By on November 10, 2015

2.0L TDI Customer Goodwill Package

Volkswagen’s Goodwill Program in the U.S., which may cost the company nearly half a billion dollars all told, may be a form of corporate apology that could insulate the automaker from further lawsuits.

Michael Siebecker, a professor of law at the University of Denver, says the company’s gift cards could be a form of “corporate apology” that studies have shown help shield some doctors from medical malpractice lawsuits.

“I believe that this is a type of watered-down apology. They may be saying ‘You must be hurting, here’s a little something to get by.’ I don’t know what exactly they think consumers need right now,” Siebecker said.

According to a 2009 study by Dr. Jennifer K. Robbennolt for “Clinical Orthopaedics and Related Research,” a publication by The Association of Bone and Joint Surgeons, an apology could ward off patients taking doctors to court for malpractice. Of the patients who believed their malpractice lawsuit could have been prevented, 40 percent said an apology by the doctor would have been sufficient to preclude legal action.

“There’s a whole notion of corporate apology. Corporations, both in the U.S. and around the world, have decided to approach scandals in a slightly different way, whether that’s animated by public relations or it’s just business sensibilities,” Siebecker said. “There’s a benefit in apologizing. Of course, the danger there is when you apologize you then expose yourself to further liabilities when you admit to wrongdoing.”

Siebecker, who teaches a law class in corporate social responsibility at the University of Denver, said corporations have been slower to embrace organizational apologies because it often admits guilt that could be used later in lawsuits.

In Volkswagen’s case, the automaker may be offering some sort of mea culpa by way of $1,000 in gift cards to nearly 500,000 consumers to avoid costly lawsuits later.

“To you and me, $500 million dollars is a lot of money. But something of this size and magnitude, which could cost billions, $500 million doesn’t seem like a lot,” if it goes to help generate goodwill toward the company, he said.

The Harvard Business Review recently found examples where organizational apologies helped defuse potentially explosive situations.

“An apology enables an executive to express concern and convey the organization’s values — even as an investigation into exactly what happened and who was responsible unfolds,” Maurice E. Schweitzer, Alison Wood Brooks and Adam D. Galinsky wrote in their September findings for the publication.

Siebecker said that by making half of the goodwill package redeemable only at Volkswagen dealerships for parts and service could potentially backfire. He recalled the story about a Pennsylvania mine explosion that killed one worker, where gas-giant Chevron initially responded by giving the people in the town free pizza coupons.

“That obviously didn’t work,” he said.

While many in the town weren’t initially upset with Chevron, the scheme was a public relations nightmare.

Still, Siebecker said, something on the size and magnitude of the Volkswagen diesel scandal may not be recoverable for the company.

“I think that once this investigation takes hold, it could bring down the largest automaker in the world,” he said.

Get the latest TTAC e-Newsletter!

Recommended

43 Comments on “Volkswagen’s Apology and How It Might Save Millions...”


  • avatar
    bullnuke

    I visualize legions of lawyers attempting to access the motor vehicle department records of the many states for VIN numbers of registered TDI’s. Apologies ain’t gonna do it.

  • avatar
    Lou_BC

    An apology with an explanation works well when it occurs in close proximity to the time the “violation” occurred. Surgical or medical misadventures tend to be addressed almost immediately after their occurrence. Health Care organizations have policy and protocols in place outlining when and how to admit to a mistake.

    In the case of VW they aren’t admitting to an error, mistake, or complication but to deliberately cheating and breaking the law. That in itself is a completely different animal.

    • 0 avatar

      +1

    • 0 avatar
      SCE to AUX

      Quite true.

    • 0 avatar
      Pch101

      The main motivator for medical malpractice suits in the US is lousy bedside manner. Patients sue their doctors because they dislike them personally (and malpractice insurers try to get their insureds to be nicer because they know that it saves them money.)

      Those factors aren’t going to dissuade class action attorneys from filing cases against VW. It may persuade some to not participate in the class action, but there are bound to be quite a few VW owners who take part because it isn’t difficult to just say yes.

      • 0 avatar
        Lou_BC

        Pch101 – that is to a great degree true. An Internist I used to work with was saying that the simple act of wearing a tie statistically improves one credibility and believability when dealing with patients.
        We all can be swayed by appearances but as you pointed out, none of that is going to help VW much if at all.

        On the subject of class action litigation, each individual person signing on isn’t going to get as much cash as they are expecting. I have a 2010 Toyota Sienna and somehow it showed up on a mail out list for a class action suit against Toyota for UA (even though it wasn’t affected). Our portion of the settlement would of been hundreds of dollars. To make a long story short; lawyers are going to get rich’er’ and VW is going to get smacked around.

  • avatar
    GermanReliabilityMyth

    VAG seemed so vast and untouchable before cheating. Now it looks like VAG will be hit hard by millions, for billions, left close shop and exit the US.

    Although we can dissect this any number of ways, you shouldn’t forget that there are other people who own VWs that actually aren’t diesels. We bought ours without any promise of retained value, so why should diesel owners feel entitled to claim harm in that regard? VW never promised any number for retained value when you bought your vehicle. That was YOUR perception and assumption. Ultimately, the Clean Diesel is VAG’s IP to sully as they see fit.

    And now, because the greenies found their outrage du jour, we owners of VW gassers get the hit in retained value solely based on trickle-down perception. And yet, no gift cards for us. But we’re still getting by. For those diesel owners (not the reasonable ones waiting this out before complaining) who are whining about how terrible this is, quit your bitching and enjoy your apology money and better-than-EPA-stated mileage. This goes double for those in states without sniffer testing.

    • 0 avatar
      28-Cars-Later

      I agree and of all of the things to take them down too.

    • 0 avatar
      its me Dave

      So instead of the cheating engineers and cheating executives who admitted they cheated to meet regulations mandated by US law, you’re blaming some so called greenies for the hit you’re taking in resale value on your gasoline VW? You’d rather impeach some mythical tree huggers than an real organization of self-admitted liars?

      • 0 avatar
        GermanReliabilityMyth

        Well, it might seem ridiculous, but everything was fine until their emissions cheating was brought to light. My gasoline VW was on a typical depreciation curve, as was all the other “clean diesels.” Taking VW to the proverbial woodshed isn’t going to undo any harm against the environment, real or imagined. Ask yourself this: is anyone, whether it’s the planet, the buying public, the dealers or VW any better off after all this? Who has the most to gain? If you answered “the politicians,” you got it right.

        Even if, entirely by magic, VW corrected all of the diesel vehicles in violation tomorrow, just one bro in Alabama could be rolling coal, negating the whole effort.

        • 0 avatar
          Pch101

          “Taking VW to the proverbial woodshed isn’t going to undo any harm against the environment, real or imagined.”

          Prosecuting murderers and rapists doesn’t unkill or unrape anyone, yet we do it anyway.

        • 0 avatar
          Scoutdude

          While it won’t fix any harm that has already been done it will prevent it in the future as these vehicles are fixed or destroyed. It will also send a strong message to other companies not to risk cheating. So yes there are benefits to the public even if the lawyers and politicians do too.

      • 0 avatar
        Lou_BC

        Apparently blame or culpability depends upon which altar you worship i.e. The altar in the church of capitalism or the altar in the church of environmentalism.

        • 0 avatar
          GermanReliabilityMyth

          It’s more of a question regarding which world you live in, not where you worship. I live in the world of reality and all the symbolic gestures in the world, be it corporate castration or environmental ministration doesn’t change anything. China is still burning a hole through the ozone and there’s nothing we can do it. And that’s just the tip of the melting iceberg.

          Everyone has their eyes focused on VW but I simply believe we’d be better off outlawing anything aiding and abetting prior-mentioned rolling of coal. Again, I’m not against environmental protection. I love the environment, if only for the selfish reason that I live in it and have no other alternative. Or maybe because my daughter will one day inherit what’s left of it. But if we’re going to be outraged, let’s at least direct it toward something with a meaningful impact.

      • 0 avatar
        28-Cars-Later

        @dave

        I’m going to go out on a limb and suggest this sort of endemic dysfunction is common to many multinationals both in and out of the auto industry. If they were say audited by an independent firm who found this and say the stock plummeted, I’d say they got what was coming. But that’s not what happened, VAG dared defy one of the many edicts of the USG on a part of their business which comprised 25% of sales. Now you can point to dishonestly, corruption, incompetence, or whatever but the point is they were given standards with which they could not economically comply. Who is really to blame here, the engineers who failed or the unelected bureaucrats who set them up to fail? Maybe both sides share blame? The fact that none of the scientists or people who obsess about NOx picked up on more of it in air quality surveys than their should be in SIX years tells me the “damage” is inconsequential else someone would have noticed. You defy Fedgov and its lunacy and they will make an example of you as they have no other choice. If EPA/NHSTA etc decided tomorrow ZEV was mandatory for all models in five/ten years, the automakers would have to comply even if it meant most of them wouldn’t survive and the economic impact be staggering. Unelected bureaucrats who answer to no one, no matter their slant, are incredibly dangerous.

        @GRM

        Not being snarky, but VW branded products never enjoyed great resale (at least in the past eleven years since data was made available to me). Flybrian used to buy them at something like 45% off in a year and then sell them with low miles with a quick $2K markup.

        @Lou

        I’m nodding my head in agreement as I type.

        • 0 avatar
          mike978

          You make some interesting points. But they were not set up to fail. Other manufacturers in the US managed to meet the criteria. The criteria were well known and if VW couldn’t meet them then they could choose not to sell a diesel (like Mazda recently did).

        • 0 avatar
          GermanReliabilityMyth

          28CL, you make a fair point regarding VW resale value. They’ve always been dragged down by reports of reliability and longevity issues as we all know. Just because the diesels enjoyed a reputation of being longer-lived doesn’t mean that they were that much better in this regard compared to any other VW models. They simply had the “diesel premium” baked into the resale.

          That said, I bought mine knowing full well I’d take a hefty hit on depreciation. I guess it’s unrealistic on my part to expect the Clean Diesel adopters to have the same expectation rooted in reality. But that’s one of my main gripes about people turning up their noses at the gift cards. It’s more than I was offered and more than they were ever promised when they bought. VW owes them nothing. When you buy a car, you take on the risk of depreciation, for reasons known and yet-to-be-known.

          Is this a hassle for Clean Diesel owners in emissions testing states? Absolutely. Is the fix, as well as its impact, unknown? Yeah, and no one likes to be left in the dark. But it’s no excuse to indulge oneself in a healthy dose of victim mentality. At least until the full consequences come to light. People have to realize they have to deal with things that arise from their own decisions as well as things that they have no control over.

          • 0 avatar
            Pch101

            “But it’s no excuse to indulge oneself in a healthy dose of victim mentality.”

            You’ve expressed quite a bit of that for yourself and for VAG. Must not be enough to go around.

            As for “rolling coal,” it isn’t an either-or universe. Nobody at the EPA is saying that it’s a great idea to turn a diesel pickup truck into a gross polluter.

          • 0 avatar
            GermanReliabilityMyth

            Pch, I’m not going to lie, I wish I was getting a kickback like the Clean Diesel owners, so there might be some bitterness. I could’ve sworn the Germans had a word for it, though. Schaden…schaden-fraud…schäden-something.

          • 0 avatar
            Robert.Walter

            While reading your various comments, most of which make no sense to me, I began to wonder if you affected by Stockholm syndrome?

            Maybe your next car should be a Volvo!

          • 0 avatar
            GermanReliabilityMyth

            Robert, as a matter of fact, I had a Volvo previously. I loved every minute of ownership and still regret letting it go.

          • 0 avatar
            Scoutdude

            The hassle is going to be pretty much they same whether the owner lives in a testing area or not. The local testing isn’t set up to see if a vehicle has had any required updates and I doubt they will change that for what is a small percentage of the vehicles that need to be tested.

            What I expect is that the EPA will base the final fines on how many vehicles they actually are able to fix. What that means is that VW will pester the owners until they comply.

            So the best idea may be to wait it out until VW starts offering payments to come in and get the vehicle fixed.

  • avatar
    FormerFF

    Thing is, at the current time, VW diesel owners aren’t hurting unless they are trying to sell their cars.

  • avatar
    65corvair

    What will the European diesel owners think of the U.S. deal? Are they getting gift cards too? If not, won’t they feel left out?

  • avatar

    Reminds me of the Seinfeld episode in which Cosmo Kramer was suing a coffee company for having sold him coffee which was too hot. Against his lawyer’s advice Kramer immediately settles for free coffee in all franchises, not knowing that the coffee people were prepared to pay 50 grand… to begin with.

  • avatar
    SCE to AUX

    “An apology enables an executive to express concern and convey the organization’s values”

    So I ask, what are VW’s values?

    An apology is only meaningful if the bad behavior was out of character. In VW’s case, they’ve admitted to bad behavior that was IN character. What has actually changed since September 18th?

    Apologies by celebrities and politicians are legion these days, and I’m tired of it since most of them are empty words. Sometimes unapologetic behavior is refreshingly authentic, if abhorrent. I’m not suggesting VW take this approach; I’m suggesting that their apology isn’t weighty.

    Real change by VW will take years to prove, if they survive that long.

  • avatar
    jacob_coulter

    I just don’ think it’s an apples to apples comparison, a doctor making a mistake and apologizing to a patient with some sort of gift is MUCH different than a big faceless multi-billion dollar company.

    From where I’m standing it seems like a big waste of money, and it’s certainly not going to slowdown any lawyers or government regulators.

    • 0 avatar
      RideHeight

      Heh.. yeah, the individual owners now matter as much as the oxpecker fluttering above the lions gorging on its ex-host.

    • 0 avatar
      Lou_BC

      jacob_coulter – a Doctor apologizing with a gift is in itself grounds for censure.
      In Health Care it has been found that openly dealing with Mea culpa reduces the risk of litigation. No one wants to admit to making a mistake but doing so not only reduces costs from litigation but also reduces cost through improved patient care. Admitting and correcting situations that lead to error is good for everyone.

      In VW’s case they deliberately broke the law.

    • 0 avatar
      pragmatist

      There are two types of doctor cases. He may fail to recognize a symptom or make a technical mistake. This is human.

      Other doctors have defrauded patients and insurance. These get no sympathy. This is more like the VW situation.

  • avatar
    jpolicke

    Back in 1985 after JAL Flight 123 crashed, the president of the airline personally went door to door and apologized to the family of each victim. THAT’s corporate contrition. Just like any other con artist, VW is only sorry it got caught. If I still had my Jetta I’d take their gift cards, but I wouldn’t buy another of their cars.

  • avatar
    jvossman

    Swap my TDI engine for a 2.0t and well call it even…

  • avatar
    Robert.Walter

    Apologizing for institutional fraud once one’s tit is in the wringer is almost a continuation of the fraud. In any case, it is a separate topic from a heartfelt apology for a genuine mistake.

  • avatar
    Joss

    Volkswagen gonna face a Nuremberg.

  • avatar
    George B

    The fundamental problem Volkswagen faces is they united several different types of customers under the lie of “Clean Diesel”. Customers who want different things. For the “Clean” side with CARB, EPA, plus customers who wanted to display their environmental virtue, the solution is to buy back used diesel Volkswagens and sell new hybrid and electric Volkswagens. The problem for Volkswagen is that Volkswagen dealers are practical independent businesses worried about getting stuck with used diesel cars they can’t sell. For the “Diesel” side, Volkswagen needs to preserve the superior fuel economy of TDI models in the face of government/environmental demands to “do something”. Anything Volkswagen does to promote “Clean” tends to degrade positive traits of “Diesel”.

  • avatar
    stuki

    Rules to live by in the era of petty childishness.

  • avatar
    WildcatMatt

    When I was in customer service, we were always instructed to show empathy and apologize to the customer when there was an issue. We weren’t supposed to automatically admit fault, although we certainly could if it was determined the company had in fact done something wrong.

    As others have pointed out, there are limits to when and where it’s appropriate and whether a goodwill gesture is commensurate to the incident. That requires judgement and a deft touch.

    But in general, never underestimate the power of simply saying “I’m sorry”.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Matthew Guy, Canada
  • Seth Parks, United States
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Moderators

  • Adam Tonge, United States
  • Kyree Williams, United States