Why German automakers may not have cleaned up yet
Volkswagen chief executive Martin Winterkorn said he was “stunned” to find the company cheated on emissions tests when he told the world about the “dieselgate” scandal.
In September 2015, the German executive resigned after being informed of investigations into “defeat devices” on the company’s cars by the United States Environmental Protection Agency.
In the end, the scandal came down to internal culture. It appeared that Winterkorn employees had been too scared to tell him that Volkswagen would not be able to meet public emissions reduction targets. Instead, the parent of Audi, Lamborghini and Bentley ended up cheating.
Since then, VW has been counting the costs of its failure to maintain a healthy corporate culture: it has paid £30bn in fines and compensation to regulators, buyers and shareholders and diverted all of its production efforts from the cars diesel.
Winterkorn and four others, meanwhile, have been charged with gross fraud for their role in the emissions testing scandal, with the case pending.
To emphasize culture reform, the 68-year-old automaker has also appointed a board member in charge of integrity and legal affairs, and implemented a program designed to s ensure that any wrongdoing is reported.
But he once again found himself in hot water. Earlier this week the Financial Times reported a senior executive has been fired after alerting VW to a risk of fraud in its payments arm.
The warning came just days after the automaker announced that JP Morgan would buy a 75% stake in the company, and the ensuing layoff has reignited concerns about whether VW values employees who report complaints. failures.
Professor David Bailey, a car industry expert at the University of Birmingham, says the latest developments suggest the company still needs to reform its internal culture.
“For too long there was an attempt to cover up dieselgate and downplay its importance. Then when it broke it was extremely damaging to the business. They should have been much more open to the issues earlier,” he said.
Cultural problems persist?
Bailey argues that VW had resisted hiring outside counsel to help solve its problems. “What we saw with dieselgate was that the company was shifting its investment significantly towards electric cars and moving away from diesel – but VW didn’t bring in outside experts to help open up the culture. They should have brought in outside experts to look into what went wrong and learn the good things about it.
This attitude, he says, stands in stark contrast to the strategy Toyota adopted when it was forced to announce a worldwide recall of all of its 7.5 million third-generation Priuses manufactured before January 27, 2010. It also suspended selling eight of its most popular cars.
“Toyota deliberately appointed outside experts to look at what was wrong and think about how to avoid this. I still think VW has lessons to learn in terms of being open and avoiding a touring culture. towards the inside. “
VW’s share price fell nearly 30% when dieselgate was revealed. The stock price has since rallied after changing strategy to focus on electric vehicles, which Bailey says may have ultimately saved the company. VW shares failed to respond to the announcement of the latest fraud warning.