It seems that every time you turn on the news, a major car manufacturer is making headlines for recall issues or massive faults in one system or another that inevitably hurts their reputation. Time passes and people seem to forget about it after the company takes extreme measures to correct the problems and rebuild their reputation. This time the German car maker Volkswagen has crossed a line and they may not be able to recover as quickly as their competitors have. What VW did boils down to a matter of trust, which is very hard to win back for most businesses. In case you haven’t heard, here are the details:
Volkswagen has admitted to installing a sophisticated software known as a “defeat device” into the electronic control module that senses when the vehicle’s emissions were being tested and would put the vehicle into a type of “test mode” that would alter the tests to show 10-40 times less emissions than what was really being produced while the car was being driven on the road. This software has affected about 11 million diesel vehicles on the road around the world right now. The TDi versions of the 08-15 Golf, Jetta, Beetle, & Passat owners have fallen victim to this scandal thinking that they purchased a much more environmentally friendly vehicle than advertised. Recently, Audi & Czech-based company Skoda added another 2.1 million and 1.2 million affected cars respectively worldwide to the parent company’s already staggering number. Audi lists the A1, A3, A4, A5, A6, TT, Q3 and Q5 models while Skoda has not yet released which vehicle models are equipped with the cheat device. That brings us to 14.3 million cars on the roads that are producing more smog-forming gases and particulate matter into our atmosphere than what they were believed to.
So what does that mean to you as a VW owner and a non-owner?
As a non-owner, it doesn’t mean a whole lot. With 1.2 billion cars on the road, this scandal affected less than 1% of the vehicles on the road worldwide (that percentage per population is higher in Europe since there is a higher density of diesel vehicles in that market). The appeal of a “clean diesel” was to have the benefits of higher fuel per mile numbers without emitting as much nitrogen oxides (NOx) which are harmful to the lungs, two very difficult thing to balance. Based on an EPA study using BenMAP, the amount of extra NOx estimated from the Volkswagen scandal (10,000 to 40,000 tons) can lead to anywhere from eight to 34 premature deaths.
For the owners, it left a bad taste in their mouth if nothing else. Most purchased these vehicles to simply be environmentally friendly since they were advertised to release far fewer harmful gases into the air than their gasoline counterparts do. The customer was lied to by the biggest car manufacturing company in the world. Consumers don’t like being lied to. This is evident by the 33% plummet in the company’s shares so far which continue to plummet since the scandal broke about a week ago.
So what is going to happen to VW?
German authorities demanded that VW set out a timeline by October 7th on how it will ensure its diesel cars meet the national emission standards without using the cheat technology. With the new CEO Matthias Müller at the helm, they have a little over a week to find a solution to a problem they have been covering up for the last 7 years. Not only that, but last Friday, the EPA announced that Volkswagen had very flagrantly violated the Clean Air Act and ordered the German carmaker to fix the affected vehicles along with possible fines as high as $18 billion. The cherry on top, the Department of Justice is also contemplating criminal charges. Needless to say, the company has halted US sales of its 2015 and 2016 clean diesel vehicles until a solution has been made.
There are many factors that go into a consumers decision to purchase big ticket items like automobiles. Trust is perhaps the largest influence since big decisions are made in the brain’s limbic system, the part of our brain that is responsible for emotions, such as trust and loyalty. So where does that leave VW after they have paid the fines, fixed the cars, and fired all the people responsible for this whole debacle? How long do you think it will take the people to brush this aside and start trusting the car company again? Only time will tell. Let me know your thoughts on the matter in the comment section below!