the emissions output to below action levels. Once disconnected from the test, though, the engine output increases, the fuel economy increases and the emissions output skyrockets to approximately 40 times the allowable limit for emissions. The effects of this bombshell accusation have been dramatic and global. To begin with, the value of VW stock shares dropped like a proverbial stone, losing something like $70 a share since the news broke. Total cost of the scandal, including fines in multiple countries, class action suits by owners, shareholder suits against VW’s management board, and of course, the cost to recall and retrofit the affected cars with new software or hardware or both, is estimated at close to $55B worldwide.

The pain of this scandal is deeper than the economics for VW owners and their fans. This is a blow to the belief in the principles of this company. It is a blow to the pride of owners and fans of VW worldwide. Yes, they make fast, economical and fun to drive diesels – but they had to cheat to make it all work. It would be one thing to engineer the car to run just a smidge too close to the legal edge of emissions – I think we could have all appreciated a slightly overachieving effort not to leave anything on the table performance-wise. This goes beyond that, though. Here is a specific program – designed by an engineer or a team of engineers, to use a sensor input to determine when the vehicle is being tested and then blatantly cheat on that test. There is just something so wrong about this action that it just does not seem possible that a company full of Stolz could ever take such a risk. You expect brilliance … innovation … possibly fanaticism. You do not expect dishonesty. Being caught at being dishonest is worse than just losing in the first place.

It is hard to be the President of NNJR and not think about how this might affect Porsche. How is the Porsche brand affected by this whole issue? It cannot be a good thing for your parent company to essentially lose wholesale chunks of their market value within a period of days. VW’s successes help fuel the company, which help pay for some of the less essential, albeit more satisfying technologies found within various Porsche cars. What else could be affected? Will the racing budget for Porsche and Audi become smaller? Will more platform sharing take place to help continue new model development under small budget constraints? Will ownership be affected? These are all looming questions which will be answered over time.

In the meantime, you have to feel somewhat relieved to know that Porsche continues to thrive at being one of the world’s most profitable car brands. Anchored by a diverse product line and an economically-strong customer base, chances are excellent that Porsche will continue along unscathed. What is most helpful, of course, is that no Porsche diesels – at least as I write this article – appear to be affected in the probe. Apparently the power (and emissions) generated by the Porsche power plants is real and legal. Who knows? Maybe sometime in the near future Porsche will once again be in a position to try and rule the kingdom. Not a small detail is how Porsche’s former leader, Matthias Mueller, has assumed the top position at VW after the top management was fired in the wake of the scandal.

Somehow, I am quite sure that Volkswagen will pull through this dark chapter of their history. It will not be easy and it will not be cheap, but there will be brighter days ahead for Volkswagen and their group of companies. It is a shame that the company felt that cheating was a viable option to enhance the overall performance of their cars, but the management of the company that remains will no doubt be driven to overcome the immediate task of making the affected cars right. Then they will be able to get back to what they do best – engineering some of the finest cars on the road. They have too much Stolz to do otherwise.

Drew Karpinski