VW makes amends. A model in rebuilding trust?

Volkswagen agrees with US regulators to pay nearly $15 billion for its diesel-emissions deception. Other steps are needed to help it become a company leader in how to restore a reputation.

Volkswagen CEO Matthias Mueller delivers a speech at the annual shareholder meeting in Hanover, Germany June 22.

Long a leader in car technology, Volkswagen is now being tested as a corporate leader in how to rebuild lost trust. On Tuesday, the German automaker took a big step toward restoring its reputation by settling quickly with US regulators, nine months after being forced to admit it had rigged 11 million diesel vehicles to illegally pass emission tests.

Like other automakers recently caught either lying about their tail-pipe emissions or fuel-economy results, VW is struggling “to do everything we can to win back trust,” as chief executive Matthias Müller put it. Such legal settlements will be only a start for a company that has seen its brand plummet in both Europe and the US as result of its long deception to customers.

VW agreed with the Justice Department and Environmental Protection Agency to set aside $10 billion to cover buybacks and fixes of nearly 500,000 diesel cars in the US. Another $4.7 billion will go to remediation and research in green technology. The total payout is the largest by any automaker in US history. And VW has other legal hurdles to jump elsewhere in order to make further amends.

But restitution for past wrongs is only part of its effort to “make things right,” the phrase used by Mr. Müller. Many other steps are needed.

A few top VW executives, for example, have left the company. VW is using the crisis to be a leader in making “green” vehicles. It plans to have about a third of its cars powered by electricity by 2030.

Müller also apologized for betraying the trust of shareholders. And the company plans to release an internal investigation by the law firm Jones Day on how it cheated on engine software to fool regulators about the diesel pollution of its cars.

Companies from General Motors to Suzuki are learning that trust is a precious currency easy to lose but can be difficult to regain. “Following the Volkswagen emissions scandal, the whole of the automotive industry must work hard to restore public trust by being transparent about the systems they employ and advancing plans for introducing cleaner engine technology,” said Britain’s Transport Secretary Patrick McLoughlin.

Cooperation, contrition, and transparency are essential for companies to bounce back from a loss of credibility.  To regain the respect of customers, VW will need to handle its buy-back and repair program well. And it must ensure independent audits of its auto emissions.

“What’s done cannot be undone,” says Müller. “But what does lie in our power is ensuring we act in a responsible manner.”

Consumers are becoming better at spotting when a company is authentic and doing more than making profits. In a recent global survey on trust by Edelman public relations firm, 45 percent of people say they trust a business better if it is contributing to the greater good.

The survey also found only 27 percent of leaders were viewed as behaving in open and transparent ways. That is one more reason why a big company like VW must demonstrate how to restore trust.

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