A Grain of Salt: Volkswagen and the credibility of product claims

There was a huge, major, game-busting and, potentially, economy shifting event which happened this week and it’s covered every single news source across the world, such is the breadth of said event… And I for one am highly thankful it wasn’t the iPhone 6.

Of course, it was the Diesel scandal surrounding Volkswagen. If you haven’t already (somehow!) heard about the issue, here’s a snapshot:

The reality of the scope of this issue is almost unbelievable. Somewhere along the line, someone in Volkswagen’s engine development and engineering team has thought environmental regulations are just too hard, let’s just put in some trick-software to make emissions meet required levels only during testing… Or as it should be known, the “sixteen year-old putting off doing their exam study” strategy. As a result, there are an estimated 11-million affected vehicles (holy sh*t!), environmental regulations and laws broken in MANY countries with expected hundreds of billions of dollars in fines, on top of an immediate impact to the company of $66 billion in recall fixes!

Retrospecticus

I’m not particularly worried about the long-term impact of VW’s latest crisis… If there’s one thing we as consumers are guilty of with such issues, it’s complicity. Not in that we participate in the activities, but in that we have short memories in relation to scandals committed by large companies. This is particularly true with the automotive industry… When you have a very brief look into recent incidents, there are two major examples of automotive companies committing major cover-ups.

  1. Toyota – Back in 2009, reports began to surface of Toyota vehicles accelerating on their own, there were a number of deaths attributed to the issue and Toyota pinned the blame on faulty car mats… It was later found that Toyota had knowingly lied about the scope and source of the issue, had purveyed those lies to the public as well as the U.S. Congress and had declared it resolved… They then recalled 9 million cars worldwide after themselves acknowledging that they had intentionally deceived the public and governments about the issue, fixed the plastic lining causing the issue and happily paid the $1.2 billion in fines.
  2. General Motors – To this day, GM is still fighting a battle on the issues facing 30 million of their cars in the U.S. alone, where faulty ignition switches cause thousands of cars to switch off, directly contributing to the deaths of 169 people. This has been documented over the past decade and the fix, which the company was aware of, would have cost as little as $2 per car to fix.
  3. Bonus Round – Takata Airbags – Exactly how long did it take the many safety regulators in various car markets (NCAP, ANCAP, U.S. Auto Safety, etc) to notice the defects in airbags, currently affecting more than 19 million cars globally? Were they aware? They do directly test airbags afterall…

Of course, this definitely led to the ultimate demise of these car makers, given their intentional and malicious deception on such grand scales… Discounting the fact they’re still among the top car sellers globally, with Toyota second behind the now declining VW, with GM running a close third. Right?

But these are hardly the first, or last examples, of product scandals to be heard of. After thousands of iPhone 5s bent in peoples pockets, people still lined up for the 6th version’s release. Samsung is still one of the largest sellers of phones, despite many of their phones having blown-up due to faulty batteries. James Hardy continues to operate at a profit in the USA housing market, despite still being liable for billions of dollars in compensation for asbestos related deaths in Australia. And everyone seems to have already forgotten about that little hepatitis outbreak in frozen berries just earlier this year!

Remember a Healthy dose of Skepticism

It’s not particularly surprising that claims around the NOx emissions of VW diesels don’t stack up… Granted, in most cases, product claims might not quite stack up to real world conditions, as opposed to up to 40 times worse than claimed… The point is, that there is a tacit level of skepticism that people must (should!) naturally feel when companies make any particular claim. In today’s modern, highly connected, high-quality-good world, it’s easy enough to find, and purchase, a competitor’s offering, so organisations will do what they can to at least match their competitors claims, if not set their own benchmarks. Even if it’s not quite truthful…

Let’s take the automotive sector (as it’s on theme), for performance cars, their testing Mecca is the Nurburgring in Germany. Porsche and Nissan fought a fierce PR battle over who had the fastest time for their performance flagships… Neither of which were road-going versions of the cars (despite saying they were), the Mitsubishi Outlander PHEV is quoted as having a combined fuel consumption cycle of 1.9 liters/100km… It has never done this under independent testing with “normal” driving conditions or behaviours (many cars don’t). And the constant yard-stick, the 0-60mph/100kmh acceleration figures which are claimed, are hardly ever matched when tested by the many publications devoted to the auto sector (Opel’s Insignia OPC/VXR is case-in-point).

But it’s not just the product performance claims of the automotive industry we should take with a grain of salt. When was the last time a video game, or movie, truly lived-up to the expectations set by its trailer (But Halo 5 and Star Wars Battlefront still have my hopes high)? How many people have found their “62gb” smart phones come out of the box with only 25gb of usable storage? Or, as I’ve written before, how many ‘health blogs‘ and fad diets have actually made scientifically accurate claims?

And Knowing is Half the Battle

Today’s ‘scandals’ are very much similar to the typical kinds of scandals that you would have come across in previous decades… The only difference is the speed at which we are now able to identify, digest and share the details of scandals. In those product claim revelations of old, information was slow and businesses were able to react quickly enough should something particularly scandalous have occured (think the knowledge and complicity of BBC in the case of Jimmy Savile).

The speed with which information can spread and with which dots can be connected through ‘uncontrolled media’ has completely changed the state of play in dealing with product claims and/or scandals. And with that, there are two sides of the coin:

  1. Companies can no longer rely on typical PR tools to combat negative product outcomes or control potential “black swan” events.
  2. Customers have less excuse to be ignorant of certain elements of a company’s product performance claims not meeting expected levels.

This second point in particular will be exacerbated by the emergence of the web of things and, in the future, the further development of virtual assistants and heuristics. Imagine driving down a road in a connected car and your mobile’s digital assistant decides to interrupt your radio to say “looks like you need petrol and your car is emitting a whole lot more nitrogen-oxide as well… I’ll contact your nearest service center for a patch to the emission controls.”

Okay, so that’s a very imaginative example, which may never actually happen, but it’s highly probable that with the increasing ability of information to be measure and for it to spread, at speed, scandals such as VW’s emissions rigging, James Hardy’s Asbestos cover-up or the Powdered Milk scandal in China will be less likely to occur as companies improve their processes and resist committing any intentional deceptions/unintentional errors for fear of being found out.

As they say, these days it only takes a single tweet to turn a conversation into a global issue!

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