Volkswagen CEO: Using Deceptive Software Was Wrong - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Government // Leadership
News
9/21/2015
05:05 PM
Connect Directly
Google+
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Volkswagen CEO: Using Deceptive Software Was Wrong

Volkswagen CEO Martin Winterkorn pledges cooperation as investigators delve into alleged emissions test cheating.

10 Apple Slip-Ups That Bruised Its Reputation
10 Apple Slip-Ups That Bruised Its Reputation
(Click image for larger view and slideshow.)

Volkswagen AG CEO Martin Winterkorn on Sunday issued an apology in response to allegations from the US Environmental Protection Agency and the California Air Resources Board that VW and two of its subsidiaries had used software to cheat on vehicle emissions tests.

"I personally am deeply sorry that we have broken the trust of our customers and the public," said Winterkorn in a statement. "We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter."

On Sept. 18, the EPA issued a Notice of Violation accusing Volkswagen AG, Audi AG, and Volkswagen Group of America of deliberately employing a "defeat device" to allow four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015 to appear to meet emissions standards during testing.

During actual use, however, the affected vehicles emitted 10 to 40 times more pollutants than allowed, according to the EPA.

(Image: Volkswagen)

(Image: Volkswagen)

As trading resumed on Monday, Sept. 21, stock of Volkswagen AG was down about 20% in the wake of the EPA/CARB charges. For Clean Air Act violations, VW could be fined up to $37,500 per vehicle, which would amount to $18 billion for 482,000 affected vehicles. There may be additional litigation.

The EPA has not said how much it will seek in fines, but a similar case in 1998 may offer some guidance.

That year, the EPA and the Justice Department announced the largest Clean Air Act settlement up to that point, an $83.4 million civil penalty against seven truck makers -- Caterpillar, Cummins Engine Company, Detroit Diesel Corporation, Mack Trucks, Navistar International Transportation Corporation, Renault Vehicules Industriels, and Volvo Truck Corporation.

In 2015 dollars, that fine would be about $122 million, based on a cumulative inflation rate of 46.2%. That's significantly less than the statutory maximum.

[Read the latest reports on Apple's Project Titan.]

The EPA and Justice Department claimed that the truck makers sold 1.3 million vehicles with defeat devices that disabled emission controls while on the road. The EPA estimated that the vehicle makers would spend an additional $850 million to develop cleaner diesel engines and bring old engines into compliance.

Last year, South Korean automakers Hyundai and Kia agreed to pay a $100 million civil penalty to resolve alleged Clean Air Act violations.

Beyond direct financial fallout, Volkswagen will have to contend with brand damage. For example, Consumer Reports on Sunday suspended its recommendation of two Volkswagen models, the Jetta diesel and the Passat diesel. The publication will wait until VW fixes the emissions system to re-test the cars.

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
moarsauce123
100%
0%
moarsauce123,
User Rank: Ninja
9/25/2015 | 7:14:15 AM
Re: Is it the individual or the culture in which they operate?
@Thomas Claburn

The Kia and Hyundai cheats are also due to not prescribing and verifying the test conditions under which these measures were taken. Such tests should be conducted by a third party like UL or TÜV.

As far as individual or culture, it is the culture. I am convinced that there were plenty of minions who spoke up and claimed it was wrong, but had the choice of going along with it or losing their job, if not even get sued for disclosing business secrets.

I am sure VW has a rough quarter now, but in the end it will nothing more than a larger blip on the balance sheet. Stock is already rebounding and financially VW has no worries, half of the company is owned by the German state Lower Saxony, so it would be taxpayers in the end who have to cover expenses.

The culture that favors cost cuttings and sales over everything, especially quality, will eventually generate such major fails. For the longest time I suggest that Ethics must be a mandatory course for any science, business, and engineering graduate. Maybe that helps to prevent things like this.
SachinEE
50%
50%
SachinEE,
User Rank: Ninja
9/23/2015 | 9:46:09 AM
Re: Is it the individual or the culture in which they operate?
@Thomas: They would probably "refurbish" these cars (or claim to) and send them to Chinese or Indian markets. 
Thomas Claburn
50%
50%
Thomas Claburn,
User Rank: Author
9/22/2015 | 4:49:29 PM
Re: Is it the individual or the culture in which they operate?
Interestingly, Hyundai and Kia cheated in a smarter way than VW, though they were still caught. The two South Korean car makers manipulated tests for favorable results without resorting to software trickery.  

From the EPA: "For example, Hyundai and Kia restricted their testing to a temperature range where its vehicles coasted farther and faster and prepared vehicle tires for optimized results. In processing test data, Hyundai and Kia chose favorable results rather than average results from a large number of tests. In certain cases, Hyundai and Kia relied predominantly on data gathered when test vehicles were aided by a tailwind."

So there's probably a lot of cheating that goes on. Some of it is just more obvious.
stevew928
50%
50%
stevew928,
User Rank: Ninja
9/22/2015 | 3:20:37 PM
Re: Not wrong unless you get caught???
Yea, it's a wrong on so many levels!

And, whether Martin should resign or not, we should be seeing a lot more owership of the problem and intended action, not the start of an investigation.
stevew928
50%
50%
stevew928,
User Rank: Ninja
9/22/2015 | 3:18:23 PM
Re: Is it the individual or the culture in which they operate?
Good point. I'll give VW credit that their apology is at least more straight-forward than most. But, I hope we see a lot more action into what they are actually going to do about it.

The 'investigation' part of it really makes me think they won't, though. What's to investigate? Sounds like the start of a 'shift the blame' strategy aready.
mak63
50%
50%
mak63,
User Rank: Ninja
9/22/2015 | 2:43:00 PM
Re: Not wrong unless you get caught???
This is more than a simple wrong. More pollutants means more health issues for many. My asthma symptoms this year have been the worse that I have recently. Who couldn't say that this is directly linked to all the driving that stevew928 has been doing.
Martin Winterkorn should resigned, if he has any shame at all left.
glenbren
50%
50%
glenbren,
User Rank: Ninja
9/22/2015 | 2:34:51 PM
Re: Is it the individual or the culture in which they operate?
Makes me wonder what else they cheated on? What about the other auto makers?
stevew928
50%
50%
stevew928,
User Rank: Ninja
9/22/2015 | 12:54:41 PM
Re: Is it the individual or the culture in which they operate?
This was something that took a lot of work and planning. It wasn't just an oversight or mistake.

I don't see any good way of explaining it outside of.... "well, we thought we could get away with it... sorry" which doesn't instill much confidence.
stevew928
50%
50%
stevew928,
User Rank: Ninja
9/22/2015 | 12:50:48 PM
Not wrong unless you get caught???
The question is... why did they do it? Are they operating on the subjective-not-wrong-unless-you-get-caught morality that is becoming so prevalent these days? I guess so.

It's not like this is an oops moment. This took a LOT of planning and implementation. They clearly did it to thwart the policy, hoping they'd never get caught.

But, here's the problem. I bought one... a 2010 Jetta TDI. I love the car, and have been quite proud of it. I've hailed it as a pretty good 'green' alternative to hybrids and electric cars. So much for all of that, huh? I just got back from a trip through the the mountains of BC (Canada) where I averaged about 40 MPG (while also averaging over 80 MPH through much of it). It's simply a stellar car... but I guess stellar by cheating?

So, next time I take it in, are they going to 'fix' it with a software update that kills the performance I love about the car (that's why I bought it... I'd have bought other vehicles if fuel-economy were my only concern)?

Are they going to refund my purchase price if I'm no longer happy with it? (or, pay me the current/previous market value for it? Or allow a fair trade-in? etc.)

Will I ever trust them again and buy another VW? They've got a lot more than an oops on their hands here!
Charlie Babcock
50%
50%
Charlie Babcock,
User Rank: Author
9/21/2015 | 6:36:17 PM
Is it the individual or the culture in which they operate?
This a black eye for Volkswagen. How often do people talk themselves into doing what they think "has to be done," only to find how much cheaper and better in the long run if they had just concentrated on doing it right the first time. I don't think it's always one or two individual at fault. It's more the culture in which they operate, make promises, meet deadlines, etc., whether realistic or not.
Slideshows
9 Steps Toward Ethical AI
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/15/2019
Commentary
How to Assess Digital Transformation Efforts
Lisa Morgan, Freelance Writer,  5/14/2019
Commentary
Is AutoML the Answer to the Data Science Skills Shortage?
Guest Commentary, Guest Commentary,  5/10/2019
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
A New World of IT Management in 2019
This IT Trend Report highlights how several years of developments in technology and business strategies have led to a subsequent wave of changes in the role of an IT organization, how CIOs and other IT leaders approach management, in addition to the jobs of many IT professionals up and down the org chart.
Slideshows
Flash Poll