Volkswagen beetle, deisel cards

How Could You Cheat on Us Like You Did, Volkswagen?

Volkswagen made headlines yesterday when company officials admitted they had installed software on diesel vehicles to cheat on emissions tests required to comply with federal regulations. Its brand reputation and stock price sank, and deservedly so.

A Place in Our Hearts

The first Volkswagen “Beetle” entered the U.S. market in January 1949. Since then, more than 5.5 million Beetle models have been sold in the U.S., according to the company.

The first Beetle was more than a car for each new owner. Owners entered into a love affair with this little car that had no gas gauge and practically no storage space.

The first cars did have a little daisy flower holder. In the beginning there was so few of the original beetles on the road that owners would honk and wave when they drove by each other. The reservoir of good will was overflowing. People loved their cars and Volkswagen.

The iconic ad campaign “think small” by the ad agency Doyle Dane Bernbach boosted sales and contributed to the feeling that owners were part of a club that owned this “lemon” of a car.

Volkswagen cheater on emission standardsOver time – especially in the 1970s – “flower children” personalized their cars by painting them in psychedelic colors and designs.

Volkswagen owners were the best advertisement for the automaker.

What Happened?

Greed is what happened. Volkswagen grew to be one of the largest automakers in the world with the upscale Audi as part of it brand product line. The residue of consumer good will carried over for years as VW introduced larger and more fully equipped cars. It became the largest exporter to the U.S of diesel-fueled automobiles.

But the carmaker felt it was above the law. How did a company the size of Volkswagen think it was going to get away with cheating on such a grand scale? What hubris. The E.P.A. has said it will require Volkswagen to recall almost a half-million vehicles sold in the United States from 2009 to 2015.

It isn’t OK in business to tell a “little white lie,” and this one by VWE was a whopper. Analysts predict that the company will never regain its reputation in this country. VW owner are mad – really mad, as they should be. No one likes to be duped.

Is this what happens when brands become too big and begin to dominate the market in a category? Just look at the reputation of the major cable companies in the U.S. Their customer service is dismal. But they own a disproportionate share of the market, as consolidation across all industries accelerates

The stated purpose of these mergers is to provide a better customer experience, but mostly they are to slash costs, reduce training of customer service representatives and control what customers watch or buy.

Fines as a Cost of Doing Business

Did you notice that General Motors was recently served with a $900 million fine, which the Washington Post called “just a slap on the wrist?” But did any of the executives who knew about the faulty ignition devices that killed 174 drivers get fined or will any spend any time in jail? No.

Here is my fear and concern. Big brands will continue to grow like octopuses, gobbling each other up. And if they’re fined for breaking the law or killing a few people, it’s just the cost of doing business. Usually, the fines are only a small dent on the balance sheet, nothing to be too concerned about.

Is this the society we want for ourselves? Where brands thumb their noses at their customers and regulations enacted to ensure our safety. In survey after survey, Millennials tell us they want to work for companies with a social conscious and a respect for the environment.

This year they will surpass Baby Boomers as the largest demographic group. Let’s hope they retain their values as they begin their rise in the corporate ranks to rule the big brands.

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  1. As an automotive writer, my news feeds have been full of VW (aka Very Worried) for the past couple of days! In actuality, when the VW Beetle came to North America, it didn’t take off for a while – people called it the “baby Hitler.” It wasn’t until the briliant Bernbach-led advertising campaign that it caught on. I’m looking to our younger generation, which values conscience above cash, to lead the way on dealing with greedy corporations. It’s all well and fine to try to make a buck, but not at the expense of the environment and human lives. Will be interesting to see how this continues to unfold.
    Krystyna Lagowski recently posted..Chasing after the last sunny days of summer in a 2015 Honda Civic SiMy Profile

    • Krystyna — The DDB “lemon” campaign is one of the most famous and successful in advertising history. It’s beyond belief that Volkswagen would purposely cheat and think they were going to get away with it. It’s damaged their reputation, possibly beyond repair, and their stock has dropped like a rock. The CEO left claiming he didn’t do anything wrong. Yeah, sure.

  2. This is such a great post, you’re really telling it like it is. I heard on the news last night that the CEO has resigned but seeing his smiling face on TV got me a bit mad. What about the others involved, this guy didn’t act alone. These are criminal offenses.
    These huge mergers need to be stopped by Government. It’s obvious that in Industry it’s all about greed and the consumer is getting shafted. People wanting to work for companies with a social conscious is admirable, but in many cases when the large paychecks start rolling in, a lot of them will forget about their values and start thinking about the ‘good life’ the money can buy.
    Lenie recently posted..Cooking Tips for Reluctant CooksMy Profile

    • Lenie — I’m afraid you’re right. It’s hard to listen to your conscience when you’re looking at a big fat paycheck. Millennials say their work is more important than the money. Let’s see if that changes when they “grow up.”

    • Doreen — Almost beyond belief when many customers bought these diesel cars because of VW’s promise that they were not polluting the air. They broke their trust with customers and it will be a long time before they win it back, if ever.

  3. You are correct about big business wanting to pay a fine, instead of doing what it right. Worse is that there are politicians who think this is correct. To them business, and making money is what a government is for, and that people are not as important as they are.
    I think Government should protect people from big business, not the other way around

    • William — if you listened to the first Republican debate, the moderator challenged Donald Trump about the fact that he had started four companies that went bankrupt. He came out fine but his investors lost all their money. His response to the question, “It’s how business is done, it’s all perfectly legal.” But does that make it right?

    • Marquita — my stepson had a yellow bug which I drove on more than one occasion. I remember having to put the pedal to the floor when approaching a hill to have enough power to get over it without slowing down to 5 mph!

  4. I’m so glad you brought this up for discussion. Wow, these two – GM and VW – have demonstrated a hubris that’s over the top, but so far with little consequence. While the dollar amount may sound over the top for the average person, in reality it is barely a slap on the wrist. Lives were lost with the GM ignition switch issue. NO ONE is paying for that. The VW issue is flabbergasting. But unlike your friend, I think the brand will survive and probably be thriving in a shorter time than we imagine. It’s confounding, frankly. And very very disturbing.
    Jacqueline Gum recently posted..Karma… Where’s The Justice?My Profile

    • Jacquie — the big banks, car makers, pharmaceutical companies — they’ve all injured their customers either physically or financially. But did you notice, no CEOs or any top executive has either paid a fine or gone to jail. Just business as usual.

  5. Such great points Jeannette!

    Sadly, I’ll bet if you could somehow begin to trace the origins of
    the original fraud, obviously the high paying executives weren’t the
    only ones that callously and routinely looked the other way!

    And if at the end of it all, they get to in essence, pay what amounts to a
    “stay out of jail” fine.

    That invariably ever consumer of their products and services, is paying in reality!You ask me,
    they’re all, meaning our elected officials are part of this callous scam and
    media show!

    And you can bet any true whistle blowers will be severely punished for doing so!One way or another!

    How could that type of blatant over sight be missed by so many layers of quality control
    employees?And for so long! No way!Great post!Thanks so much for making it a topic of discussion!
    Mark recently posted..Three Ways Technology Has Actually Taken Your Small Business Hostage!My Profile

    • Mark — as you said, elected officials are part of the problem. The legislation they enact has no teeth, or else they are just too beholden to big business for contributions to their election campaigns. The little guy can’t take on these giants, so who will?

  6. Jeannette- What I don’t get is why a company that had the reputation of VW would risk it. As we all know a satisfied customer tells three or four people about a positive experience while an unhappy customer tells nine to 15 people about one of our mistakes—and 13% of unhappy customers tell more than 20 people (Source: U.S. Office of Consumer Affairs). If VW is to survive of which I think will be a long shot and thank God I do not have their stock, they need to act quickly. VW needs to convince the consumer that they will make it right and take on the full responsibility. It might be paying individuals for the loss they will incur when they try to sell their cars. If they do not do something more than recalling the cars to fix the software problem, VW will never recover from this one.
    When you look at the other car makers that have survived a misstep like the Toyota and the untended acceleration form sticky gas petals and GM recall on faulty ignition switches and now the cars that have faulty air bags. For VW timing now is everything. The problem is that people have short memories.
    Arleen recently posted..New Google Logo and How an Updated Logo Reflects Your BusinessMy Profile

    • Arleen – since the scandal first broke the news has only gotten worse. They had invested so much money in the new diesel car and couldn’t meet pollution standards in any country. Thus, the big fix was on. I don’t understand why it took so long for the regulators to discover their treachery.

  7. Agree with you completely. It’s lamentable but a side effect of how “capitalism” works today. Boards, shareholders and the financial markets expect excessive profits. So all companies are focused on beating expectations.

    From what I have read the majority of car manufacturers are doing something similar but are not as obvious. The difference is that VW got caught.

    And the pay structure for CEO’s and other top executives doesn’t help. The president of VW definitely knew what was going on. He had to resign but got millions of dollars as a “reward” for what he had approved that is costing VW a fortune. Until how senior management are paid is changed we can’t expect changes. What do they have to lose?

    It wouldn’t be so bad if it was only the car industry that was behaving like this. But it applies to companies of all kinds. What bothers me most is what goes on in the pharmaceutical industry. Drugs are sold and promoted even when companies know they can be lethal.

    The fiancial industry is another horrendous example. They did their version of what VW has done and caused the 2008 global economic crash. They also got rewarded for what they caused and is still up to the same tricks. Just different names.

    There is an urgent need for the world to turn capitalism responsive again. That’s what the father of capitalism, Adam Smith, advocated. But today what we see it robber capitalism even though the prinicples have been tried since the 70’s and never worked anywhere in the world. Until that’s changed we will get results we don’t want and the situation in the world will keep on deteriorating. Sad but true.
    Catarina recently posted..How do digital companies succeed?My Profile

    • Catarina — thanks for your very thoughtful comment. You’re so right — companies feel they have the need — and the right — to cheat. Why is it that some poor person who commits a petty crime gets a stiff jail sentence, yet none of the CEOs of companies in the industries you mentioned has been charged with a crime or spent a day in jail.

  8. I just love the image at the top of your post. It captures the feeling so well for so many of us. What a fun little car and affordable! I am totally disgusted with this fraud. It will damage so many people. How can they sell their cars? I am so glad this was disclosed and hope there is sufficient punishment.
    Beth Niebuhr recently posted..Don’t Pitch in a Networking Group!My Profile

    • Beth — it is so sad that a company that built its reputation on a little bug — and with the vocal support of all its customers — betrayed that trust.

  9. Hi Jeannette, the behavior of these companies is actually sickening, isn’t it? And that fact that it’s all about greed and money is mind boggling. That they are willing to pollute the environment (even more than it already is) or risk the lives of the people buying the cars because it would cost money to fix or play by the rules…sad. I hope that customers turn away from companies like this and send them a clear message.

    • Susan – it is sickening. The latest news is that they had so much invested in the new diesel car that when they found they couldn’t meet pollution standards in any country, they purposely designed the engine to circumvent the law. I don’t know why they weren’t caught sooner.