A lot of electrons have been annoyed by people writing about the Volkswagen scandal. In an effort to give customers the performance they want while still passing the Environmental Protection Agency’s (EPA) unrealistic tests Volkswagen wrote some clever software. It’s no surprisingly Volkswagen sales increased in the month of October. Well, it’s no surprise unless you’re a statist who doesn’t understand how markets work:
There is a world in which consumers swiftly punish Volkswagen where it counts — the coffers — for its massive, systematic deception of the Environmental Protection Agency in which it cheated its way around diesel emissions tests for half a decade.
This isn’t that world.
Volkswagen of America just reported its October sales, the first full month of reporting since the scandal broke, and guess what? Sales are up 0.24 percent year over year, likely thanks in part to enormous discounts being offered to prop up volume. Now, perhaps they would’ve been up more in the absence of the scandal. But if consumers haven’t outright rewarded VW for deceiving them, they certainly haven’t done much to punish the automaker, either.
I don’t really know what to do with this. Governments and law firms around the world are rearing to shake VW’s piggy bank, but it’s a little confusing to me that car buyers wouldn’t be looking elsewhere while this all plays out (and it is very much still playing out). Are these buyers just not following the news? Are they not concerned, because America is generally less excited about diesel engines than Europeans? (Note that Volkswagen has suspended sales of its 2016 diesels, pending approvals, so Americans have made up the sales difference versus October 2014 with additional gasoline and hybrid purchases.)
Consumers only punish manufacturers when they feel they’ve been wronged. Why should I, as a consumer, be angry if I know an automobile manufacturer can’t sell its product in the United States without passing random government tests that demonstrates nothing of value (more on this in a second) and find out the manufacturer cheated the test to give me a better product? On the other hand I, as a consumer, have ever right to be angry when the government attempts to interfere with my acquisition of a desired product. The EPA tests, as I mentioned above, aren’t even testing real-world conditions so there’s no reason for consumers, even those who are dyed in the wool environmentalists, to give two shits about them.
And don’t make the mistake of construing this increase in sales with consumers not caring about environmentalism. Most consumers care greatly about environmentalism, which is why fuel mileage is advertised to heavily these days. Generally consumers want a balance between performance and fuel efficiency (of course the EPA’s fuel efficiency tests, like its emissions tests, aren’t accurate but that’s a different can of worms). If a vehicle’s fuel efficiency is too low consumers face undesirable increases in their fuel bills. But market forces are something statists don’t understand so they become confused by situations like Volkswagen’s sales increase and come to the faulty conclusion that it means consumers don’t care about environmentalism (and use that conclusion to argue the necessity of the EPA).
What we’ve learned from this Volkswagen scandal is that producers, when faced with idiotic regulatory tests, will find creative ways to give consumers what they want and be rightly rewarded. If you want to be angry with somebody be angry with the EPA. It’s been feeding the public bad data for decades and using that data to restrict availability of goods, which has forced manufacturers to cheat in order to fulfill the wants of their customers.