VW Customers Don't Give a Monkey's About Diesel Cheating

A bizarre incident involving the testing of diesel exhaust fumes on a group of cartoon-watching monkeys, and possibly humans too, has catapulted the Volkswagen AG emissions scandal back onto newspaper front pages. But public outrage, though warranted, may well ring hollow this time.

When Volkswagen admitted rigging about 11 million vehicle engines in 2015, I assumed the German carmaker would pay dearly, not only in terms of fines, repair costs and compensation, but also in terms of damage to its brand and thus lost sales. I was wrong.

While VW has incurred more than 25 billion euros $31 billion) of diesel scandal costs, so far only two managers have been imprisoned and the company hasn’t offered European customers the same compensation U.S. buyers received. No matter, its global vehicle sales rose 4 percent to 10.7 million vehicles last year. Remarkably, though U.S sales of VW’s namesake brand declined in 2015 and 2016, they rebounded strongly last year. The share price is higher now than in September 2015.

The only sensible conclusion from these data is that VW’s customers and investors don’t care much about its emissions cheating — or at least not enough to buy a different brand of vehicle. Human and animal-testing is clearly an emotive issue but there’s no reason think consumers will behave any differently this time. 

The diesel emissions scandal is hardly the only example of public outrage about corporate wrongdoing being worse than its bite. Uber Technologies Inc. has lost market share to Lyft Inc. following a string of scandals, but its sales haven’t fallen off a cliff. In Britain, about 850,000 people have signed a petition for London to reverse a decision not to renew the company’s operating license. Uber’s plans for an IPO as early as next year remain on track. So far Equifax Inc. has also suffered remarkably few financial repercussions related to its massive data breach.

The scandal provoked broader concern about the risks of diesel in several European governments, and diesel sales have since declined in the region as consumers worried a ban from cities or the loss of fuel-tax incentives could undercut the resale value of new purchases. It would be a stretch to argue that a consumer’s decision to switch from a diesel to a petrol car was retribution for the car industry’s collective environmental shortcomings — there are plenty of carmakers with vehicles that emit far higher levels of dangerous nitrogen oxide in real-world driving conditions, compared to the laboratory.