Why the 32 billion euro diesel scandal also has its positive side

Five years ago, VW shook confidence in the German auto industry with the diesel scandal. But the shock was followed by the overdue renewal.

Sales of ID.3 started in July 2020

It is the biggest scandal in German economic history. The diesel affair has cost Volkswagen 32 billion euros so far, and there is no end in sight. The lives of once celebrated top managers such as VW boss Martin Winterkorn or his Audi colleague Rupert Stadler have been turned upside down. Fame and recognition are gone, soon both will have to answer in court.

But as bold as it may sound: the scandal has something positive about it. Ultimately, the fraud initiated a process of renewal at VW that would otherwise never have happened at this speed. What began exactly five years ago when it was discovered by the US environmental authorities has not only brought the VW Group forward, but also the entire automotive industry.

Under the head of the group, Martin Winterkorn, Volkswagen actually only went up. In 2013 and 2014 the Wolfsburg reported record wins, the rise to the world’s number one seemed only a matter of time. But what no one really wanted to admit at the time: the group was down in important foreign markets such as North and South America, and the brand’s image had already suffered significantly.

The record profits had become a burden. Nobody in Wolfsburg wanted to recognize the need for a giant like Volkswagen to have to renew itself. Electromobility, digitalization, new forms of mobility – none of these seemed to interest those responsible at Volkswagen that much.

If the diesel manipulation hadn’t been exposed in September 2015, Martin Winterkorn would probably have continued as CEO for another two or three years. And following the example of the VW patriarch Ferdinand Piëch, Winterkorn would have continued to exert significant influence on the group as Chairman of the Supervisory Board for many more years. But much changed with the diesel scandal. Suddenly the CEO had to leave the group.

Limit damage

Of course, in the beginning it was mainly about getting the diesel affair under control somehow and limiting the expected damage. In September 2015 there was great uncertainty in Wolfsburg. Even the company’s very existence was at stake.

But at the same time something new began. The development teams soon got together and started working on new electric cars. The results can be seen right now: A few days ago the group delivered the first ID.3 to customers.

The development of these cars was associated with birth pangs, as the recurring software problems have shown. With the ID electric model range, however, something remarkable happened in Wolfsburg. The entire development process for these completely new cars took just four years from the first pencil line to final production. Before that, Volkswagen had usually taken seven years to develop a new model of classic conventional combustion cars.

The Wolfsburg colossus has become much faster and has thus also found an answer to Tesla. Because Tesla founder Elon Musk shows every day that there can always be new ideas in the rather deadlocked and traditionally oriented automotive industry. And in Wolfsburg, nobody would have thought it possible before that a new car could be developed in just four years.

The acceleration effect radiates

The acceleration effect triggered by the diesel scandal also had a decisive impact on politics, as the example of Europe is currently showing. EU Commission President Ursula von der Leyen wants to push through a further tightening of the climate targets, which in turn has consequences for the automobile manufacturers. Because these goals can only be achieved if more electric cars than originally planned come onto the streets. This will no longer only affect Volkswagen, but the entire automotive industry.

Five years ago the industry would have protested loudly against it. But VW CEO Herbert Diess also shows that the tightened climate targets can be achieved. Because the finished and ready-to-drive electric cars are already available and because they don’t have to be sent to the test stand for another three years.

But the diesel scandal will not only help the environment. This week, US monitor Larry Thompson from Wolfsburg also said goodbye. He certifies that those responsible for VW have made a better company out of the VW group in the past three years of his mandate.

Cultural change at VW

After the diesel scandal was uncovered, a cultural change began at Volkswagen. Internally, dealing with one another has become more open, transparent and critical. The belief in hierarchy no longer shapes working life at VW as much as in the past. This is also confirmed by the monitor.

More openness and transparency can ensure that new criminal ideas are not developed again so quickly in a quiet little room. This is not a complete protection against new misconduct. But it is an important prerequisite to prevent another diesel scandal.

Contact the author: tomasharper@wheelsjoint.com

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