20 June 2017

The rise and fall of the automobile

Back in September 2015 the world discovered that a leading car manufacturer had been cheating in its emissions tests. The company had illicitly installed engine management software, known as a “defeat device”, in its diesel vehicles. The software switched the engine to a lower performance, cleaner exhaust emissions mode that allowed it to pass the US Environmental Protection Agency, and other regulators’ emissions tests. When the car was on the road rather than on the test ramp, however, the software switched the engine to a more polluting, higher performance mode and allowed the vehicles to spew out higher levels of pollution than are allowed under regulations.

The defeat device gave drivers the performance they were after from the vehicles but hid the e environmental cost of that performance behind false emissions data. The company in question, Volkswagen, one of the most prestigious vehicles marques of the last half a century is now paying the price in terms of perception of its global brand. Research published in the Journal of Global Business Advancement, suggests that this fraud has had a significantly detrimental impact on the company and muses on how consumer trust in the brand might be rebuilt.

Adnan Latif of the College of Business Administration, at the University of Dammam, in Dammam, Saudi Arabia, asks “Is it the beginning of the end for this giant brand or will it restore its image among its millions of consumers?” Volkswagen has its origins as a company founded in Nazi Germany in 1937 as Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH. Later it was renamed Volkswagenwerk but was operated and controlled by the German Labour Front, the Nazi Party initially. After World War II it subsumed Audi and Bentley but it was many years before the US market would ignore its Nazi origins. By 2014, however, the company had factories in 31 countries and was a multinational company with an enormous share of the ever-expanding vehicle market. Global brand value was $8 billion and brand revenue $139.5 billion.

Latif has an interesting take on the VW deceit and scandal in that it does not represent a fault or safety issue but rather suggests even greater engineering skills, albeit illicit, among the companies’ designers, engineers and programmers to have pulled of such a deception for many years. “Even though the news is negative it does have a twisted positive side and is different from all the rest of auto malfunction cases,” Latif explains. “It does not carry the scar of incompetent auto engineering as has happened with several other manufacturers in recent years.” He adds that “Instead it could be perceived as a well-planned genius covert engineering operation that fooled the world for almost half a decade.” Adding: “Young high-tech consumers might now be attracted even more to VW diesel cars which they might perceive as not being made by incompetent people but by VW engineers possessing the hacker’s evil genius mind.”

Latif, A.A. (2017) ‘Volkswagen brand: the fall of an auto empire‘, J. Global Business Advancement, Vol. 10, No. 3, pp.281-304.

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