It is really interesting to see all the current flurry of activity in relation to the sins of the Volkswagen diesel emissions affair and the potential ramping up of Class Action legal suits all over the place.
Firstly I will make it clear that I do not in any way condone any premeditated act of dishonesty by an organisation against anyone they deal with, be they customer, supplier or shareholder. So the actions of the Group in this instance are clearly unacceptable and I acknowledge that the Group has acknowledged that exact point.
What is of concern to me however is what the aim is, what is the reasoning, and what is the real intent of these actions? Why do I ask this? Well mainly the recent memories of one of the contemporary class actions that was ultimately settled for a fraction more than the legal costs of the case itself! There was simply no real benefit to the individual applicants in starting the whole process in the first place.
For most of the buyers of these vehicles they would have purchased them because the vehicle itself represented a satisfaction of their personal requirements combined with an assumption that the vehicle was compliant. Thus without these owners being pursued by the regulators for a non-compliant vehicle the only real issue is ultimately resale and presumably the company would seek to deal with that when an approach was made to trade it in. Certainly there will be a select number of fleet buyers who may have put a tender out for the supply of vehicles that must meet certain criteria. If this criteria was not met then clearly there would be a breach of contract, and thus a direct liability.
Thus, to the extent that the vehicles are non-compliant then the Group needs to find a solution and resolve its implementation with the authorities as quickly as possible. In relation to all of the legal claims, there options may well be more commercial and as such could well ultimately end with a distinct and final thud. Some time ago Volkswagen acquired Rolls Royce, albeit the name, after a negotiation, went to BMW. Rolls Royce found itself in 1974 with a seriously bad contact that was so big it would bring down the company. The problem was solved with a “hive-down” (a then legitimate form of phoenix activity) which got rid of the problem contract and the claim that went with it. The Hardies Industries story rings similarly true as to the ultimate funds available to claimants.
So what is required is that some serious thought needs to go to a process for moving forward. The issue is whether it will represent money for legal’s and administration, or fair compensation to those who are actually in need of it, when they need it?
I suspect that the latter will be the better in the long term for the economy, and the majority of the players.