The trouble with driving Porsche - currently I'm on my fourth - is that once you've driven one, you rarely want to drive anything else. So my loyalty to the Stuttgart brand is strong. Yet it will be tested because I have reservations about giving money to a company that cheats and lies.
True, I've often been sceptical about Porsche's claims for fuel consumption. It's not that I thrash the life out of that flat-six engine of mine, but it's easy to notice the gap between mpg claimed by the manufacturer and that achieved by Bearbull. Still, it wasn't until the other day that I learnt manufacturers' figures are achieved under conditions so contrived as to be ridiculous - treadless tyres, stripped out interior, disconnected alternator and so on.
Such practice is sharp, but maybe it's acceptable; after all, at what point does stretched truth snap? Answer - certainly by the time software is installed in a car with the specific task of generating false data. In effect, that's what VW did to its diesel-engined models undergoing 'NOX' testing in the US for emission of nitrogen oxides.
Alright, diesel-engined autos have never been popular in the land where the right to cheap 'gas' is almost as powerful as the Second Amendment. As a result, not many diesels get sold, so what VW did may not much matter. Except that boosting sales of its diesel cars in the US was vital for VW to fulfil its aim to become the world's top-selling car maker. Which brings us neatly to the three lessons investors can learn from VW's experience.
■ Beware of corporate pride, especially when it's linked to size. Granted, almost all multinationals exist in a state of perpetual hubris so it was apt that, in the press release immediately before its humiliation, VW was congratulating itself on being "top of the world's most sustainable car makers in the Dow Jones Sustainability Index this year". And earlier this year its now-departed chief, Martin Winterkorn, was stating unequivocally that "our pursuit of innovation and perfection and our responsible approach will help make us the world's leading automaker by 2018 - both economically and ecologically". Sorry, could you just repeat that, Martin?
What's happening to VW is much the same as happened to Toyota and General Motors before it as they closed in on the number-one spot. The pursuit of size became an end in itself, the effect of which was to undermine well-established corporate virtues. It was unthinkable that Toyota would compromise its four core values, but compromise them it did. Similarly, VW epitomised the dedication to quality and corporate responsibility on which Germany's manufacturing champions are built; at least, until size got in the way.
■ Beware of the consequences of demanding too much. Ask someone to fulfil a really difficult task where the penalties for failure are harsh and/or the rewards for success are enticing yet monitoring performance is lax, then - chances are - they will cheat. For example, throughout western Europe's power-generation industry the gap between the permitted level of green-house gas emissions and what's actually achieved is closed by gaming the system and worse. Something similar happens in its auto industry, too. But it is not only those who cheat who are to blame. If governments - motivated by a combination of idealism and cynicism - make unrealistic demands without bothering to police a system, then neither they, nor the consumers for whom they act, should be surprised when the process gets corrupted. The easiest response for VW and other auto makers was to bend the truth.
■ Beware of group dynamics. The VW scandal has this in common with the Libor scandal of rigging interest rates: the unstated assumption among players that it was okay to cheat because everybody cheated and everyone knew that everyone else cheated; in such circumstances, only a fool would not cheat. A similar dynamic has propelled the conduct of testing vehicles in Europe for their CO2 emissions and - much like the genesis of interest-rate rigging in the City - even if sharp practice was not condoned by regulators, they conveniently turned their back thus allowing the group dynamic to gather momentum. This matters if only because regulations now have to be toughened and policed better. That will impose costs - ultimately on consumers or shareholders - that would not have been there had controls been better set up in the first place.
Talking of shareholders, is this a Deepwater Horizon moment for VW? Quite possibly, worse. It's not just that diesel fumes are killers, too; also - and unlike BP - VW deliberately deceived. So, sure, VW's plant and equipment will survive, as will its brands. But the equity - whose market value is already half the book value - might be wiped out. It's a worry that there's a highly-leveraged financial arm - effectively a bank - embedded within VW. If lenders run for their money, it could get really nasty.
