To be clear to future readers looking back, I did not predict today's gap down in advance. Not really. I saw the news over the weekend and I knew it would go badly for the shares today. But I would likely have predicted a gap right here had I been following the VW stock chart because this is clearly the beginning of a massive C wave that is likely going to take the shares down to $5 before its over.
Note that I did a slight renumbering on the count so that this gap is now the 3rd of 3 of 1 of C. It's subtle and it changes little in the big picture but it is still worth noting.
So the chart clear predicts a big killer C wave to unfold and note that the time line is not intended to be accurate. This will likely be done crashing by mid to late 2017.
If you need a fundamental story to account for such a death plunge, consider what will the people do who are now driving these illegal vehicles? Will they just park them and walk now? Will the US EPA grant VW a cheater's reprieve?
Sorry volks, that kind of shit happens when liberalism is on the rise. Someone makes a case for grey and then in the name of rising profits all the con men just cover up the evidence or downplay it in the media.
Not no more people. Expect zero breaks for VW. Conservatives believe in right and wrong and have little tolerance for shades of grey. Expect VW to have to bear the full brunt of their indiscretion.
Here's another thing to consider: this move by them was major, major desperation. Why would anyone chance getting caught at something like this unless they felt the need to? This was not a greed move IMO. This was a survival move. Without these diesels having good performance and passing EPA, what does VW have to offer for its hyped up price tag? Without this, where is the claim of superior German engineering? If VW could have delivered their driving performance specs while also delivering their EPA performance specs, they would have. The fact that they didn't means that there is physics in the way and so they can't. I expect them to have to deliver engine controller firmware that passes emissions at a substantial hit to performance, perhaps as much as 15-25%.
People want what they paid for and so VW is going to have to refund billions of dollars to consumers in addition to EPA fines. Some owners will accept a rebate check in order to accept the derated firmware. Others will say not no but Hell no, you refund the whole GD sales price including tax tag and title and you take this 1-2-3 year old vehicle back as if it were just purchased. Who doesn't want 1-2-3 years of use on a car for free?? I know I would if I had bought one. And they will get it too because those buyers have a clear case to make that they were defrauded of their money. They entered into a business arrangement with VW under false pretense by the company. They have every right to nullify the deal and demand their money back and I believe that VW will be contrite and they will not fight it very hard. They will take Nike's advice and just do it.
That's how much ass kissing VW is going to have to do in order to avoid a complete collapse of their future business. If VW doesn't go waaaaaaaay out of their way to make this right, it will be seen as a social faux pas to even think of or to be seen buying or be seen driving a new VW in the future whether it has a diesel engine or not. Any "cool" factor that VW fans thought they had is now GONE.
VW will likely get as badly over screwed on this deal as others have gotten off lightly during the liberal years.
It's getting worse and not only for VW. The EPA rightfully suspects that VW us not alone cheating the emissions regulations, so it's expanding a probe to other makers of diesel cars. But wait, there's more! The British counterpart of the EPA, suspicious of NOx concentration in large cities not having fallen as expected after years of ever more stringent emissions limits, is starting an industry wide probe. I will not be surprised if this spreads throughout Europe.
ReplyDeleteIt is a bit bizarre though. The liberal regulations which pushed engines to spew exhaust gases cleaner than the air of some European cities raised the costs of treating the exhaust gases to the point of making them unbearable, not to the maker, but to customers. Such an impasse couldn't but be broken by the conned conning the conner, merely winking at each new emissions standard pushed by bureaucrats.
I am on record here that this industry, and possibly worldwide, shake up of the car makers will backfire at the bureaucrats and slow down new emissions standards for a couple of decades. After all, nobody is going to be happy to be banned from using his car, whose emissions were not a factor in the buying decision and whose value is prone to plummet below its junkyard price by weight.
Yeah I saw that about government wanting to sniff around and see who else has been skinny dipping the EPA regs. You are right. If this dragnet catches ford gm, etc. then we can't just blame it on the "Evil Germans" and fine the crap out of them. We will have to admit that everyone is gaming the intolerably difficult system. Wouldn't that be something.
ReplyDeleteWell, I want to go electric in my daily commuter anyhow, and not for green reasons. I think when oil bottoms it is going to pop right back up above $100 and higher and that US gasoline prices will reach new and terrible highs. I'd rather burn the sunlight that my 15kW solar array catches.