Audi has become a company that is known for making luxury cars, but a few decades ago the company faced a scandal that nearly ruined them. In 1982, the Audi 5000 was a sharp looking, sporty sedan that was set to cement Audi’s position as a luxury car brand. All hopes for the Audi 5000 were dashed in 1986 when CBS’s 60 Minutes ran an episode that showcased the car.
60 Minutes interviewed several owners who said that their car would suddenly accelerate when they did not want it to. Then they even showed an unoccupied Audi 5000 appearing to jerk forward. But Audi never faced a single lawsuit or any penalty for continuing to manufacture and sell the car. Why? Because 60 Minutes lied. The show modified the car and used an air compressor to make it look like an unoccupied car would move on its own. And the interviews? Audi investigated and tests were performed in the U.S., Canada, and Japan. What they found was that the people did believe that the car accelerated on its own, but it was because they were unable to tell the gas from the brake.
The Audi 5000 had narrow pedals that were closer together than most cars. So some drivers would press the gas when they meant to press the brake. In order to combat what they saw as the stupidity of the consumer, Audi released a series of ads that contained car quizzes.
If a person passed the “quiz” then they were smart enough to drive an Audi. No matter what Audi tried, they could not bounce back. In 1985 the company had sold more than 75,000 cars, by 1991 their sales were at 12,000. It would be 20 years before Audi would get back to its 1985 car sales level.
Ford Had Secret Police to Ensure Employees Were Model Americans
One of the things that made Ford’s factory unique back in 1914 was the fact that workers were paid $5 a day. This was an unheard-of amount of money in 1914, and some speculated that Ford did it in order for his employees to be able to afford cars. But the real reason was that the raise was in order to retain workers. Work in the Ford factory was hard and the hours were long, employees were constantly quitting in the middle of the day and leaving. This would not only slow production, but the company would have to pay to retrain someone and pay to find new employees. In one year, the Ford company ended up hiring 52,000 people in order to maintain a 14,000 staff.
But the $5 a day pay wasn’t exactly a $5 pay. It was $2.50 a day with a potential $2.50 bonus. Employees would get this bonus if they stayed on for 6 months, and then also maintained a lifestyle that fit Ford’s requirements. Ford created the Ford Sociological Department, which was designed to investigate employees to see if they met Ford’s standards for the bonus. The department started out with 50 employees but then jumped to 200 as more investigators were needed to probe into every single aspect of an employee’s life.
They would drop in to an employee’s home unannounced to make sure that it was kept nice. They would make sure the children were in school, that spending was reasonable, that there was no excessive alcohol consumption and that the marital relationship was good.
Women were only eligible for the bonus if they were a single mother to children. Men were only eligible for the bonus if they were married and their wives did not work outside the home. Ford even had its own English school to ensure all employees spoke perfect English and were assimilated into American life.
In 1996, things were looking bad for Ford yet again when they were forced to perform the largest automotive safety recall to date, 8.7 million cars and trucks. These automobiles built between 1988 and 1993 had a very big problem. There were 10 different models recalled and the company expected a cost of $50 per car to fix. Ford that they did not expect all of the car owners affected by the recall to respond.
The reason for the recall was a problem with the ignition switches on these models. Under a very specific set of circumstances, the ignition switch would short circuit. This would then cause the switch to overheat and could potentially start a fire. There were over 1,000 reports of fires from ignition switches in the U.S. and another 900 in Canada. The problem was not as rare as Ford would have liked people to think, and it was not until an investigation by the NHTSA and two lawsuits were brought against the company did the recall occur.
The lawsuits were brought against the company by two people who reported to have severe injuries. 19 other people claimed minor injuries due to the fault. A class action lawsuit was also brought against the company until it was willing to perform the recall which solved most of the demands in the lawsuit.
Ford stated that they did not view the recall as being very detrimental to their business. They stated they kept money put away in case of a recall and with the low cost of the repairs and the fact that they only expected about 60% of consumers to comply. The $300 million cost of the recall was not enough to affect their second quarter earnings.
The Automotive Industry Shamed People off the Roads
In the 1920s, cars and people shared the road. People used the street as a place to walk and leisurely stroll. With the introduction of cars, the streets became much more crowded, and inevitably people and cars started colliding. In response to the rising number of pedestrian deaths, a petition in Cincinnati was circulated in 1923.
The petition sought to limit the speed of cars to 25 mph to protect people in the streets. Even though the petition failed, the auto industry realized that public pressure could turn against them if they did not find a way to decrease pedestrian deaths.
In the 1920s the term “jay” was used to describe someone who was an idiot or a simpleton. So the auto industry decided to coin the phrase “jaywalking” to refer to people that did not practice safety when crossing the street. They got Boy Scouts to stand on corners and hand out cards to anyone that lingered in the street or crossed where they were not supposed to. The cards asked people to “quit jay walking” and to only cross at the designated areas.
They also asked newspapers to send them facts about the local traffic accidents in their city. The auto industry safety committee would then send back reports on the situation of traffic and accidents in their city. The end result was that in 1923, newspapers blamed accidents on drivers and the next year, newspapers shifted the blame to “jaywalkers” instead of drivers. Not done yet, they would hire clowns to perform and imitate the jaywalkers who was too naive to realize that streets were no longer for walking as in the archaic days, but rather this was a modern society and the road was for cars. Needless to say, the effort paid off as jaywalking is a punishable offense in many countries.
Ford Allowed 77 People to Die Instead of Paying 3 Cents
While Ford did have the largest recall in the 1990s, they nearly faced a much bigger recall in the 1980s. From 1966 until 1980, Ford automatic transmissions had one very big flaw. The transmission had the potential to slip from park into reverse and this would cause the car to start rolling backward. Ford Motor Company did not see the problem as that big of an issue, but it eventually became a very big issue that nearly led to the recall of 23 million cars.
In 1980, the truth was exposed by Mother Jones and the Detroit Free Press. Both issued reports stating that Ford had been aware of the defect since 1972 and had done nothing to fix it. A design improvement that would have solved the problem was valued at $0.03, but the improvement was rejected by Ford. When issues did arise, Ford decided it was better to pay $20 million to the affected victims and their families rather than doing a massive recall.
The NHTSA investigated and found that 777 accidents occurred as a result of the defect. There were 259 injuries and 77 deaths from those accidents and it was enough to have the NHTSA to considering order a recall of every single car with the defective transmission, which would amount to about 23 million cars. Ford knew that such a recall would bankrupt them, so they pleaded with the Reagan administration for help.
In the end, there was a compromise struck in which Ford would mail out 23 million stickers for owners to put in their cars that would remind them to “make sure the gear shift is fully in park” and to “engage the parking brake” before shutting off the car.
The Chrysler Airflow was introduced in 1934 as the car of the future. It was so well built that it would even meet many of today’s safety standards. The Chrysler Airflow featured a unibody construction that was made entirely of steel. This was revolutionary considering most cars at the time still used wood which led to many deadly accidents on the road.
The car was set to completely transform the industry. It looked streamlined, modern and unlike anything else on the road. It would have forced the other car manufacturers to follow suit.
In response to the impending success of the Airflow, GM decided to embark on a smear campaign. They started buying advertisements in the Saturday Evening Post. They claimed that the design had been stolen from one of their unreleased prototypes. After all, how could a smaller car company like Chrysler create a car that was more advanced than anything in GM’s arsenal? GM went on to claim that the reason why the car never made it to production was because it turned out to be a danger to the roads.
Knowing that the ads were false, Chrysler fought back. They showed a baseball pitcher throwing a fastball at safety glass windshield that did not shatter. They shot out a tire at high speed to show the advanced suspension kept the car from losing control. They rolled the car over and then drove it perfectly. In one last effort, they drove the car off a 110-foot cliff and then drove it away without even a broken window. Despite every effort to prove the car was completely safe, indeed much safer than anything else on the road, it was not enough to overcome the GM campaign. Production was stopped on the Airflow in 1937.
The Tucker 48 was supposed to be one of the safest cars on the road, and it featured a streamlined and futuristic design. In many ways, it wasn’t far off from the Chrysler Airflow. Preston Tucker had successfully designed a gun turret for the U.S. Navy, and decided that he could design a car just as well. In 1948 he started driving around in his Tucker 48 and showing off the look and features of the car as he drove from one side of the country to the other. At each stop he took down payments on cars, sold stock, and even sold dealership franchises. People were excited and eager to get behind the new stylish car.
The Tucker 48 stood out as being the utmost in passenger safety. It had a pop-out shatterproof windshield, a center headlight that turned with the front wheels, a padded dash, and a reinforced safety cell. It seemed that the car was destined to be a success…there was just one problem with the car, it was not really in production.
Preston Tucker started the company with next to nothing and every bit of money he took from people for down payments, stocks and franchises was used just to keep his Chicago factory running. When the money started to run dry, he began calling his customers and selling them extra features that he made them pay for up front…before they even got to see their car.
One setback after another delayed production, and in 1950 when cars still were not rolling out, the government stepped in. Preston Tucker and his entire board of directors was indicted for fraud and the company was completely shut down. There were only 51 cars produced which makes it one of the rarest and most desirable classic cars in the world. A Tucker 48 recently sold for over $1.5 million.
The scandal with the Chevrolet engine mount was not that it was particularly deadly or that it was a problem, but that everyone knew there was a problem with the car but no one did anything for three years. The problem stated in 1969 when General Motors received reports of 172 failed motor mounts. These failures had resulted in 63 accidents and 18 injuries. Instead of addressing the issue, GM just let it go. Reports then started coming into the National Highway Traffic and Safety Administration.
They found that there was a failed motor mount in Chevrolet cars that could potentially led to death if a certain chain reaction occurred or during an accident caused by the failed mount. No one did anything and left it as it was for three years.
Finally in 1971, the media started to notice that there was a problem and that it was not being addressed by GM. With more and more people talking about the issue, GM decided to do a recall in December 1971. 6.5 million cars were recalled and fixed. Strangely enough, GM did not say that the recall was due to a safety issue but rather due to the “mounting publicity” that the issue was being given. It seems that would never have addressed the problem if the media had not spoken up.
It turns out that the engine mount used the in 1965 to 1969 Chevys had the potential to completely collapse at full speed. This would torque the engine out of position and then would place too much stress on the throttle body linkage. The end result was unintended acceleration. Another potential problem was that the movement could twist the automatic transmission out of place rendering it impossible to shirt the car into park. As part of the investigation, GM admitted that they had been using the same mounts since 1958. It only became a problem with the horsepower and engine displacement ramped up in the 60s making the 1958 engine mount undated and unable to handle the extra stress.
The Takata Corporation of Japan has been responsible for some of the largest automotive recalls in history. The first major recall came in 1995 when the NHTSA announced that more than 8 million Japanese vehicles made between 1986 until 1991 would be recalled in order to replace the seat belts. An investigation by the administration looked into numerous complaints made by Honda owners that complained their seat belts did not latch or that they released during accidents or without notice. This was a deadly problem, and the investigation found that it was much bigger than they initially anticipated.
The initial investigation only focused on Honda vehicles, but it was later found that other Japanese imports featured the defective belts. In total, 11 manufacturers were affected and many of them chose to offer lifetime warranties for seat belts on their cars in addition to performing the required recalls. At first the manufacturers were not as cooperative some of the blaming the defect on user error.
But a nine-month investigation determined that parts of the seat belt were made from ABS plastic. This plastic would become brittle and break after prolonged exposure to ultraviolet light. The broken pieces would then get jammed in the latching mechanism of the seat belt.
The seat belt recall was brought to mind again when the Takata Corporation faced an even bigger recall in 2014. It was discovered that cars manufactured from 2001 until 2015 included airbags made by the Takata Corporation that were defective. The NHTSA launched an investigation and over the next two years’ massive recalls were scheduled. The Takata Corporation refused to cooperate with the investigation leading the NHTSA to fine them $14,000 a day. By the of the investigation and numerous recalls more than 42 million vehicles were affected, 11 people died and 180 were injured.