when companies seriously violated the rules and what it cost them

Any failure to comply with legal requirements entails sanctions. Both small firms and industry giants come under attack: they are fined, sometimes top managers are sent to the dock, and in all cases, public condemnation often reaches such proportions that a company that was once successfully functioning is on the verge of collapse. Let's look at relatively recent cases.

Japanese auto industry

A number of companies from Japan were forced to stop production of several car models (Toyota – Corolla Axio, Corolla Fielder, Yaris Cross, Mazda – Roadster RF and Mazda2) due to identified violations:

Toyota provided false data in pedestrian protection tests;
Mazda specialists, as the audit showed, rewrote the engine control software during testing for two models being produced.

These corporations also committed fraud by improperly modifying test vehicles during crash tests to ensure that they passed safety inspections and were allowed onto the market.

And what are the consequences? Toyota, whose headquarters were searched, lost for the week from June 3 to June 8, 2024, about 5% of market capitalization.

Company management was forced apologize to clients:

— Counterfeiting is a fundamental issue that undermines the certification system, and car manufacturers should never do this. As the head of the Toyota Group, I sincerely apologize for this,” said corporate president Akio Toyoda.

Mazda President Katsuhiro Moro said an almost similar phrase.

Why are the authorities interested in the auto industry? The fact is that in April 2023, violations were discovered at the Toyota division – Daihatsu. After that, they decided to check it more closely: at the end of 2023, an independent commission worked within the company. She discovered 174 fact of deviation from standards in 25 test categories. The problems affected 64 Daihatsu models, including those sold under the Toyota brand. December 21st Daihatsu suspended operation of all factories in Japan. Car deliveries were frozen. The company managed to partially recover only by February 2024.

Boeing

The American aviation giant has recently been plagued by constant problems:

In January 2024, the exit plug of the new passenger airliner 737 MAX 9 was torn off, on board appeared a giant hole (Forbes compared its size to a refrigerator). The boy sitting next to the resulting hole immediately had his shirt torn off. Eyewitnesses said that a gust of wind could have carried away the child, but he was saved by his mother, who literally clung to her son with all her might (the chair on which the baby was sitting turned 10-20% towards the hole). The Civil Aviation Administration (FAA) has banned the flights of this series of aircraft while conducting an inspection. The New York Times later reported that Boeing and its supplier Spirit AeroSystems violated many quality control requirements when assembling the planes: for example, assemblers used plastic hotel key cards to test the tightness of installed doors, and Dawn liquid soap was smeared on door seals as a lubricant ( firm didn't pass 33 out of 89 tests).
In March, Boeing 737-900 exploded engine during a flight from Texas, the 777-200 suffered a wheel blowout at the same time, and the 737-800 was forced to land at Rogue Valley-Medford International Airport, having lost part of the outer skin of the fuselage.
In early June, a Boeing 777 flying on the Toronto-Paris route caught fire engine. There were 389 passengers and 13 crew members on board.

Anonymous sources at Boeing claim that the reasons for the emergency become: Reductions in skilled labor during the pandemic and numerous violations of assembly procedures (for example, a worker at the North Charleston plant told the media about incorrectly routed wires inside the cabin, a manipulation that potentially leads to damage).

And what are the consequences? Corporation stock quotes fell by 27% in the first quarter of 2024, in April – by another 9.5%. At the beginning of January 2024, analysts predicted the corporation’s net profit at almost $3 billion. They revised their forecast in May to now expect a loss of $175 million. Boeing's revenue fell 8% in the first quarter. Deliveries of 737 series aircraft decreased to 67 units (for the same period in 2023 there were 113). The total number of civil aircraft delivered to the airlines was reduced to 83.

Tesla

Elon Musk's company constantly gets into various scandals.

In 2023 alone, there were three of them.

In April, it turned out that employees of the corporation, which stated that it was impossible to interfere in the personal life of the car owner, have recordings from surveillance cameras installed in vehicles. This affected not only ordinary clients, but also Musk himself: in one of the videos, representatives of the company saw the White Lotus Esprit submarine belonging to the billionaire from the 1977 James Bond film.

In July, the media, citing anonymous sources and independent research, reported about the deliberate falsification of vehicle range indicators. A special “sabotage group” allegedly worked with dissatisfied customers, the goal of which was to prevent cars from entering service centers.

In December 2023 became known about problems with the released Model Y 2023 car.

Several car enthusiasts immediately complained about the new product they purchased. One was driving at low speed in his area and suddenly lost control of the steering. The front part of the suspension failed after driving less than 200 km. To return the car to working order, we had to spend 14 thousand dollars.

Another motorist, as follows from the mechanic’s report, lost a wheel while driving on autopilot at a speed of 90 kilometers per hour.

Tesla representatives most often stated in response that in these cases the customers themselves were to blame for driving the car incorrectly.

Reuters writes that from January 2021 to March 2022, Tesla replaced the upper suspension arms on 120 thousand cars worldwide. At the same time, 31 thousand owners who had problems of this kind were forced to eliminate the defect at their own expense.

And what are the consequences? In the first quarter of 2024 – decline revenue by 9%. Net profit decreased by 2.2 times.

In April, it became known that large-scale layoffs would take place at factories in Austin and California: more than 5 thousand workers would be laid off.

In general, analysts admit that the company had a difficult year, and the corporation's shares fell in price by almost 30%.

Volkswagen

In 2015, the “diesel scandal” broke out. As experts have established, the company has sold more than 11 million cars since 2009 that had special software installed that allowed them to bypass US and EU environmental regulations.

After this information was made public, inspections of Volkswagen immediately began in these countries. Sales of vehicles with diesel engines were prohibited.

The corporation's top managers admitted guilt.

At the end of 2016, an agreement was concluded between the management of the concern and the US authorities, approved by the court. The company agreed to buy the defective cars or provide them with free repairs and pay compensation from 5 to 10 thousand dollars to each owner. TASS indicatedthat the total amount of payments was estimated at $10 billion. The company also paid 2.7 billion to a special fund for compensation for environmental damage, and pledged to spend another 2 billion to implement zero-emission technologies.

In January 2017, Volkswagen paid an additional $4.3 billion to the US budget in fines for providing false information when importing cars and for attempting to obstruct the investigation.

The representative of the automaker in America, Oliver Schmidt, received a prison sentence and a fine of 400 thousand dollars.

In other countries, the company was treated no more kindly.

In Australia, the court appointed a German corporation fine at 125 million Australian dollars.

In 2020, the Polish regulator UOKiK fined the company 120 million zlotys for misleading consumers about the size of emissions, and the Canadian authorities fined for 150 million dollars for violating environmental standards (up to this point, Volkswagen also paid Canadians $1.8 billion to buy back or fix damaged cars).

The costs of compensation and covering all kinds of obligations were so large that in 2019 the concern allocated an additional 5.5 billion euros for these needs. The total amount of fines in 2020 was estimated at $33.3 billion.

Currently, Volkswagen is actively promoting the green agenda and selling electric cars. It would seem that everyone has forgotten about the recent scandal. Sales have recovered (as have stock prices). In general, the German auto giant managed to overcome the crisis.

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