Is There a Bright Side to the Volkswagen Debacle?

Volkswagen is in trouble – a big, smelly, noxious kind of trouble and it’s the kind of trouble that is going to cost it dearly to fix.

With the discovery by the US EPA and the ensuing Mea Culpa from VW CEO Martin Winterkorn that the company has been willfully rigging US emissions tests on its 2.0L Diesel engine powered vehicles, the company has unleashed upon itself a tidal-wave of negative publicity and possible fines that are almost un-heralded in automotive history.

Simply put, through some subversive computer software, Volkswagen was essentially able to cook the books, where emissions level testing was concerned.  The software could detect when a vehicle was being tested for emissions and then altered the performance so as to reduce the amount of pollutants and therefore allow it to pass the stringent conditions established by the EPA for vehicles sold in the U.S.

A question being wondered by many is why would they do this?  The reasoning involves a few factors but most notably is the fact that the diesel engines used by Volkswagen do not perform as well when full emissions controls are utilized.  Consumers wanted optimal performance, but regulators wanted optimal controls on the amount of pollutants the dirty engine variant emitted.  Faced with this problem, Volkswagen decided to create a system where both parties are satisfied, yet in doing so they broke the law and allowed vehicles on the road that emitted many times the amount of pollutants as was allowed.

VW Beetle TDI

What will follow in the weeks, months and likely years to come for Volkswagen is a brutally painful and expensive exercise in paying the piper.  They will need to repair the 500,000 vehicles identified in the US, and it’s likely that other countries where VW TDIs are sold will follow suit.  The total number of vehicles involved will likely wind up in the tens of millions.  They will also face Billions in potential fines, but perhaps most painful of all is that they will have to endure a brand-tarnishing of epic proportions.

The willful dishonesty displayed by this debacle is being met with disdain and contempt from not only regulators, but members of the media and the public at large.  Where brand power is concerned, what can take years or decades to build up, can come crashing down in mere days and take just as long, if not longer to build back up again.

But with all the above being said, is there a possible bright-side to the story?

I believe the answer is yes, and it ultimately will be up to Volkswagen to recognize the opportunity and then seize upon it.

VW Golf Wagon TDI

While it will likely take years for all the dust to settle on this matter, it is presumed that at some point whatever is left of both Volkswagen and its reputation will be looking to start anew.  While Volkswagen, which just this year topped Toyota to become the world’s top selling automaker likely has sufficient wealth to weather the storm, it’s relatively safe to assume that they will be rebuilding the public trust from Ground Zero.

Going forward, any and everything Volkswagen does will be seen through hyper-vigilant public and administrative eyes.  They will be wearing the Corporate Dunce Cap for a long time, so it goes without saying that whatever they decide to do after the dust settles, better be done absolutely perfect.

And herein lays the opportunity.

If Volkswagen truly learns its lesson, it will see that in all adversity lies opportunity.  If they are cunning enough to develop software that can hide the truth, they are also likely smart enough to build cars that are clean enough so as to have absolutely nothing to hide.

Slowly, but surely both the preferences of consumers and the offerings of automakers are turning towards vehicles that not only perform well but offer minimal harm to our environment.  Volkswagen originally made the decision to fake their way to the party, but now the only chance they’ll have at being invited back is to earn it.

From the ashes of public shame and legislative punishment may yet emerge a newer, truer, greener and most importantly, more honest automaker.  It’s in Volkswagen’s best interest to do so, and the world will be watching to see how it decides to proceed.