The loop

We’re hearing this again.

In 2015, the Volkswagen Group was found to have used a software “defeat device” to circumvent strict emissions standards set by the US and other countries for diesel engine vehicles. Engines programmed with this software control emissions during regulatory testing. As a result, the emissions meet US standards. In reality, however, over 500,000 of its diesel engine vehicles had been producing emissions up to 40 times the levels allowed by regulators. This is in the US alone.

According to reports, VW had been doing this since 2009.

In 2014, General Motors faced an uproar over its handling of a defective ignition switch in some of its car models. Drivers could knock off the keys from the ignition switch. As a result, the engine would shut off and cars would lose their power steering and power braking capabilities. And in the likely event of a crash, the airbags would not inflate. As of May 2015, there were 97 reported deaths caused by this defect.

According to evidence, GM had known of this defect this since 2003.

In 2010, Toyota faced a scandal relating to vehicles that suddenly accelerate. This was attributed to faulty accelerator pedals. The defect was caused “on a plastic material that could cause gas pedals to stick in a partially depressed position.”  News reported that in the first two quarters of 2010, the US National Highway Traffic Safety Administration had received more than “6,200 complaints involving sudden acceleration of Toyota vehicles. The reports include 89 deaths and 57 injuries over the same period.”

Apparently, “despite knowing the vehicles had a potentially fatal defect, Toyota kept producing them with the same specifications.”

As a consequence, Toyota recalled a total of 9 million cars and GM recalled about 2.6 million affected models. VW announced plans to refit up to 11 million affected vehicles.

Despite the recency of the scandal, sale of VW vehicles was hardly affected. In 2017, the VW Group posted revenues of approximately 230 billion euros. Less than four years after recalling vehicles with a faulty ignition switch in 2014, GM generated revenues of US$145 billion. In the 2018 ranking of the world’s most valuable car brands, Toyota is on top. The same rankings showed also that VW has “climbed back.”

In preparing for the 2014 Global Automotive Consumer Study, Deloitte fielded a survey in 19 countries. More than 23,000 individuals responded. The study explored consumer mobility choices and transportation decisions. It also analyzed “different tradeoffs consumers are willing to pay for to own a vehicle,” as well as “assess the customer experience and the factors influencing the final vehicle purchase decision.”

Although more than half of one survey group prefer and are willing to pay more for vehicles with alternative energy source, e.g. hybrid electric, battery-powered electric, fuel cell, compressed natural gas, etc., cost and price are still the primary purchase motivators. Almost the same number of respondents says that the motivation to use a vehicle with alternative energy source “would be driven more by my desire to save money on fuel than to save the environment.” 

In the same year, Nielsen Global Survey of Automotive Demand collected data from 30,000 respondents from 60 countries. Results show that the top driver for car purchase is financial, followed by emotional and status drivers. Function or utility is the least motivator. 

In the Weve Primary Automotive Research 2017 conducted in the UK, the spike in new car purchases from 2015 to 2016 is driven by “finance deals.” Moreover, the look and brand of cars are the main influencers of car purchases. In the order of influence and consideration, safety and emissions were the last on the list.

One study revealed that although participants will almost always emphasize the safety features, “safety was superseded by other purchasing considerations, most notably price.”

When asked, a substantial number of affected VW owners are relatively chill, “happy with their vehicle and ready to move past the scandal altogether.” Not surprisingly, most of them agree that funds to be used to mitigate the impact of the scandal “would be better off going to compensate affected owners.”

A month ago, Nissan Motors admitted falsifying product-quality data. According to the company, an internal review showed that “altered measurement values” were used on emission inspection reports. Moreover, the tests also “deviated from prescribed testing environments.”

We’ve heard this before, right?

Real Carpio So lectures at the Ramon V. del Rosario College of Business of De La Salle University. He is an entrepreneur and a management consultant. Comments are welcomed at realwalksonwater@gmail.com. Archives can be accessed at realwalksonwater.wordpress.com. The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.