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Scandals: VW vs FCA vs GM (updated)

by David Zatz on

Analysis. Three major automakers have had scandals this year: Volkswagen-Audi Group (VW), Fiat Chrysler (FCA), and General Motors (GM).

FCA has been recalling cars and trucks left and right, but the “scandal” involves complacency and competence within one group, not knowingly breaking laws. The gas tank issue in older Jeeps is a  canard, since many cars were designed the same way, and incident rates were not high. The real issue is low recall repair rates by customers, so FCA is working much harder to get recalled cars into the shop. FCA has cooperated with the government and has had numerous voluntary recalls for just-discovered problems.


GM covered up a problem, to the point of issuing a revised part using the old part number. It seems to have gone up the ladder well past the responsible engineer. GM recently settled its differences with the Federal government but has ongoing lawsuits.

VW knowingly broke the law, and the decision to do this most likely involved more people than at GM. The company wrote a program that detected emissions tests and changed the engine’s operation to meet them. The result was extremely heavy real-world emissions of a toxic chemical group that causes smog, asthma, and other problems. (To be discovered is whether they also had a program to fake fuel economy tests.)

VW has now admitted that 11 million engines are affected, around the world, indicating that numerous people were probably involved.

The European Union may have had a coverup of its own, ignoring research showing that Volkswagens had around 25% higher NOx emissions when tests were run by an outside group.

VW Volkswagen dieselEither way, this was a deliberate criminal act that went on for years — like the GM incident, but worse in that the company set out to break the law from the start, rather than quietly fixing a problem that was not intentional.

There is no indication that Germany or the EU will actually penalize its biggest automaker, or even force it to have honest emissions testing, despite a statement by a Germany spokesman that information will be sent to the proper agency.

Volkswagen-Audi Group may face criminal charges as well as billions of dollars in fines by the United States; and it may not face either (in all likelihood, they will pay fines but nobody will have jail time). Already, Volkswagen cannot sell certain diesel-powered cars, which hurts since around 20% of sales are diesels, and some probably visit dealerships for a diesel and leave with a gasoline car.

One lingering question is whether this will tarnish VW’s traditional “fuel sipper/clean air” reputation. Chances are, though, that consumers will have forgotten the whole thing before the month is out, unless the press, as it did with GM and FCA, continues to front-page the story. Look for heavy advertising from VW to counter that possibility.

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