As Volkswagen owners worldwide begin receiving their recall paperwork for the emissions débacle, the new CEO Matthias Müller has given the clearest indication yet of the scale of changes that are coming at Volkswagen. In a speech to 20,000 Volkswagen employees at Wolfsburg’s Hall 11, Müller made it clear that the Volkswagen of the future would be a very different organisation.
“Apart from the enormous financial damage which it is still not possible to quantify as of today,” said the Chairman, “this crisis is first and foremost a crisis of confidence. Our most important task will be to win back the trust we have lost with our customers, partners, investors and the general public. Only when everything has been put on the table, when no single stone has been left unturned, only then will people begin to trust us again.”
Volkswagen shares plummet by $60 Billion
Meanwhile, Volkswagen shares continue to nosedive, with a staggering $60 billion now wiped off the company’s value since the scandal broke. Even more staggering is the number of industry commentators who continue to insist that this is a fuss about nothing – either they have an errant line of code in their programming or this is costing VW PRs more than a few VIP perks. As more than half the value of Volkswagen AG has now evaporated, Müller is right to let his people and the global stock markets know that cuts are coming.
Suzuki Motor Company is the most recent bulk shareholder to abandon ship: Porsche SE buying back a 1.5% Volkswagen shareholding owned by the Japanese firm. As Porsche spends on share buybacks, ex-Porsche CEO Müller looks to slice billions off Volkswagen’s costs. “It is not possible to quantify the commercial and financial implications at present. That is why we have initiated a further critical review of all planned investments. Anything that is not absolutely necessary will be cancelled or postponed. And it is why we will be intensifying the efficiency program. To be perfectly frank: this will not be a painless process.”
A number of analysts have put their best interns on the job that Volkswagen says is currently impossible: quantifying the scale of the financial implications. Possibly the best/worst one was a Credit Suisse report estimating the total cost (not including long term damage to reputation) at somewhere between $25 billion and $87 billion, with shares dropping another 20%. Volkswagen insists the numbers are nonsense, and the top estimate does seem completely ridiculous, but the lowest number is at least what it will run to, including settling the lawsuits and discounting replacement car prices for those affected. This will put a huge strain on Volswagen’s finances.
No doubt the shares will bounce back from wherever they bottom out, but another 20% would take Volkswagen to a third of its pre-dieselgate value. The VW emissions affair is certainly not a fuss over nothing and it is very relevant to the future of Porsche.
While Matthias Müller hits the halfway point of his first week as Volkswagen’s latest Chief Executive, his employers have appointed the new chairman of Porsche AG. Forty-seven year-old Doctor Oliver Blume takes the helm at Stuttgart: a move that has been applauded by many including the Chairman of the Works Council. Will putting the young production chief in charge prove the right way to go?
No doubt Blume is a capable professional, but he has only been at Porsche for two years. Graduating in mechanical engineering from Braunschweig in the early 1990s, Blume headed straight for Audi, where he progressed through the ranks to lead the bodyshell engineering team on the Audi A3 before spending time at the University of Shanghai.
Staying with Audi, Blume led development of a new Audi plant, shifting sideways to SEAT in 2004 and eventually helping to shift production of the Audi A3 to a SEAT plant in Spain, when the Spanish economy collapsed and new car sales plummeted. Success here led to promotion as Global Head of Production for Volkswagen AG in 2009, then onto the Executive Board of Porsche AG as the member responsible for production in 2013.
Porsche Production Cost Cuts?
Wolfgang Porsche renewed Blume’s contract ahead of schedule earlier this year with a five-year extension so, as Müller was always headed for Volkswagen, no doubt this Porsche job has been on the cards for a while. As a Volkswagen man through and through and a keen production cost cutter, Blume may be just what the Supervisory Board wants in charge as global operating costs are pinned to the top of the long-term agenda.
Volkswagen Emissions Scandal: $50 billion
The automotive business unit at Duisburg-Essen University recently estimated that the dieselgate scandal could cost Volkswagen up to $50 billion, so to believe that Porsche will be ringfenced from that would be foolish. As the substantial Chinese market continues to contract, Blume will be expected to deliver increasing sales and enhanced profitability, so what marketing genius will be helping the new boss to achieve this?
New Porsche Sales and Marketing Chief
Fourteen-year Porsche veteran and current head of Sales and Marketing, Bernhard Maier, has just been shot from a cannon towards the Czech Republic to take the reins at Skoda, as the former CEO there has been put in charge of a unifed Volkswagen for Canada, North America and Mexico. This means a new Porsche sales and marketing chief, so Blume will have former Porsche Cars North America boss, Detlev von Platen, to help sell whatever he produces.
Von Platen has seven years with Porsche to his name, so the two biggest jobs on the Porsche board can barely claim double figures in time with the badge between them. Cayenne is already on its way to production in Bratislava (Slovakia) alongside Audi Q7 and VW Touareg and, if Audi A3s can be made down in Spain with minimal impact on sales, where else might Porsches be bolted together? Interesting.
Had a bit of a Porsche blog sabbatical while working on other projects and building my new Porschehaus garage & office. Porsche’s Mission E concept, a new 911 with turbochargers as standard and Magnus smashing his 911 into a parked truck with a journalist on board didn’t get me excited enough to pick up a keyboard, but today’s news regarding Porsche’s parent Volkswagen kickstarted some action.
A year after this story first broke in the UK’s Sunday Times (as reported on ConsultEV), America’s Environmental Protection Agency has ordered the recall of almost half a million Volkswagen group cars sold in the US since 2008, after uncovering cheat software in Volkswagen group diesel cars designed to lower emissions when being run through emissions testing. The defeat device software knocks Nitrogen Dioxide emissions down for testing, but NO2 emissions are up to 40 times higher than levels permitted in the USA at all other times.
Toxic by inhalation, Kings College in London blamed Nitrogen Dioxide for 9,500 deaths in the city during 2010. The Nitrogen Dioxide emissions cheat software has so far been located on just five VW And Audi cars tested by the EPA, but every car found to be running the cheat software will incur a penalty of some $40k for its manufacturer. The maths apparently totals to almost $18 billion for Volkswagen in the US.
The bigger story will come from the fallout in Volkswagen’s other markets, paticularly back home in Germany. Also count on a slew of class action lawsuits against VW in the super-litigious USA. Perhaps the most bemusing aspect to this story is that emissions cheating is absolutely commonplace in vehicle testing. From my own conversations with car manufacturer-employed friends over the years, it seems that most if not all modern manufacturer ECUs are programmed with cheat software, designed to recognise throttle patterns common to rolling road emissions testing and shut down as much combustion as possible while the tests are being carried out.
A recent European Union report says that real-world emissions from cars can be up to 40% higher than seen in emissions approval testing, so this Volkswagen story is just the tip of the iceberg. You’d think the EPA would have known about this all along. I smell a rat in a Tesla lab coat, or maybe an EPA bod who stopped getting hush money. Either way, you know the discovery is no real shock to the emissions testing system: it’s a PR campaign designed to shock consumers and batter VW.
How does this affect Porsche? Well, imagine if your dad was fined $18 billion and 50,000 Americans started suing him. You would bloody know about it.
Porsche Motorsport has launched the all-new Porsche 911 GT3 R at the Nürburgring 24-Hour. The new 991 GT3 R joins the current factory race car lineup of 919 LMP1 Hybrid and 991 RSR, and the customer 991 Cup, which is built on the Stuttgart production line.
Based on the 991 GT3 RS, the 991 GT3 R comes with a four-litre flat-six making 500bhp and costs an impressive €429,000 plus VAT: almost $500,000 plus applicable taxes, according to fxtop.com. In comparison, the 991 Cup (GT3 based) with 460bhp from its 3.8-litre engine costs just €181,000* plus tax. So what do you get for your half-million dollars?
“In developing the latest 911 race car, special attention was paid to lightweight design, better aerodynamic efficiency, reducing consumption, improved handling, further optimised safety as well as lowering service and spare parts costs,” says the Porsche press release.
That lightweight design starts with aluminium, carbon fibre and polycarbonate: all the glazing – including the windscreen – is now polycarbonate (EB Motorsport sells a similar polycarbonate windscreen for early Porsche 911s if you’re in the market). The roof, front panels, doors, rear quarters and tail section are all carbon fibre.
Lowering body and suspension weight across the 991’s longer wheelbase (83mm longer than a 997) means an ‘optimised’ centre of gravity has been achieved. I presume that optimised means lower and further forward than the 997: no doubt one of my race engineer friends will fill me in on this over a beer some night.
One big change on the new GT3 R is a move to a centre front radiator. Anyone who has watched Supercup racing at Monaco knows that even a small hit to one front corner can wipe out a radiator and then a race motor too, as the damaged car limps back to the pits with soaring engine temps.
Going to a centre rad (as seen on older Porsche 911 race cars with centrally-mounted oil coolers) helps airflow and aerodynamics too, allowing more control of the hot air beneath the front wings and around the front axle. The 991 GT3 R brings in the same front wing vents from the 991 GT3 RS to reduce front end lift, but then the 997 GT3 R also had front wing vents: not a great deal is different.
Brakes at 6-piston 380mm front/4-piston 372mm rear are the same as GT3 Cup, and the wheels are also the same 310mm width at the rear. Paddle shift of the six-speed sequential transmission, direct injection, variable valve timing, 120-litre fuel cell: it’s all as one would expect from a top-flight Porsche racing car costing £370,000 including VAT.
Deliveries start in December this year, so we won’t see the Porsche 991 GT3 R on race tracks before 2016. How competitive will it be? That depends on who decides to run it, and what the competition does in the meantime. See below for some Porsche video of the new 911 GT3 R in action.
Interesting story on Gizmag this morning about how Porsche has patented a new type of variable compression ration engine technology. Partnering Porsche in this venture is Hilite International, already a long-standing client at Porsche Consulting.
Variable Compression Ratio (VCR) is a prime candidate for the next big step in internal combustion engine efficiency. It is particularly suitable for turbocharged engines, and we know that all 911s will adopt turbocharged engines over the next few years, alongside the many turbocharged model variants in the Macan, Cayenne and Panamera ranges already produced by Porsche.
Compression ratio is critical to performance, and is of particular importance on turbocharged engines. Turbos work by compressing the intake charge of air and fuel before ramming it into the combustion chamber under pressure. Because a turbocharger is powered by exhaust gas, and therefore is not always running at peak boost, the amount of fuel/air mix entering the cylinder varies from low volume when the turbo is not spinning to maximum volume when the turbo is running at peak revs. Turbocharged engines must therefore run lower compression ratios, to allow that higher volume at peak boost. This costs them power.
Why use Variable Compression Ratio technology?
One way to increase the efficiency of a turbocharged engine would be to constantly adjust the compression ratio, giving higher compression off-boost, and reducing the compression as boost pressure rises, to prevent detonation. The Porsche system (top) is clever, planting the piston on an eccentric mount that is automatically adjusted by control rods, which swivel the piston up or down on the crankshaft connecting rod depending on oil pressure, thus controlling the compression ratio.
Compare this solution to the nicely engineered but complex solution developed by MCE over the last decade (above photo shared under ‘fair use’), and it is perhaps easy to imagine how this new patent might better suit volume manufacturing, delivering less risk to reliability. It is also highly licensable technology: something which Porsche has done very well from over its history. So, even if the technology never makes it into a Porsche, it could be shared commercially with a wide range of other end users.
Bravo Porsche engineering! We look forward to seeing a fully developed version of this system come to production, and to experiencing the benefits on the road.
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