Volkswagen has a tough road ahead to restore consumer trust

In the many years I’ve been involved with the car industry I have come across many scandals and cover-ups involving auto-makers involving many aspects of their business, but I have never seen anything like the frenzy which has engulfed Volkswagen in the past fortnight.

I have seen all sorts: the recent General Motors steering lock scandal which caused the company to compensate some 124 families for related deaths, forced a 30million vehicle recall and cost it nearly $1bn in fines; the A-Class ‘Elk test’ scandal which forced Mercedes to practically rebuild the car; the Ford Pinto fireball scandal which caused hundreds of deaths and zillions in class actions; to the tragi-comical Lancia ‘rust’ scandal of the early eighties which saw the company secretly buying cars back to try and hide problems with unstoppable corrosion.

Volkswagen says around 11 million diesel vehicles worldwide -- including more than 110,000 vehicles in Ireland -- will need to go back to garages for a “refit” in the coming year.
Volkswagen says around 11 million diesel vehicles worldwide -- including more than 110,000 vehicles in Ireland -- will need to go back to garages for a “refit” in the coming year.

Hell, there was even the story of the late generation British-owned Land Rover concern which sent out letters to owners asking them to come to the dealer to rectify some minor lighting concern. Cars returned to the dealers promptly had whole new differential units fitted, unbeknownst to the sucker owner.

I won’t suggest that car scandals are quite two a penny, but there have been more than enough of them to confirm to people that manufacturers have traditionally been more than capable of trying to dupe the authorities and, worse, the public at large in order to bury their shortcomings. But Volkswagen has taken things to a whole new level with its’ admission that it deliberately fitted software to its cars to cheat emissions testing.

Martin Winterkorn
Martin Winterkorn

As we saw with the banking crisis, the rush to massage profit levels upwards and force growth and expansion becomes almost a disease to those involved and it now seems that one of the world’s biggest and most powerful automakers has succumbed to the same levels of greed and insatiability. It seems incredible that this has happened — and yet it has.

And the thing is that those at Volkswagen responsible for this vast attempted deception honestly thought they could get away with it. Presumably they would not have done it otherwise.

They actually thought they could not only con all the regulatory authorities in America (very foolish), but their customers as well. Unfortunately for them, they have ruined the reputation of their company but also shattered the valued trust their customers had placed in them. I’m one of them.

The cost to VW has already been measured in terms of the €18bn fines they are facing and a collapse in share prices, but the damage going forward to a reputation irrefutably stained may never be properly calculated. Those responsible — some of whom are said to be facing jail — will forever have on their conscience the fact they wrecked one of the greatest automakers of all time.

In terms of desperately trying to restore whatever customer confidence remains, VW has already announced the recall of some 11m vehicles — eleven million, just think of it — but that is only going to be the start of a mammoth process involving many stakeholders, not least of whom is the company’s dealer network which has been left embattled and besieged by these staggering revelations.

Newly appointed chief executive Matthias Mueller has said the German carmaker had drawn up a “comprehensive” refit plan to be submitted to regulators aimed at ensuring its diesel models complied with emissions standards and that it will ask customers “in the next few days” to have diesel models equipped with manipulated software refitted.

Volkswagen has a tough road ahead to restore consumer trust

Mueller reportedly told a closed-door meeting of about 1,000 top managers at the automaker’s Wolfsburg headquarters last Monday night that the company was facing “a long trudge and a lot of hard work.” That’s an understatement. Germany’s KBA regulator has set an October 7 deadline for VW to come up with “binding measures and a timetable” for ensuring that all its diesel cars meet emissions standards.

Volkswagen has said about 11m vehicles were fitted with software capable of cheating emissions tests, including 5m VWs, 2.1m Audis, another 1.2m at Skoda and a good deal of Seats you’d have to think. Not to mention a reported 1.8m light commercials.

But this is only the start of the hard work at VW to restore its’ reputation and it will be a very long time before the company can once more count on the sort of customer loyalty which was until very recently a hallmark of the brand.

I do not believe anyone in the automotive industry can take any satisfaction at all from this scandal.

Volkswagen has a tough road ahead to restore consumer trust

I can only hope that it provides a salutary lesson for everyone in the business and that lesson is that no matter how big or great your company, you’re never too big to get caught out by your own arrogance.

Then again: Plus ça change (plus c’est la même chose).


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