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How does a brand like Volkswagen EVER recover from such a scandal?

This blog almost writes itself, I surely don’t need to tell you about the Volkswagen Scandal.

I am more interested in your views on the questions it raises in my mind and undoubtedly in many other people’s minds:

  • How many teams and departments would have to have been involved to make this happen?
  • Has this idea stemmed from one very bright manager?  
  • Were engineering teams under so much pressure to get results that they thought this was a feasible work around?
  • Or it did it stem from elsewhere?
  • Are other car manufacturers doing the same?
  • What should the consequences for VW be?
  • How does a brand with such strong consumer loyalty and following ever restore confidence and trust in their products?

 

There are of course so many more questions, but I would be really keen to pick the brains of my very experienced executive network on the above. 

I look forward to hearing your views on what is a very contentious topic.

  

Claire Lauder is the Principal for Manufacturing & Engineering at Interim Partners. 

Comments

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Claire Lauder

30 Sep 2015 11:16 AM

Thank you all for your input, some people have commented to me on email rather than on the blog and many references have been made to Tesco's, BP and the banking scandals that have taken place over recent years. However, for some reason this VW scandal resonates more with me than any of the aforementioned scandals above.

I have tried to think why this may be and the only answer I can come up with is that this feels like a very premeditated way of duping consumers, rather than other corporations or HMRC.

I wonder if anyone else feels like this or perhaps it is just because I was going to buy a Golf TDI in the New Year!


Jonathan Walter

30 Sep 2015 10:42 AM

Interesting comments, I'd like to add a few of my own having worked with VW for a long time.

Firstly, the point made about VW being too big to fail is a good one. VW is a huge concern which carries with it its own particular brand of corporate arrogance, to the point where I'm sure at corporate level it feels it can bend the rules with impunity.

Secondly as there is a large shareholding by one of the regional governments in Germany (I forget which - Saxony?) it will be bailed out in some form by the German Government, diplomatically or financially.

Thirdly, it should be remembered amid all the explosions of moral outrage, that what VW is guilty of is breaching an arbitrarily set pollution limit. It is highly unlikely that anyone's health has been seriously imperilled by this breach. Many other vehicle types are not tested for emissions at all eg motorcycles, agricultural equipment, etc.

Also, one can be certain that other OEMs are doing the same thing. A certain very popular van in the UK cannot be tested for diesel emissions at MOT time, because its ECU software does not allow the engine to be run above 1500 rpm when stationary. Yet another popular make of car has obstructions in the exhaust system which prevent the emission probe being correctly located. In both cases they pass the MOT with an "unable to test" caveat.

The biggest casualty in all this is the faith in German corporate governance which has been held up as a model for the rest of the world, and which has been instrumental in developing the German economy to its current stable, innovative level with a long term business view. The decision to cheat was made at a senior board level, with the biggest failure being the corporate oversight to detect it.

For some of us with long memories, this isn't the first time big car makers have lied. Consumer protection took off in the US when a campaigner called Ralph Nader exposed the fact that in a collision the fuel tank of the Ford Pinto was likely to split, and toast the occupants. Ford denied the problem until Nader revealed that Ford had known of this design fault and decided not to correct it.

Plus ca change......!


Glenn Mills

25 Sep 2015 11:10 AM

This was a real Black Swan event. Who would have predicted that a solid unexciting German car manufacturer would allow an event like this to threaten the very existence of the business? And just after I had bought a diesel car - doh! I find it hard to believe that this could have been due to a rogue individual or small group - it is too far-reaching. As for solutions, I think the worst thing VW could do would be to focus entirely on damage limitation. The best thing would be if they turn this into an opportunity to change the culture of the business, top to bottom. Then it just might end up being the best thing that ever happened to them, rather than the worst.


Tom Pickering (FIET)

24 Sep 2015 18:12 PM

Hi Claire. This is an interesting and common corporate disease that is dificult to diagnose and even more dificult to change the behaviours to resolve. This is my summary on video I did earlier :) https://vimeo.com/ondemand/mbaintroduction enjoy :), best Tom


Ian Parker

24 Sep 2015 15:30 PM

Claire. The first step to recovery is to admit guilt. VW has done that and the CEO has rightly stepped down. The next step is transparency but some 8 days into the story VW has yet to come clean about who new what, when and more importantly who made the decisions to install this software.. Inevitably the credibility of their vehicle emissions data is undermining Europe's bias towards diesel and all the European OEMs will suffer volume hits as drivers switch to hybrids and electric. The way back will be long and painful. Years of lawsuits will keep the story in the news and fresh in consumers minds. Component Suppliers to VW (and possibly other OEMs) will also take a hit (GKN's share price has already seen volatility). I never really new what "vorsprung durch technik" meant but today it is certainly no longer about excellence!


Nimr Accad

24 Sep 2015 13:21 PM

This is indeed bewildering - this cannot be a one man, or even a team failure. The whole system of QC and corporate governance at VW appears to have failed. This will not only shake confidence in VW but the well known German perfectionism. Coming from a manufacturing background, QC should be outside the mainstream operational management and with enough clout to prevent standards from being compromised.


Peter Wells

24 Sep 2015 12:57 PM

Very topical, Claire, as always and good to see your return to the blogosphere. This will be the automotive equivalent of the banking scandals that erupted from 2007 onwards. The Germans are very proud of their automotive industry and its heritage, with world renowned marques such as Mercedes, BMW and more recently at this level VW, comprising as it also does Audi, Porsche, Lamborghini and a stake in Bentley. My belief is that, from a German government point of view, VW, with over 100 plants worldwide and more than 600,000 employees will be considered 'to big to fail', much as was RBS by the UK government. Therefore, it seems likely that the German government will find a way through EU regulations prohibiting anti competitive state financial support to bail VW out, should the financial carnage resulting from the scandal threaten to bring it down, as seems quite possible. You are right about many questions remaining to be answered, will doubtless take some time. Of particular interest - how high up in the German government did knowledge of this criminal enterprise reach (Mrs. Merkel, maybe) and what will be the impact on the European motor industry more widely, with its now very questionable focus on diesel, with or without modified emissions systems?