When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .


Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

What Volkswagen Can Learn From Toyota About Ruthless U.S. Regulators

There are billion-dollar fines, but the humiliation is what really hurts the bottom line. This is the lesson VW faces amidst the emissions scandal snowballing in the U.S.

VW, Uncle Sam's coming after you next
VW, Uncle Sam's coming after you next
Thomas Fromm

MUNICH — The car industry knows how unpleasant legal problems in Europe can be. And yet, somehow, they always seem to find a way of getting resolved. In the United States, such matters are handled differently. Very differently.

For starters, there are the penalties. The current fraud scandal around falsified auto emissions may cost Volkswagen up to $18 billion and has already forced the resignation of CEO Martin Winterkorn. Add to that huge number billions more from recall costs and potential claims of recourse from disappointed clients and shareholders.

But that's not all. Foreign automakers that wind up in a battle with U.S. authorities will also suffer damage to the brand's image, the cost of which simply cannot be measured. In 2010 Akio Toyoda, the CEO of Japanese automaker Toyota, had to sit through an excruciating hearing in front of a Congressional committee. It's the kind of appointment most top managers would do anything to avoid. Back then, Toyota had to recall millions of cars due to mechanical defects that had led to multiple deaths of American motorists. The hearing lasted seven hours, and it was described as nothing less than a "grilling," as a long series of accusations and allegations prompted a final kowtow, and Toyoda acknowledging that both he and his company fell far short of being "perfect."

At the end of the day, the group paid a $1.2 billion penalty for its sins. But the words and images, capped by the U.S. Attorney General chiding Toyota for "deceiving its customers," were far more damaging.

[rebelmouse-image 27089441 alt="""" original_size="1024x683" expand=1]

Toyota CEO Akio Toyoda — Photo: Bertel Schmitt

Toyota's experience offers a hint of what may happen to VW, following the accusation that it manipulated software that measured its car emissions. One thing is clear: A special commission from the U.S. congress will investigate the case, while the Environmental Protection Agency is obliged to probe which regulations have been violated. "The American people deserve some answers," said one lawmaker. Other reports suggest that Volkswagen and its managers could face criminal charges.


The central concern over the last couple of years for Volkswagen — how to keep growing in the difficult American market — is no longer on the agenda. Today, instead, the question is whether VW can even survive in the U.S. Some executives from Toyota, VW and other foreign car companies have said in the past that U.S. regulators have a tendency to target non-American groups. The fight for market share is ruthless. Still, a recent example of General Motors undermines such a theory, as a case of broken ignition keys led to a settlement that forced the American automotive giant to pay penalties. Nevertheless, we're not speaking of billions here — a mere $900 million.

The U.S. National Highway Traffic Safety Administration (NHTSA) had accused GM of not having reported the broken ignition keys soon enough. As a result, GM had to order back 2.6 million vehicles worldwide. There is also a compensation fund for victims' families in the 124 deadly cases linked to the faulty piece.

GM's CEO Mary Barra was sent to Washington, to sit in front of another Congressional hearing. The lawmakers wanted to understand how it could be that it took more than 10 years for such a dangerous defect to be detected and corrected. Barra and Toyoda: Two recent examples of how serious the U.S. really is about corporate responsibility. Now get ready to see some German executives in the American hot seat.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Migrant Lives

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

An orchid rehabilitation project is turning a small Mexican community into a tourist magnet — and attracting far-flung locals back to their hometown.

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

Marcos Aguilar Pérez takes care of orchids rescued from the rainforest in his backyard in Santa Rita Las Flores, Mapastepec, Chiapas, Mexico.

Adriana Alcázar González/GPJ Mexico
Adriana Alcázar González

MAPASTEPEC — Sweat cascades down Candelaria Salas Gómez’s forehead as she separates the bulbs of one of the orchids she and the other members of the Santa Rita Las Flores Community Ecotourism group have rescued from the rainforest. The group houses and protects over 1,000 orchids recovered from El Triunfo Biosphere Reserve, in the southeastern Mexican state of Chiapas, after powerful storms.

“When the storms and heavy rains end, we climb to the vicinity of the mountains and collect the orchids that have fallen from the trees. We bring them to Santa Rita, care for them, and build their strength to reintegrate them into the reserve later,” says Salas Gómez, 32, as she attaches an orchid to a clay base to help it recover.

Like magnets, the orchids of Santa Rita have exerted a pull on those who have migrated from the area due to lack of opportunity. After years away from home, Salas Gómez was one of those who returned, attracted by the community venture to rescue these flowers and exhibit them as a tourist attraction, which provides residents with an adequate income.

Keep reading...Show less

The latest