Martin Winterkorn’s resignation Wednesday after nearly nine years as Volkswagen Group CEO is the latest signal that the industry has a serious problem with following the rules.
VW has admitted to cheating to beat U.S. diesel emissions tests and says it actions have affected 11 million vehicles worldwide. VW has set aside 6.5 billion euros ($7.3 billion) to deal with the problem, but recent history shows us that the automaker will probably have to pay a lot more.
This month General Motors announced it will pay a $900 million fine in connection with its ignition-switch recall. In 2014 Toyota agreed to pay $1.2 billion to settle claims by the U.S. Department of Justice that it suppressed what it knew about safety flaws in its vehicles connected to its unintended-acceleration crisis.
In a matter of a few years the world’s three largest automakers have been hit by image-ravaging scandals that have one thing in common: a clear and calculated intention to deceive.
Is this proof that global automakers have become too big to manage? Is decentralization speeding up decisions but leaving the giants vulnerable to large-scale problems? Why do there seem to be so many bad boys whose reckless actions are causing their organizations irreparable harm without anyone noticing anything -- for years?
While I don’t have answers to these questions or a solution to this problem I can say this with the utmost certainty: these scandals put the credibility of the entire automotive industry at risk.
For my generation, automakers were highly regarded producers of individual mobility machines that expanded and extended our freedom.
If this industry doesn’t stop cheating and deceiving in the name of profit then future-generation car buyers will never trust them. The companies will be better known for their lies than for the products they put on the road.
Winterkorn has stated that he knew nothing about the so-called “defeat devices” put into VW and Audi cars to help them get passing results during emissions tests while later polluting at rates well about the legal limits during real world driving.
If Winterkorn knew VW was cheating then he will probably face criminal and civil charges. If he didn’t know, then he failed to perform his duties as CEO.
Either way, he had to resign.
I appreciate his decision to step down because that will help speed up VW’s rebound. During 36 years in this business, I have seen far too many CEOs stay too long, even when the evidence against them was irrefutable.