Automakers Losing in Court of Public Opinion

Back in the 1970s, the automotive industry faced its first hardcore regulations on fuel economy, emissions and safety. It was the first time the government started dictating to corporations what kind of products they had to build, and they did not react well.

Automakers practically declared war on legislators and regulators. At times the hyperbole bordered on the hysterical.

Ford threatened to shut down its U.S. plants and move all production out of the country. Joan Claybrook, then the head of NHTSA, declared she was going to “hold the industry’s feet to the fire.” It got ugly as the threats escalated.

But over time cooler heads prevailed. It took years, but automakers began to realize the free market alone never would produce cleaner and safer cars for everybody. Environmentalists and regulators began to realize a healthy auto industry was important to the U.S. economy and a competitive advantage for the country. Each side finally recognized the other side had legitimate concerns. It wasn’t all butterflies and bunny rabbits, but a healthy working relationship developed.

Not anymore. Today the talk of working together has gone out the window. We’re back to a 1970s kind of relationship. And this time it’s fully the fault of automakers.

The industry has a real credibility problem right now that goes beyond skeptical legislators and regulators. The public now perceives most of the OEMs as liars and cheaters.

This didn’t happen overnight. It’s been building over the last six years or so. And it took a long list of bonehead moves to make the public so disgusted.

It started when Toyota dragged its feet during the government’s investigation of unintended acceleration allegations. Eric Holder, the U.S. attorney general, condemned Toyota’s behavior and a $1.2 billion criminal penalty was imposed, the largest ever for an automaker in the U.S.

Then there was the General Motors ignition switch defect scandal, linked to 124 deaths and 274 injuries.

Also in the past few years, Hyundai and Ford have had to restate fuel-economy ratings on numerous models and Mitsubishi admitted to cheating on fuel-economy tests for years.

The list goes on and on: Volkswagen’s shocking diesel emissions-cheating scheme, multiple reports alleging airbag supplier Takata hid or manipulated test results showing it had defective airbags, and now FCA is being investigated for misstating its sales numbers.

These actions have consequences. Right now automakers are going through the midterm review for CAFE to determine if they can meet the 54.5 mpg (4.3 L/100 km) target by 2025. Most OEMs say an unanticipated collapse of fuel prices have changed consumer buying habits and the standards are too strict.

But guess what? No one believes them, especially not in Congress, the EPA, NHTSA or the California Air Resources Board.

There is little public support for OEMs this time around. They’re going to get fuel-efficiency and carbon-dioxide emissions rules rammed down their throats whether the regulations make sense or not.

I have no idea what the industry can do to turn the situation around. There’s no program or process it can adopt that will remedy the situation. It’s going to take years for the industry to rebuild trust with regulators and the general public.