German automaker Volkswagen (VLKAY) has found itself at the center of a widening scandal involving deceptive emissions testing practices designed to make its diesel vehicles appear more environmentally friendly than they actually are.
The controversy erupted on Friday when the U.S. Environmental Protection Agency accused Volkswagen of installing software in approximately 500,000 U.S. vehicles that could detect when they were undergoing emissions tests.
This software allowed the vehicles to temporarily reduce emissions to meet regulatory standards, while under normal driving conditions, they emitted pollutants at levels 10 to 40 times above EPA-compliant limits.
The fallout has intensified since then. On Tuesday, Volkswagen issued a statement acknowledging that the issue extends far beyond the U.S., affecting 11 million vehicles worldwide.
The company has set aside €6.5 billion (around $7.3 billion) to “cover the necessary service measures and other efforts to win back the trust of our customers.”
As a result of the scandal, Volkswagen’s stock took a significant hit on Monday and Tuesday, losing nearly a quarter of its value in just two days.
“Their biggest markets are Germany and China, and we will see what each country does about this issue. We are in the very early days of this issue, and it will continue to be a problem for VW for quite a while.
Unfortunately for diesel enthusiasts, it also paints diesel technology as environmentally unfriendly even though other diesel cars and SUVs from other manufacturers do meet emissions requirements.”
Volkswagen is far from the first automaker to face serious consequences due to unethical practices or major scandals.
Here are ten other instances where the auto industry and its key players have been shaken by controversy.
1. The Tucker 48
Following World War II, American automobile designer and entrepreneur Preston Tucker sought to introduce a groundbreaking new car, the Tucker 48. However, the project was short-lived.
Despite Tucker’s innovative vision for the car, his business methods were unconventional.
He attempted to sell dealership rights before the vehicle had even been produced, which led to an investigation by the Securities and Exchange Commission for fraud.
Tucker claimed that the automotive industry was conspiring against him. “My associates and myself and the Tucker Corporation have been investigated and investigated, time and again,” he wrote in an open letter dated June 15, 1948.
“Millions of dollars of the taxpayers’ money have been squandered in an utterly fruitless effort to kill the Tucker, to bar us from needed raw materials, to keep us so busy defending ourselves and our efforts that the motoring public would tire of waiting for a completely new rear-engine car.”
Although Tucker was acquitted of fraud charges in 1950, the damage was done, and production of the Tucker 48 ceased.
Only 51 Tucker cars were ever built. Among their owners is filmmaker Francis Ford Coppola, whose father had been an early investor in the Tucker venture.
“He took me to see the car when it was on exhibit and I was very excited. I remember the details very well and for months kept asking,
‘When is the Tucker coming?’ Finally he said it was never coming, and that the big companies didn’t want it to exist, and wouldn’t let Mr. Tucker buy steel or the supplies he needed,” Coppola recalled in a 2012 interview with Smithsonian.
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2. The Ford Pinto
In 1977, an exposé on the Ford Pinto, alleging that for seven years, Ford Motor Company (F) knowingly sold vehicles with a fatal flaw, resulting in unnecessary deaths.
According to the report, pre-production crash tests revealed that rear-end collisions could easily rupture the Pinto’s fuel system, leading to deadly fires. However, rather than addressing the issue, Ford proceeded with production anyway.
Mother Jones also uncovered an internal Ford memo, written five years earlier, which analyzed the financial implications of Pinto-related fire fatalities.
The memo estimated that each death would cost the company $200,000, with the total cost of fixing the issue projected at $137 million—far exceeding the estimated $49.5 million in benefits from taking corrective action.
In response to public outcry, Ford recalled the Pinto in 1978 to implement fuel-tank modifications.
Despite the controversy, some researchers have since questioned the way the case was portrayed. In 1991, Gary T. Schwartz, a professor at UCLA School of Law, published a paper titled The Myth of the Ford Pinto Case, arguing that the public’s perception of the incident had taken on an almost legendary status.
“The case shows how disturbed the public can be by corporate decisions that balance life and safety against monetary cost,” he wrote.
3. Failure to Park
In 1980, the U.S. National Highway Traffic Safety Administration (NHTSA) made an initial determination that certain Ford Motor vehicles had a defect in their transmissions, which allowed them to unintentionally slip from park into reverse. The agency had received 23,000 complaints regarding the issue.
That same year, Mother Jones magazine published a report presenting evidence that Ford had been aware of the transmission slippage problem for at least a decade.
According to the magazine, design improvements that could have reduced the number of park-to-reverse incidents by 90% would have cost the company just three cents per vehicle.
Ultimately, it was determined that more than 20 million Ford vehicles manufactured between 1966 and 1980 were affected by the defect.
However, rather than issuing a full recall and making the necessary repairs, Ford reached an agreement that resulted in nothing more than a warning sticker.
The label cautioned drivers that “unexpected and possible sudden vehicle movement may occur” if they did not take specific precautions.
In 1984, the Center for Auto Safety, an organization founded by Ralph Nader to advocate for automobile safety, reported that these defective transmissions had contributed to 77 fatalities.
4. Audi’s Accidental Acceleration
In November 1986, CBS’ (CBS) investigative news program 60 Minutes aired a segment titled “Out of Control,” which focused on the Audi 5000.
The report featured interviews with owners who claimed their vehicles had suddenly accelerated without warning.
The segment also included footage of an Audi 5000 appearing to lurch forward on its own a scene that was later revealed to have been manipulated by the television crew.
Despite the misleading presentation, the damage to Audi’s reputation was severe. Consumers panicked, and lawsuits against the automaker surged.
After conducting a three-year investigation, the NHTSA cleared Audi of wrongdoing in 1989. However, 60 Minutes never retracted its report, instead referring to it as “an opinion.”
The controversy led to a dramatic decline in Audi’s sales, which plummeted from 74,000 units in 1984 to just 12,000 in 1991.
5. Takata Seatbelts
“It could remain a quiet preliminary investigation or turn into one of the biggest automobile recalls of all time,” reported in early 1995 as concerns began to surface regarding seatbelts manufactured by Japanese auto parts company Takata.
“At the very least, it should ensure that from now on carmakers offer a lifetime warranty on seatbelts.”
Just a few months later, the NHTSA ordered a recall affecting millions of vehicles sold between 1986 and 1991.
The recall was prompted by concerns that the seatbelt buckles were prone to failure, either by refusing to latch or by becoming stuck in the locked position.
In total, more than 8 million vehicles were impacted, making it the second-largest auto safety recall in 30 years at the time.
Authorities had received over 700 complaints related to the defective seatbelts, with reports of at least 60 injuries. However, no fatalities were linked directly to the issue.
The recall affected vehicles from more than a dozen different automakers across the U.S. and Japan. The total cost of the recall could exceed $1 billion.
6. Ford-Firestone Rollovers
In May 2000, the NHTSA launched an investigation into Ford and tire manufacturer Firestone after receiving 90 complaints, including reports of four deaths, related to vehicles equipped with Firestone tires.
By August, the number of fatalities linked to the issue had risen sharply. The NHTSA documented over 60 deaths caused by rollovers of Ford Explorer SUVs following sudden tread separation of Firestone tires.
In response, Firestone recalled 6.5 million tires. As the crisis unfolded, it was ultimately determined that more than 100 people had lost their lives due to the defect. Ford later recalled an additional 13 million tires.
The controversy sparked a bitter dispute between the two companies, with both sides blaming each other for the deadly failures. The fallout from the crisis led to the eventual termination of their long-standing business relationship.
7. Daimler’s International Bribery
In 2010, Daimler (DDAIF) reached a settlement with the Securities and Exchange Commission (SEC) over a widespread corruption and bribery scheme that spanned more than a decade.
The German automaker, known for its Mercedes-Benz brand, agreed to pay $185 million after allegations surfaced that it had engaged in at least $56 million worth of improper payments.
These transactions, totaling more than 200 across 22 countries, were found to be part of a broader effort to secure business advantages.
The SEC concluded that Daimler generated $1.9 billion in revenue and $90 million in illegal profits from these dealings, which included kickbacks paid to Iraqi ministries under the United Nations Oil for Food Program.
“It is no exaggeration to describe corruption and bribe-paying at Daimler as a standard business practice,” stated Robert Khuzami, director of the SEC’s enforcement division.
“The final and reputational costs incurred by Daimler as a result are a lesson that should be studied closely by all companies.”
8. Toyota’s Accidental Acceleration
In 2009, Toyota (TM) faced a major crisis when a series of accidents linked to “runaway cars” led to widespread consumer outrage.
The issue gained national attention in August of that year when a family of four tragically lost their lives in a crash.
Authorities later released a harrowing 911 call from the vehicle’s driver, who reported that the car had started accelerating uncontrollably.
Investigations eventually revealed that certain Toyota models produced between 2004 and 2010 were prone to unintended acceleration.
The problem was traced to two primary causes: floor mats getting stuck under the accelerator pedal and, in some cases, gas pedals that would stick.
Toyota ultimately recalled more than 9 million vehicles in 2009 and 2010, but the delayed response severely impacted its reputation.
In 2014, the U.S. Attorney’s Office imposed a $1.2 billion fine on the automaker not just for the defect itself, but for its attempts to conceal the issue and its repeated misleading statements about the problem.
“When car owners get behind the wheel, they have a right to expect that their vehicle is safe,” said then-Attorney General Eric Holder in a statement announcing the fine.
“Other car companies should not repeat Toyota’s mistake: A recall may damage the company’s reputation, but deceiving your customers makes that damage far more lasting.”
9. The GM Ignition Switch
In 2001, General Motors (GM) engineers identified issues with the ignition switches on the Saturn Ion. An internal report at the time indicated that the problem had been resolved, leading to a redesigned switch.
However, in 2004 and 2005, GM began receiving reports that Chevrolet Cobalt vehicles were losing power when the keys were inadvertently bumped.
This failure caused the power braking, steering, and airbags to become inoperative. Despite these reports, the automaker chose not to pursue a redesign, citing cost concerns among other reasons.
The decision proved to be disastrous, ultimately leading to billions of dollars in losses, numerous accidents, and 124 confirmed fatalities.
In 2014, GM initiated a massive recall effort affecting millions of vehicles manufactured since 2004.
The financial fallout was severe as the scandal wiped out over $5 billion in GM’s profits. Later that year, in September, the U.S. Department of Justice ordered the company to pay a $900 million fine as the legal consequences continued to unfold.
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10. Takata Airbags
Over 30 million vehicles from 10 different automakers have been recalled in the United States due to defective frontal airbags manufactured by Takata.
A 2014 investigative report by The New York Times alleged that both Takata and Honda (HMC), one of the automakers using its airbags, delayed informing the public about the dangerous defects.
The report linked two deaths and more than 30 injuries to ruptured airbags in Honda vehicles, with some incidents dating back over a decade.
In January 2015, the National Highway Traffic Safety Administration (NHTSA) imposed a $70 million fine on Honda in civil penalties for failing to report deaths, injuries, and warranty claims associated with the airbags.
The following month, the agency announced it would fine Takata $14,000 per day for failing to fully cooperate with the ongoing investigation.
“Safety is a shared responsibility, and Takata’s failure to fully cooperate with our investigation is unacceptable and will not be tolerated.
For each day that Takata fails fully to cooperate with our demands, we will hit them with another fine,” stated U.S. Transportation Secretary Anthony Foxx.