April 29, 2016
Before the Volkswagen scandal, people could really care less about any recalls. There were dozens of recalls that preceded the diesel scandal that were a blip on the American radar at best. That all changed when Volkswagen admitted wrongdoing to the Environmental Protection Agency (EPA), and everyone else in the world. After the company acknowledged the charges, they lost a quarter of their stock value, essentially overnight. No automotive faux pas that preceded it (barring the Audi smear campaign, but I will address that another time) had anywhere near the kind of fiscal backlash that Volkswagen is facing. The General Motors ignition switch massacre, ostensibly killed at least 120 people, paired with the changing of CEOs (which always results in a stock slump) only yielded a 14 percent drop. Volkswagen dropped 23 percent, before even firing Martin Winterkorn. I cannot stress the how underappreciated the GM ignition switch scandal still is to this day, especially when compared to the backlash against Volkswagen. Even the subcontractor that built the ignition switches warned GM in 1999, at the moment I cannot find the link to that information, I will link it as soon as I do. That said, strike that from the record, and remember that a whistleblower was punished for bringing news of faulty ignition switches to record in 2003, and that Federal safety inspectors became aware of the life ending fault... in 2001! 13 years before the news broke. And it is worse for VW AG, because it is not just the auto group name’s sake (i.e. Volkswagen AG) that is seeing sales slumps, both of their blue ribbon brands (Porsche and Audi) are suffering as well. So then the question becomes, why Volkswagen? Is there a tint of Jingoism involved? Probably, but that's for another article. The biggest difference, is that the scandal of it all, was immediately apparent. Volkswagen was hugely popular and universally well received, and they lied. People love to catch a liar in the act, especially if the liar is a public figure (see: Bill Clinton) or seen as a best in their field (see: Lance Armstrong). Volkswagen was both. The public jumped on top of the story. Beyond the lie, Volkswagen was king of passenger car diesel in America. Volkswagen commanded a huge diesel market share in the US before the scandal, they were seen as the future of diesel. Ironically, a study on why Volkswagen’s diesels were so superior turned out to be the end of diesel. Another factor was the fact that the scandal shone the light on federal agencies apparent ineptitude. Volkswagen was polluting at peaks that were 40 times the legal limit, and the EPA had no idea. That, to a large extent is not the EPA’s fault, their funding is a joke, but it got the people riled up. Because of these factors, people got deep into the apparent deception, and the recalls and scandals that followed have been taken far more seriously. Compare the Hyundai mileage scandal to the almost identical Mitsubishi scandal. Hyundai and Kia were caught lying and they continued to be one of the fastest growing automakers in the world. Mitsubishi on the other hand lost a third of their stock value instantly. The only difference was timing. So the good news is, all the automotive wrongdoing that postdates the Volkswagen scandal will be taken as seriously as they should be.