The negative impact that Volkswagen has made on society, consumers and on global business by falsely representing the results of EPA and Clean Air Act emissions regulation standards, has ruined consumer’s perception, that the reputation of the auto industry is rated very favorably. Even though pollution is still seen as one of the biggest shortcomings for personal vehicles, prior to this event, the majority of consumers felt that the auto industry was progressing with emission reductions and investments in renewable energy sources.

Consumers also felt that the industry actively sought solutions to challenges, made products that improved the quality of life, and could be trusted in the long term. This outlook of the auto industry’s reputation comes from a survey of 14,000 interviews across 18 countries and was sponsored by the International Organization of Motor Vehicle Manufacturers (OICA). The survey was conducted by polling institute TNS Sofres. The industry itself scored extremely high and was largely considered as an industry that could be trusted and is innovative. Now, however, this scandal has left many feeling a sense of distrust and betrayal.

“When the idea of “transparent leadership” which is based on honesty and sharing what is pertinent is violated, it undermines consumer and team spirit, corporate productivity and the trust of both”. (Pagano, Barbara/Pagano, Elizabeth). In addition to this, the lack of honesty by way of omission once discovered, can lower morale and profitability. As seen in this case, millions or billions of dollars will need to be spent on damage control which will have a negative impact on corporate financial operations and loss of respect due to deceptive and fraudulent practices. “The most important people for any business are its stakeholders: investors, employees, suppliers, regulators, customers and so on. Reputation risk is a bottom-line issue, because a loss of reputation can lead to a loss of customers and a loss of shareholder value”. (Rayner, Jenny) It is going to take a lot more than a public apology and $1,000 refunds to customer’s to repair the damage that has been done by Volkswagen. Sources Cited
Pagano, Barbara/Pagano, Elizabeth (2004). The Transparency Edge, How Credibility Can Make or Break You in Business. McGraw Hill, 2004.
Rayner, Jenny (2003). Managing Reputational Risk, Curbing Threats, Leveraging Opportunities.
Wiley, 2003.

http://www.hybridcars.com/consumers-say-auto-industry-is-innovative-and-effectively-cutting-emissions/ by Sarah Shelton September 22, 2015 http://www.hybridcars.com/about/ Questions:
1. Will the reputation of the auto industry as a whole be effected by this event? Explain.
2. What will it take to gain the respect and trust of auto-makers.
3. Should mandatory random monitoring be performed in the auto industry? Explain.
4. Do you believe that companies with low trust environments are also prone to cover up other mistakes? Explain.