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Volkswage’s DSG Rashomo

By Sun Xiaohong, CBU Guest Columnist

Volkswagen’s DSG problem is now a hot topic that keeps popping up whenever media people meet. While many publications choose to remain silent, some who question the fairness of VW’s decision have spoken out.

Let us first review what has happened. Owners of VW and Skoda cars made by FAW-VW and Shanghai-VW complained either privately or publicly about the powertrain problems they had experienced. Most print and electronic media did not report such complaints out of respect for and trust of the VW brands. By March 15, 2012, China’s Consumer Rights Day, the General Administration of Quality Inspection, Supervision and Quarantine summoned VW China for a discussion about the TSI+DSG problem. But when no conclusion came out from GAQIS and the China Central Television remained quiet about such quality problems and VW’s possible responsibilities, the vehicle owners as well as the public were enraged. The response from most of the media, however, was still “quite reserved,” in sharp contrast to their response to Toyota’s recall in China two years ago.

What explains the media non-reaction? Fu Hui, a reporter with the 21 Shiji Jingji Baodao (21st Century Economic Herald) summed it up by saying: “this shows a unique Chinese characteristics.” Liu Jingjing of Zhongguo Qiche Bao (China Automotive News) made it clearer: “Earlier all of us heralded the TSI+DSG technology. For us to criticize the technology now is like slapping our own faces and is unfair. We have so much other stuff in the world to worry about that we don’t really need to do so if we can help it.”

It was true that at the beginning we were all in favor of the TSI+DSG and hoped that the technology savvy Volkswagen of Germany would be providing us automobiles that are more fuel efficient, environmental friendly and high tech in order to better our lives. Volkswagen had been doing so and we had no reason to doubt it.  

Objectively speaking, the TSI+DSG represents top of the line technology achievement in traditional automobiles. Compared with other carmakers that brought outdated vehicle models to China to make a buck when the market is immature, Volkswagen had been more “generous.”

We also understand that for any new technology to be marketed successfully, a certain period of test, feedback and improvement on the technology is a must. Although problems arising during this period are to be anticipated, such a period must be controlled and their impact must be minimized especially if consumers are involved. In other words consumers cannot be held responsible for problems of a technology being tested.

This is exactly the problem with Volkswagen. Its launch of the TSI+DSG was too hasty. The necessary period of test and feedback was most likely shortened by people in management who wanted early profit from the new technology.  Unfortunately, the serious and rigorous VW has treated consumers as its guinea pigs.

Commentator Zhang Zhiyong said that the DSI issue reflects Volkswagen’s different attitude towards Chinese consumers. Like most automotive analysts, he believes that VW has failed in its crisis PR.

This may not be true. People may agree with me that we would not have remained silent until today but for the earnest attitude and professionalism of seasoned VW China PR executives such as Ma Jinghua, Xu Ying, etc. But the issue is no longer public relations because VW PR has done its best. It is not capable of resolving problems that have arisen from VW’s aftermarket service.

When numerous VW car owners brought their problematic vehicles to 4S stores, what they experienced were not only denials and finger-pointing between 4S stores and the manufacturer but also accusations that the DSG problems had been caused by the customers. No manufacturer today can claim 100 percent defect-free of their vehicle products. As long as OEMs help resolve the defects through timely aftersales service, they should get customer understanding.

The problem with TSI+DSG is in the design and manufacture, according to industry analysts.  The technology is far from mature and reliable in terms of engineering quality and safety. Going by both the strict recall policies in Europe and North America and the not-so-strict recall policy in China, there is hardly any doubt that VW’s automobiles equipped with the problematic TSI+DSG should be recalled.

Things are complicated in China. If VW decided to recall its vehicles, it could become a more shattering event than Toyota’s recall, with devastating results. The recall would be like an earthquake for the Chinese auto industry, creating unforeseeable impact not only on independent carmakers that have never made vehicle recalls but also government regulations.

Many believe that Volkswagen has taken good care of government relations in China. It is true that over the years the two VW joint ventures in China have contributed tremendously to China’s GDP and tax revenue. They are not only German but also Chinese. To central and local governments FAW-VW and Shanghai-VW are more important.

But according to reliable sources, GAQIS is still talking with VW China. New development may be expected in the next few days. There has to be a better solution.

The solution came at 4:30 pm on May 23 through Ma Jinghua’s micro blog on auto.sina.com.cn: The warranty for the DSG dual-clutch transmission has been extended to 10 years or 160,000 km, whichever comes first. The decision means sky-high loss for the German carmaker because a problematic TSI+DSG would mean replacement. But a much bigger problem for VW is the likelihood that the replacement DSG breaks again. No customers would be patient enough to face repeated major powertrain problems and remain silent. Customer anger will put VW’s brand image at stake.

Product quality problems may happen to all enterprises in all businesses. Innovation is the life of an enterprise and its future. VW’s DSG problem has exacerbated in China because an immature auto market experienced an explosive expansion.

But we must recognize the bottom line: the safety of consumers and their property. It is more important than the interests of both the enterprise and the government. The Chinese government must clarify its stand in support of consumer safety instead of corporate interests, whether multinational or local. People remember vividly U.S. government’s hearing on Toyota safety problem and Akio Toyoda’s apologetic bow to consumers. The good thing is that the GAQIS is still in talks with Volkswagen.

Volkswagen launched the TSI+DSG simultaneously in both North America and China. The 2012 Passat launched in North America in September 2011 no longer offered the TSI+DSG powertrain. Instead, it was equipped with a 2.5L L5 or 3.6L V6 gasoline engines or a TDI diesel engine. The standard model is equipped with a 5MT transmission, plus choices of a 6MT, 6AT and 6DSG. The massive recall of the DSG cars in 2009 created a crisis of consumer trust in VW powertrains. This forced the carmaker to bring back the 6AT for all its 2.5L engines. DSG became an equipment of choice only with the V6 engine. The TSI engine disappeared in the new Passat.

Volkswagen therefore has become the first carmaker in many years that has been forced to revert to older technologies due to quality issues of its new powertrain. What has enraged Chinese consumers and brought VW to its current awkward position is its refusal to recall the same problematic cars in China.

I must say that the DSG problem is far from over. The days ahead for VW China and especially its PR executives will not be comfortable. But I must also say that the advancement of technology is an eternal human dream. The future for all automobile enterprises remains to be promising.

As a commentator and automotive journalist, I wish the DSG problem had not happened or a satisfactory solution will be found. Sometimes we may prefer to remain silent. But none of us would want to tell lies or slap our own face.

We have seen a real Rashomon in the whole DSG affair.  

(P.S. I apologize if my article hurts some of my friends, especially those enthusiastic and professional PR executives. I must first be concerned about consumer interests and journalistic ethics and professionalism before enterprise interests and the interests of PR executives.)

(Based on author’s article on her blog http://blog.sina.com.cn/emily6711. Ms. Sun can be reached at xyqqxyqq@126.com)

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