Is scandal endemic to an industry so caught up in gaining a competitive edge that it loses sight of the consequences?
Another major automobile manufacturer admitted this week to misleading regulators about its fuel efficiency claims, and once again the behavior of a few has cast a shadow over the automobile industry as a whole.
Two years ago it was Hyundai Motor Corp. that admitted overstating its mileage estimates on a number of their vehicles, and before that it was the Ford Motor Co. Late last year Volkswagen AG cheated regulators with emission-test sensing software that made their cars appear to burn diesel fuel much cleaner than what was actually the case.
The sophistication and depth of their deception is among the most elaborate ever seen in the automotive industry.
Just a couple of days ago, Mitsubishi Motor Corp. also admitted to testing and reporting irregularities on their fuel economy claims for a model that was sold only in Japan, seeming to limit the damage to their credibility. However, now that the alarm has been sounded, their entire fleet will surely be scrutinized for similar discrepancies.
When such things occur, it clearly erodes the public’s trust. Reasonable people could certainly begin to wonder if the cheating is endemic? Here’s what we know: The automotive industry is intensely competitive and the manufacturers literally spend billions to gain small advantages against each other in their quest for market share.
And with operations spread out all over the world, it’s not just the manufacturers that can get snared in wrong-doing. Even automotive suppliers (think Takata) are battling hard to hang on to their existing business and ultimately win more.
However, something that isn’t given much attention is that the local retailers are just as shocked and troubled as customers. They’ve invested mightily in the brand or brands, including spending vast sums on commercial real estate, training, equipment, maintenance and more as well as on millions of dollars worth of inventory. This is not to support an excuse on behalf of the dealers; it’s merely to point out that they’re also caught completely unaware.
When a major recall is announced on any vehicle, the retailers hold their breath, hoping that the issue in no way affects their customers’ safety, but also crossing their fingers that recall doesn’t invovle one or more of their vehicles, which can badly tarnish the brand and put the brakes on sales.
On the one hand, the automobile industry has been doing a much better job of regulating itself, and that’s one of the primary reasons we seem to be hearing more about recalls. They’ve become ultra-vigilant in the face of these scandals, and the result is they’re finding and correcting more issues faster than ever before.
On the other hand, the temptation to cheat to win an unfair advantage is always going to be bound up in the most difficult problems to solve, and people in highly responsible positions are always going to be vulnerable to the pressure. The real trouble for those who do give in to the temptation is that invariably the truth will out.
And when it does, no one’s going to be happy, least of all the perpetrators themselves.