When the world’s second biggest car maker suffers, as it admits itself, the worst tribulations of its 78-year history, then you know that something big is happening.
When you consider that within those 78 years, you have to include such incidents as its factory being repeatedly bombed flat by successive waves of RAF Lancasters and flirting, just 25 years ago, with bankruptcy, you realise just how serious the VW scandal is for the company.
With the husks of once sparkling executive careers now littering the floors of the Wolfsburg HQ, it would be easy to predict that VW is now a busted flush, that the once most profitable car maker around, the one that spends more on research and development than Nasa, could well be destined for the knackers' yard. A corporate history and a corporate future hinged on the fate of how many fines and compensation awards are levied against it.
Silly? Silly to assume that a company which has made so much money over the past decade that it was able to create a super-car on which it knew it would lose €6 million on every sale? Perhaps not.
Enron seemed unassailable and fell. Ditto Lehman Brothers, although in both those cases their accounts were built upon crumbling sand. VW's finances are far more robust.
Still though, in recent weeks the focus has begun to shift from how it will affect VW itself to how it will change the way we think about and buy our cars. Surely it will have to trigger some changes, greater than the small dip in global sales VW suffered in October?
Certainly, it seems to have pointed VW down a path which runs more quickly towards an electric car future, but will it ultimately sour our relationship with the car itself?
Stephen Bayley, design expert and car nut, certainly thinks so. "My own belief is that it is five minutes to midnight for the private car, never mind its power sources," Bayley told The Irish Times. "Although I also think that the case for autonomous vehicles is overstated – legal problems and infrastructure investment will take a very long time to get sorted. Besides, I feel people will travel less in future.
"I don't think anyone really knows whether the VW case is unique. While I don't doubt that VW is guilty as charged, it seems implausible that no other manufacturer resorted to the same deceit. After all, the software was made by Bosch which supplies almost everyone.
“It is certainly a turning point for VW. Golf customers can no longer smugly believe they have bought a distinguished and pragmatic exercise in industrial design created by Ubermensch.
“Instead, they are driving a car which says, ‘I am a sucker’. A friend of mine who is very senior in the Italian motor industry says it might bankrupt the company.
"It's amusing to reflect that 50 years ago," Bayley adds, "Jaguar used to engage in amiable fibbing about power output and performance, but that harmed no one. VW has caused real damage to itself and others. Strange that a company that made its reputation in the US by being the principled outsider turns out to be just as manipulative and cynical as Detroit."
Bayley makes a good point (several, in fact). Certainly it would seem that car companies telling massive lies is nothing new . . . or is it?
Design philosophy
Don Norman
is one of the world’s premier future gazers – a man who helped form the user-centred design philosophy that has driven
Apple
from corporate curiosity to global behemoth. He has also worked with several major car companies and he thinks that actually we’re too quick to assume that everyone’s lying to us.
“I’ve been part of many companies and, without naming them, none of the CEOs I’ve ever worked with acted that way with one exception.
"All the people I've worked with are pretty ethical. I remember the days when I worked at Apple and we were feuding with Microsoft, we still thought that the Microsoft people were behaving very ethically, and we tried to, too.
“Once we had a case where we discovered one of our engineers had got hold of some Microsoft products pre-release, that he shouldn’t have had,” Norman adds. “We thought that was not ethical, so we called Microsoft up, told them what we had discovered and we ended up firing that engineer. I was impressed that both companies did that.
"I tend to work on the research side in companies, and I have done with BMW, Ford, Nissan and Toyota, and I do see that kind of behaviour.
“ The product side of a company is often quite different, so maybe I can’t comment, but all of my experiences were positive. They were trying to compete, but not on the numbers – they were trying to compete by making a better car.”
The problem, says Norman, is one of corporate culture – flowing both from the internal pressures of running a successful company and from the external forces of needing to turn in a healthy set of numbers to Wall Street every three months.
“I obviously don’t know what went on at VW and I don’t know the people. I do know a lot of people in automotive companies and, what has been described of the CEO is what we were talking about, that there is this corporate culture that says, ‘Here’s what I need you to do and I need it done immediately, but don’t tell me how you did it’. The structure that existed made this situation inevitable.
“There’s no excuse for what VW did but it’s interesting that it has been pointed out that computer manufacturers have been doing this for years.
“We do speed tests on computers, so what has always happened is that the computer checks to see if it’s doing a speed test and second, it’s designed to pass the speed test, even though it has no relevance to how it’s normally used. Most professionals know about that and so they always smile at the speed tests, and it’s not required by law.
Profit motive
“This strikes me that large companies are driven by the profit motive and the problem is that the executives are rewarded for the profitability, not for what’s good for the company. They’re rewarded for what’s good for their little division and, quite often, executives will do what’s best for their division and therefore themselves even at the expense of the company.
“I don’t know if this is what happened at Volkswagen or not. The former CEO denied all knowledge of what happened and that could even be true, but nonetheless there is a corporate culture, where even if the CEO didn’t know that they were tinkering with this particular issue, he must have known, in a general sense, that people were gaming the system for their own benefit.”
But as for VW being for the chop and all of us running into the arms of electric, robotic cars, Norman is not so sure.
"I think at the moment VW will be hit, along with Porsche and Audi, but it doesn't seem to have hit the other car makers, but I suppose we'll have to wait and see. There is a transition going on in the automobile, but it's going to be slower than you might think.
“Basically, we started with hybrids and we’re moving towards electric and we might use some fuel cells. There are lots of experiments, but you have to remember that an electric car is not automatically better for the environment; it depends on where the electricity comes from. In the US, for example, you don’t know where your electricity comes from.
“If it’s coming from a coal-fired plant, well, that’s worse for the environment. The whole grid is interconnected. So it’s not as simple as just saying that electric cars are beneficial. The other point is that, for autonomous cars, it’s going to be a long time.
“The car makers are pushing it faster than is safe. They are all capable of doing the same thing and the difference is the corporate structure that decides whether it’s safe to release it or not. Mercedes is the leader in what it has allowed its cars to do, such as some automated highway driving.
“But look at Tesla, which announced that it could do so much, that the car could automatically pass other cars and so on. Well, I’ve been working with companies, and they’re all working on the same technology, their cars can all do the same things, but they’re not ready to release it yet.
“Tesla released it and said it was great and now they’re apologising and drawing it back, and we all predicted that – the cars are just not ready yet. Teslas are remarkably good cars, but on top of that, the easiest driving is highway driving, but city driving is much harder, and no one is ready for that yet.
Apologise
“The
car is not a good comparison, because they use extremely accurate mapping and much more expensive equipment than would ever be possible on a commercial car, and even Google says that they’re going to kill somebody some day, and that’s just because it’s just inevitable.
“ So I’m still talking decades before autonomous cars are a major issue.
“In the end, can you think of any company that suffered so badly from an image issue that it went bankrupt and died? They have to be out there, continue to apologise and try to get to a situation where people say, ‘We can see that you’ve done wrong but that you’ve apologised and we forgive you’. It’s interesting that we’re more likely to do that for companies than for individual people.”
