WOW.
Over its illustrious history, the automotive industry has faced its fair share of scandals and setbacks.
There have been recalls affecting countless millions of vehicles, automakers not fully disclosing safety-related risks, and an endless series of lawsuits and fines, with the most recent being a $900-million settlement between the U.S. Department of Justice and GM over a defective ignition switch.
But there’s really nothing quite like the storm brewing over the allegations that VW installed software to deliberately trick emissions testing equipment, thereby falsifying the real world performance of its diesel vehicles. This technological sleight of hand is what U.S. regulators say allowed the company to satisfy emissions requirements for its diesel products in that country.
The headline on the cover of a recent Economist magazine: “Dirty Secrets of the Car Industry” raises some serious questions about the long-term impact of this particular scandal on the industry, and perhaps most importantly, in the damage to consumer trust.
Those outside the industry might think a wounded VW will be good news for other OEMs that compete with VW. But it’s really not good for anybody.
The “dirty diesel” scandal is going to shed light on all sorts of issues related to vehicle testing, fuel efficiency claims, and other related shenanigans that have been going on for years around the globe. The endless gaming of the system to present numbers to consumers that don’t match their real world driving experience has been a constant source of irritation for buyers.
It’s a game that is about to end, and regulators across many jurisdictions are already talking about completely overhauling the testing system.
At the end of the day, consumer trust in automakers of all stripes — not just VW — will have been eroded by this scandal.
Many typical car buyers don’t differentiate between the company making the car and the dealership selling it to them. They are all part of the same brand. I can’t imagine how frustrating it must be now for VW dealers who can’t sell any of the diesel inventory they just ordered, and who are facing the wrath of outraged consumers who claim the dealership sold them something that wasn’t as advertised.
The relations between dealers and their OEMs are challenging at times, and this will be a difficult test.
For dealers who recently invested their own money to reimage their VW dealerships and invest heavily in the brand — their OEM may have really stuck it to them this time.
VW will have to do the right thing and look after its dealers who will be in the front lines taking it on the chin in the coming months.
It’s just the right thing to do.
