Volkswagen Australia Defective DSG Recall Fiasco

How Volkswagen Australia and its dealer network mis-managed public safety, destroyed brand loyalty and trust, and eroded public confidence in its cars and in its underlying corporate culture.

See also: how the company's attitude affects buyers in the market now - 'DSG denial' case study

This is basically a textbook 'how not to' course in corporate behaviour and demonstrates how little empathy exists within many corporate cultures.

One death, hundreds of outraged customers, thousands of potentially defective cars with lame duck DSG transmissions - all stonewalled by corporate denial.

This special report demonstrates clearly the difference between being a prospect and a customer.  Volkswagen should be ashamed of itself ... but corporations lack the capacity for emotion, so that would be ridiculous.

Corporate ego and hubris out of control - see how they did it., in the video below.


After months of systematic denial, strenuous objections, and a fatally flawed attitude to customers, Volkswagen Australia has finally decided to recall almost 26,000 Golf, Jetta, Passat and Caddys.

It’s taken one death, weeks of public outrage, hundreds of furious owners and some excellent journalisn to drag Volkswagen Australia to this point.

Fairfax Media’s Melissa Fyfe in particular deserves a great deal of credit for her excellent, ongoing series of reports on this issue.

Just last week Volkswagen was still in full-blown ‘denial’ mode following the coroner’s investigation into the death of 32-year-old Melissa Ryan.

Melissa Ryan’s Volkswagen Golf is alleged to have suffered a serious power loss just before the crash with a truck that claimed her life on the Monash Freeway in Melbourne. The truck rear-ended her, and for Melissa Ryan it was tragically all over.

A public backlash ensued. Hundreds of disgruntled Volkswagen owners came forward, all unrelated, but with corroborating stories. Many had been told by Volkswagen dealers there was nothing wrong with their cars, despite mounting evidence to the contrary.

Typically enough, Volkswagen blamed the media.

Volkswagen Australia issued a press release contesting Fairfax Media’s coverage. Volkswagen’s appalling public statement kicks off by expressing absolutely no sympathy regarding Melissa Ryan’s death. That’s pretty cold-hearted. Instead, Volkswagen says it’s not commenting because the inquest is ongoing.

Volkswagen claims the company is “co-operating fully” and that “the assertion that Ms Ryan’s death appears to have been caused by sudden deceleration is incorrect”. Volkswagen goes on to say: “There is no correlation between the inquest, and the customer reports presented in the media regarding diesel engines and DSG transmissions.”

So, nice job of not commenting … what a classic piece of mail-order MBA PR bullshit.

Volkswagen boss John White posted and open letter to owners on the company’s website. In it, frankly, he tells a fairy tale about his company’s integrity, responsibility, and engineering excellence, and he blames the media – and not defective Volkswagen cars – for the tsunami of public backlash.

Meanwhile, back on Earth, in contrast, the truck driver, Ivan Mumford, who was actually there when Melissa Ryan died,

testified under oath that Melissa Ryan’s car decelerated suddenly without brake lights.

Fairfax Media reports that at least 300 outraged Volkswagen owners who suffered the same kinds of mysterious, terrifying Volkswagen power loss came forward as a result of the coroner’s inquest into Melissa Ryan’s death. These people were all Golf, Passatt, Polo and Eos owners, and none appeared to have been recent psychiatric inmates. In fact they were generally quite credible. They had a point, and it’s a denial of reason to suggest they’re all wrong, or whipped up into a frenzy by the evil press. It’s Ockham’s razor in practice – simple.

These complainants had all completely lost faith in the Volkswagen brand. That’s what happens when your new car suddenly loses the will to live … on the freeway with a B-double up your clacker, or on a level crossing, with you and the kids on board. Especially when Volkswagen – ridiculously – continues to deny there’s even a problem.

This is the core of the issue – egg on the face in the boardroom versus risk to life and limb out there, on the road. Ego and hubris out of control, behind closed doors. Within this kind of dysfunctional, sociopathic management culture it’s easier to deny the existence of a problem than it is to get off your lazy arses and fix it.

This incident demonstrates just how to easy it is to undo millions of dollars in advertising expenditure, simply by behaving like a mob of wombats in the face of a serious problem. It also shows how little morality, if any, exists in some modern boardrooms.

It’s abundantly clear Volkswagen has a serious reliability problem. The company has already recalled 400,000 cars in China and 91,000 cars in Japan – all for defective DSG transmissions. In the US, after a similar media fiasco, and an official Government investigation, the company had to repair the transmissions of 43,000 Volkswagens and 10,000 Audis – which use the same components.

This power loss has become a public relations and marketing fiasco. Better to ‘fess up early in this situation and avoid being labeled a dog with the underlying morals of a hyena. All car companies have problems; It’s how they deal with those problems that sets them apart.

Volkswagen is hoping to sell a heap of vehicles in the final weeks of the financial year and it’s spending marketing megabucks on that. So this is very bad timing – a speed hump on the road to its stated ambition of becoming the world’s number one car company by 2018.

So, not too much Bollinger in the boardroom this Friday afternoon, when they discuss item 1: world domination, and how that’s going.

To deal with the ‘pants pulled down in public’ problem here in Australia, Volkswagen did what any responsible, ethical, reasonable carmaker with a defective product would do: it had a tantrum and pulled most of its advertising from Fairfax media – to keep those pesky journos in line.

There’s a pattern of immoral, anti-social behavior emerging here. But it gets even better:

In 2010 a Government contractor here in Australia named Levon Kara got fed up after his Volkswagen Golf suffered power loss multiple times, and after several restorative attempts by the dealer it couldn’t be adequately repaired.

Mr Kara was aware of the recalls in the USA and took Volkswagen Australia to the Victorian Civil and Administrative Tribunal. Unfortunately though, he made the mistake of sending one of his communiqués to Volkswagen from work, using his official government e-mail address.

According to Volkswagen’s lawyers, this might have constituted a breach of the public servant’s code of conduct. Volkswagen’s lawyers adroitly exploited this fact, and used it very creatively to threaten Mr Kara’s job, and therefore his livelihood.

According to Fairfax Media, that implied threat went exactly like this: “I am currently awaiting my client’s instructions as to whether I should lodge a formal complaint concerning your conduct.”

I take that to mean: keep going, son, and we will strive surgically to remove your job through your anus.

You know you’ve become a very special customer when they offer you that exclusive service.

Mr Kara was so understandably rattled by this move that he decided to back out graciously with his job (and his anus) intact, but I think it’s reasonably safe to assume he won’t buy another Volkswagen – for the rest of this life, and subsequent reincarnations, if any.

This is, frankly, an appalling story about the way Volkswagen specifically and car companies generally, couldn’t care less about you once they’ve appropriated your money. After that, you’re just an inconvenience, and the car is a liability. This is why brand loyalty’s a joke in the automotive sector.

There are four key pieces of information you can take away from this.

First – Smoke is a precursor to fire. And there’s a great deal of independent smoke here on this issue of Volkswagen’s defects. In relative fire-risk terms, we’re talking ‘Dresden, mid February, 1945’. In other words: don’t buy a Volkswagen until this defect is satisfactorily resolved in Australia. Which could take months – because it’s not abundantly clear yet that this Australian recall goes far enough to solve all of Volkswagen’s power loss problems.

That also means don’t buy an Audi or a Skoda, seeing as they’re all twins under the skin. Audi and Skoda are Volkswagen brands. They share components across the board to cut costs.

Second – would you really want to do business with a company that would rather bend you over in the absence of any lubricant whatsoever, and threaten your job on a technicality, instead of actually helping you by fixing their defective car? I strenuously vote ‘no way’ to spending any of my cash with that mob.

Third - Ze Chermans, they might hate this, but the Japanese actually build the best-built cars on Earth. An inconvenient truth.

Drive a fully loaded Mazda3 before you buy a Volkswagen Golf, and on substantive grounds you probably won’t be able to mount a compelling case for owning the Golf, dollar for dollar.

Fourth – check – the official Australian Government recalls website, before you buy any used car, or to find out if your car is subject to a recall. Manufacturers write to owners if there’s a recall, but if you buy your car second-hand, the manufacturer doesn’t know you own it – so they can’t write to you if there’s a recall.

Carmakers also conduct what they call ‘service campaigns’ which are kind of like recalls, only the Government doesn’t get involved. Service campaigns get done under the radar, during regular services at dealerships. So it pays to call the carmaker – even if you don’t get your car serviced at the dealership – and enquire specifically whether there are any active service campaigns on your car.

Have the rego papers with you when you call because they’ll need the 17-digit VIN code, which is a unique identifier for your car.

Finally of course, we shouldn’t forget the human tragedy here. The Coroner will hand down its verdict into Melissa Ryan’s death in July. Let’s just hope a defective Volkswagen doesn’t kill anyone in the meantime.