High penalties for automakers in the United States: Toyota most recently had to pay $1.2 billion in penalties, General Motors, $900 million
In addition, Volkswagen must expect damage to its image
Legal problems in Europe, they say in the auto industry, are unpleasant. But they can somehow be resolved. In the U.S., things work differently. Quite differently. It begins with the possible penalties. The cheating scandal could cost VW up to $18 billion in addition to the recall costs and possible claims for compensation from disappointed customers and stockholders. Thus, further billions.
But it doesn’t stop there. Automakers that tangle with U.S. authorities don’t only get hefty fines, but in addition, they are subject to very unpleasant questioning, and the images that go along with it.
Akio Toyoda, president and CEO of Japanese automaker Toyota, had to submit to a hearing before the U.S. Congress that managers would rather avoid. At that time, Toyota had to recall millions of cars due to sticking floor mats and gas pedals, and there were fatalities in the United States. The hearing lasted seven hours and observers said later that the man from Japan had been properly “grilled.” Blame, accusations, harsh words – finally the kowtow. Toyoda said he was “not perfect” and Toyota was not either.
In the end, his company paid a $1.2 billion penalty for its series of breakdowns that had grave consequences. Much worse were the congressional images of the CEO and the words of the U.S. attorney general who called the behavior of the automaker “shameful.”
'The American People Deserve Answers'
If the floor mat affair of Toyota provided for so much commotion in the U.S., what will then become of VW’s manipulated software scandal? Because this much is clear: The VW case will also involve a congressional committee, as announced by two American politicians. “The American people deserve answers and assurances that this will not happen again,” is the word from Washington.
In connection with congressional action, the case will also have penal consequences according to the U.S. media. Thus, the U.S. Department of Justice is expected to investigate whether the firm should be charged with criminal practices, according to a news report by Bloomberg LP.
Even the government has weighed in. The U.S. is “quite concerned” about the conduct of Volkswagen, according to a spokesman for President Obama. It is, however, the task of the Environmental Protection Agency to implement its regulations and initiate investigations.
Volkswagen Actually Wanted To Grow in the US
By now, it is no longer a matter of the big VW question of past years that has concerned the firm for so long: How can VW continue to grow in the chronically weak U.S. market, how can it get out of weak sales? Now it is necessary for VW to avoid becoming completely unimportant in the United States.
Toyota, VW – from managers of foreign automobile firms one often hears that Americans target non-American firms. The fight for market share is just brutal. The case of General Motors speaks to the contrary. The parent company for Opel was recently involved in a scandal over defective ignition switches. After a settlement, the automotive giant had to pay a penalty. However, in this case it wasn’t a payment of billions, but instead $900 million.
The U.S. automotive safety authority, the National Highway Traffic Safety Administration, accused the domestic manufacturer of waiting too late to report defective ignition switches. As a result, GM had to recall 2.6 million vehicles to repair shops worldwide. In addition, a compensation fund for victims and surviving dependents was discussed. Government agencies have connected at least 124 fatalities to the ignition lock scandal.
Here too, politicians wanted to know more about the technical problems. GM CEO Mary Barra had to submit to questioning at a congressional hearing in Washington. At the hearing, questioners wanted to know how it could be that a dangerous defect was not corrected for more than ten years. Barra, Toyoda – these examples show that the Americans mean business.