At the Detroit auto show last week, VW focused on electric technology—introducing the BUDD-e Concept, a long-range electric van. VW’s new CEO, Matthias Müller, was at the show. During an interview with National Public Radio, Müller noted the company was “truly sorry” for the emissions scandal. But he took issue with the characterization that VW lied to U.S. regulators. Instead he said, “Frankly spoken, it was a technical problem. We made a default, we had…not the right interpretation of the American law. And we had some targets for our technical engineers, and they solved this problem and reached targets with some software solutions which haven’t been compatible to American law. That is the thing. And the other question you mentioned—it was an ethical problem? I cannot understand why you say that…We didn’t lie. We didn’t understand the question first. And then we worked since 2014 to solve the problem.”
On Jan. 8, The New York Times reported that the company had invoked European Union privacy laws in refusing to turn over documents to U.S. regulators. Despite Müller’s promise for “maximum transparency,” shortly after his appointment as CEO, VW cited Germany’s strict privacy laws that limit access to data outside the EU, in this case hampering U.S. investigators’ ability to identify employees who may have known or were responsible for the misconduct.
It didn’t start out this way. VW was initially cooperating with U.S. regulators in efforts to alleviate backlash from the scandal. Soon after news of the scandal broke and Müller took over as CEO, Müller had a much more conciliatory tone, promising to “implement the most stringent compliance and governance standards in our industry.”
This column suggested back in September that VW needed to regain trust with consumers. The company understands the “what” but seems lost on the “how.” In fact, VW’s response to crisis stands in stark contrast to other global companies that have weathered significant storms.
In October 2015, BP reached a settlement with the U.S. and five Gulf Coast states worth $20.8 billion. At the time the settlement was announced, Carl-Henric Svanberg, BP’s chairman, reinforced the company’s commitment to restore the Gulf economy and environment. Other BP executives made statements describing the oil spill as “tragic” and describing the company’s eagerness to reach a collective solution. Just months after the April 2010 explosion on the Deepwater Horizon rig, BP and the U.S. government agreed that BP would create the Deepwater Horizon Trust Fund to compensate victims. As a result of the fund’s creation, BP did not pay shareholder dividends for the rest of the year. BP also tripled its advertising budget following the oil spill, spending more than $93 million on newspaper and TV advertisements. According to BP, “its primary goal was to inform the public about clean-up efforts and, more importantly, the claims process that allows oil-spill victims to receive compensation for lost wages or property damage.”
General Motors Co. also faced huge fines following its faulty ignition switch scandal, which esulted in over 100 deaths. Following the scandal, Mary Barra, the GM CEO, stressed the need to show how the company’s culture had changed as a result of the problem. GM agreed to pay $900 million to end the criminal inquiry into its failure to issue a timely recall of the vehicles. According to the DOJ, since the investigation GM took, “exemplary actions to demonstrate acceptance and acknowledgement for its conduct.” These actions included conducting an internal investigation, voluntarily providing documents to the government in efforts to remain transparent, terminating wrongdoers, and establishing a victim compensation program.
VW has done some things right. Then-CEO, Martin Winterkorn, resigned shortly after news of the scandal broke. The company also said it would seek prosecution of any VW employees involved in the misconduct and would establish a special investigative committee to discover what happened and who is responsible. Gina McCarthy, the EPA administrator, even told the Wall Street Journal that she was “pleased that Volkswagen is taking such an aggressive stance on admitting the problem and attacking it.”
Rebuilding trust with consumers, however, takes time. VW’s new electric van is impressive. And electronic technology seems to represent the future of the automotive industry. To be a leader, the company will need consumers to follow. That requires rebuilding trust. Whether the company can do that remains to be seen.