By now most of you will have heard of what has turned out to be the biggest scandal to ever have hit Volkswagen in its 78 year history. The saga revolves around Volkswagen being caught out for deliberately cheating and lying about the emissions from its diesel-engined cars. Ironically, Volkswagen was exposed by a clean-air advocacy group, The International Council on Clean Transportation, which independently tested the cars because they represented a good example of how diesel could be a clean fuel. Basically here’s what happened: The US Environmental Protection Agency (EPA) has set standards and level for emissions which car and truck manufacturers have to adhere to in order to sell vehicles in the American market. These limits are strictly monitored via tests done by the authorities on the different models and all was looking good until the ICCT discovered something was amiss. The reading of the Nitrogen Oxide levels done during official emissions tests differed to those measured during normal driving – reports say by some 40%. On further investigation by the authorities, this is what emerged. What Volkswagen had done – knowingly and willingly – was to develop sophisticated software that would actually tell the engine when it was being officially tested as opposed to when it was being normally driven. When being tested, the software would activate the equipment that reduced emissions. When being driven normally, the software would switch the equipment off so as to get better performance and ‘voomah’ from the diesel car. Just hang in and think about this for a second. It couldn’t have been a quick App that could be downloaded to enable the engine to differentiate a guy in a white laboratory coat from a guy in jeans and takkies. No, the development of this software must have had some heavy brain-power and certainly some heavy bucks behind it to recognise engine and other drive characteristics to determine who was behind the wheel. Wow! If it wasn’t developed for the intention of cheating the system, one could really admire the people behind it. Instead, they – and certainly the company they work for – are now despised for being manipulative charlatans.
After the initial announcement of this cheating scandal, US authorities said the saga involved nearly 500 000 diesel vehicles manufactured by the Volkswagen Group in the US. They were, in fact, way under the radar. Just a few days after this, Volkswagen itself came out with the admission that it had knowingly cheated and that 11-million of its diesel cars worldwide were equipped with the software. The final nail in Volkswagen’s coffin on this issue was hammered in by Michael Horn, chief executive of Volkswagen America, in a video posted by CNBC where he said. “Our company was dishonest, with the EPA and the California Air Resources Board and with all of you and – in my German words – we have totally screwed up.” This admission elevated the scandal onto the global stage with legal action threatened not only by customers but indeed by various governments around the world. Not only that. Volkswagen’s share, which had already fell some 17% after the initial annoucement, took another massive 20% dive after the company’s admission of guilt. The scandal cut VW’s market capitalisation by about 25-billion Euro to 51-billion Euro in only two days.
As things developed, Martin Winterkorn, chief executive of Volkswagen resigned having taken full responsibility for the scandal. The day before his resignation, German Chancellor Angela Merkel had stepped up to the podium calling on VW to show full transparency in clearing up the matter. That she had stepped in was understandably for not only was the VW scandal impacting on the company directly, but also on other German automakers – and indeed on ‘Brand Germany’ itself. Daimler shares, for example, fell 7.03% while BMW dropped 7.17% as calls went out for all vehicles from German manufacturers to be investigated.
I cannot believe that Volkswagen, a respectable and reputable brand for many years, could have done such a thing. What caused them to do it? That will eventually come out but my guess it was pure greed. At the beginning of the decade, chief executive Winterkorn announced that VW intended doubling its volume to some 800 000 annual sales in the US by 2018. With equipment designed to reduce emmissions, diesel cars, which have always suffered under an impression of being low powered and lacking performance, would be even more sluggish than perceived and this would impact on sales. The way around this was to meet the official emissions standards and then market cars which actually cut off the equipment so as to make them more attractive to the buyers. The fact that they spewed out 40% more than the allowable Nitrous Oxide emission level didn’t matter. It was all about sales at any cost – in this case at a cost to the environment, the health of our planet and the future of our kids. It was all about greed – and greed is not a principle I would ever have expected Volkswagen to operate to – especially in an era when global warming is being taken seriously around the world. It is predicted, for example, that next year will be the warmest ever recorded in Africa’s history. As I understand it, Nitrogen Oxide is not the main culprit of global warming but is a vile pollutant that can cause emphysema, bronchitis and other respiratory diseases. Thus the efforts to reduce it as an emission from vehicles. Volkswagen chose to ignore this and go its own route in pursuit of sales at any cost thus betraying the trust it has built up over the past 78 years. Such a shame.
So who is there left to trust nowadays? The banks messed up the world with their greed in 2008/2009; Volkswagen has now been exposed as a cheater in 2015; our own President Zuma has numerous corruption charges hanging over his head…it just goes on and on. Give me the man-in-the-street any day above the politicians and big corporates. Certainly the ordinary guys fall on hard times but most try get out of it without lying, cheating and becoming corrupt. All this probably explains why thousands of people took part in anticorruption marches in South Africa recently. The call to stop corruption was aimed not only at the Government but also at the business sector. The Volkswagen saga is one example which tells us why; and while other corporates who don’t deserve to will suffer because of VW’s actions, it goes with the saying: “One bad apple spoils the basket”. At least the chief executive of Volkswagen had the dignity to resign in the face of this scandal. South Africa’s chief executive just goes along his merry way from one scandal to another with total impunity. It all makes me want to vomit.