While the CEO of General Motors was apologizing for cars that killed people, the CEO for Volkswagen was scribbling notes to explain the carmaker's admission that it installed software that lied about its diesel car's carbon emissions.
VW, which has been venerated for years for its reliability and quirky styling, now has to contend with a reputation-busting revelation that it sandbagged U.S. environmental regulators for years. And not just a little bit. The rigged software allowed VW cars with diesel engines to pass emission tests, but actual emissions were 40 times more polluting.
Granted the higher-than-reported emissions levels didn't directly kill anyone, but it demonstrates the same indifference and above-the-law attitude that plagued GM on its faulty ignition switch.
GM's Mary Barra has apologized for the company's incompetence and reluctance to own its problem. What is Michael Horn, president and CEO of Volkswagen Group of America, going to say about his company's problem?
Horn's initial comment was, "We have totally screwed up." Martin Winterkorn, the top boss at VW, has said he was "utterly sorry." Meanwhile, European Union and other nations are checking under their regulatory hoods to see whether emission cheating occurred in their jurisdictions. Company officials said as many as 11 million VW vehicles worldwide could be involved.
Apologies won't be enough in the VW scandal. Just as Barra had to take steps to change the culture of customer indifference at GM, VW needs to root out organizational behavior that enabled gaming the law and thought it was an okay business practice. GM is guilty of an omission of action. VW may be guilty of committing a crime.
Horn pledged, "We are committed to do what must be done and to begin to restore your trust. We will pay what we have to pay."
Not surprisingly, the VW scandal has taken its toll on its stock price. The company faces stiff potential fines. There are more than 480,000 VW diesel cars in the United States that could be subject to a Clean Air Act violation fine of $37,500 each, which could total $18 billion. That's a hit, even for the world's largest carmaker with annual global sales in the neighborhood of $200 billion.
The VW scandal should go down as more than just a crisis. It should serve as an example of why deceptive practices, however justified at their inception, prove to be stupid business decisions.
A simple sniff test on the tricky VW software would have told the tale of how dumb this idea would turn out to be. Every product designer and manufacturer should give their nose a tune-up after the VW scandal.