24 Wild Scandals That Rocked the Car Industry
Do you remember the GM ignition switch scandal of 2014? Between January and March, General Motors recalled 2.6 million cars after it came to light that a faulty ignition switch had caused at least 97 deaths since 2005. The affected cars included the beloved Chevy Cobalt models, the Pontiac G5s and Solstices, Chevy HHRs, and Saturn Ions.
As if that wasn’t bad enough, the real scandal emerged with the revelation that GM knew about this flaw since at least 2003 but hesitated to fix the problem, probably because it would cost a lot of money. The faulty switches inadvertently shut off car engines and airbags as you drove.
It turns out this problem ran deep in GM’s lineup, and millions more cars were affected. It recalled over 30 million vehicles that year. The scandal rocked the automotive world and beyond, but it was neither the first nor the last in history.
The silver lining of these controversies is that they challenged the integrity of major automakers and sparked broader discussions about regulatory oversight, consumer safety, and corporate ethics. Let’s revisit 24 scandals that shook the car industry’s foundations.
Volkswagen Emissions Scandal (Dieselgate)
In 2015, Volkswagen was accused of installing the infamous “defeat device,” a software designed to cheat emissions tests, in diesel engines powering millions of its cars worldwide. Figuring out what VW had done, the U.S. Environmental Protection Agency (EPA) accused it of violating the Clean Air Act, and thus ensued the scandalous “Dieselgate.”
Apparently, the “defeat device” temporarily reduced emissions so the cars could meet regulatory standards. Eventually, the EPA was made aware that the same cars that supposedly passed emissions tests with flying colors released 40 times the permissible nitrogen oxide (NOx) levels under normal driving conditions.
Approximately 11 million cars under the VW Umbrella were affected, including Audi, Porsche, and Volkswagen. Volkswagen compensated Uncle Sam with $20 billion, bought back some vehicles, and did a form of community work. Some VW executives got jailed.
Toyota Unintended Acceleration
The complaints started in the early 2000s, which isn’t uncommon in the auto industry, but “unintended acceleration” was particularly disturbing, more so that a brand like Toyota, renowned for its extraordinary commitment to reliability, exhibited this problem. It turned out the floor mat trapped the accelerator pedal, which was sticky and failed to promptly return to the idle position.
Several accidents and fatalities were linked to this fault, but it wasn’t until a California family of four crashed and died in their Lexus ES350 that a scandal ensued. The affected models included certain model years of the ES, Camry, Avalon, Prius, IS, Tacoma, Tundra, and Venza.
The scrutiny over the vehicles’ electronic throttle control system led to Toyota recalling millions of cars from 2009 to 2011. After numerous lawsuits and regulatory scrutiny, Toyota agreed to pay $1.2 billion to avoid prosecution in 2014.
It reportedly knew and hid the deadly fault. Toyota introduced several safety measures to restore consumer trust in the brand, including the brake override system that automatically reduces engine power if the driver simultaneously presses the accelerator and brake pedals.
General Motors Ignition Switch Defect
People started complaining about the GM ignition switch issue at around the same time Toyota’s unintended acceleration complaints began to surface in the early 2000s. A fault in the ignition switch unexpectedly shut off the car’s engine.
The switch would randomly move from the “run” position to “off” or “accessory” while driving, maybe because the keyring felt heavy or the car got jarred, ultimately shutting off not just the engine but the power steering, power brakes, and airbags. Several models under the GM umbrella recorded many accidents and fatalities linked to this fault.
GM initially cupped to 13 deaths and 31 crashes linked to the faulty ignition switch but later admitted at least 124 lives were lost, and 275 more were injured. It initially counted only head-on collisions without the airbags deployed.
Found to have been slow in fixing the defect, GM avoided prosecution and litigations by settling with the U.S. Department of Justice for $900 million in 2015. It paid millions more to compensate the victims and their families.
Takata Airbag Recall
Interestingly, a car manufacturer isn’t directly responsible for the largest automotive recall in U.S. history. As of January 2024, over 20 automakers have recalled over a hundred million airbag inflators produced by Takata Corp., a Japanese auto parts manufacturer headquartered in Tokyo and with facilities on four continents. 67 million were recalled in the U.S. alone.
It started with a recall of around 3.6 million cars equipped with defective airbags made in Takata’s Mexico production plant. The inflators ruptured upon deployment, sending metal fragments flying all over the vehicle’s interior. At least 24 deaths were linked to the exploding airbag.
Apparently, the ammonium nitrate that acts as a propellant for the inflators became unstable in certain temperatures. Tens of millions of cars were affected, including Toyota, BMW, Honda, and Ford models.
As injuries and fatalities linked to the exploding airbags continued, the NHTSA (National Highway Traffic Safety Administration) issued an ongoing, nationwide recall, ultimately affecting more than 42 million cars — the largest and one of the most complex recalls in the country’s history. Takata soldiered on until June 2017, when it filed for bankruptcy.
Ford Pinto Fuel Tank Design
The Pinto’s infamous fuel tank design flaw ultimately ruined the chances of an otherwise promising economy car from becoming, perhaps, one of the most successful and longest-running nameplates in the Blue Oval’s history. The fuel tanks behind the Pinto’s rear axle posed a heightened fire risk in rear-end collisions. The meat of the scandal wasn’t that Ford built a poorly-designed little car.
What poured fuel to the fire was the emergence of solid evidence in the form of a leaked memo that showed Ford knew about the design flaw and the potential consequences but chose to conduct a cost-benefit analysis to figure out if it would be cheaper to settle lawsuits for wrongful deaths and burn injuries than to reinforce the fuel tank. The analysis suggested the former would be cheaper, so Ford released the cars as is.
Ford produced the controversial Pinto from 1971 to 1980, selling over 3 million units to outperform the Chevrolet Vega and AMC Gremlin combined. Ford was adamant the Pinto was no less safe than other cars of the same era, even as it recalled 1.5 million Pintos (in 1978) and paid $3.5 million in punitive damages in the Grimshaw v. Ford Motor Co. lawsuit.
Audi 5000 Sudden Acceleration
It took Audi a long time to recover (and is still recovering) from the lost public confidence and brand degradation brought on by the Audi 5000 sudden acceleration scandal in the 1980s. Similar to Toyota’s unintended acceleration, a series of incidents were linked to the Audi 5000 vehicles suddenly accelerating.
The media feasted on Audi as much as the numerous lawsuits it had to weather, let alone the brand’s soiled reputation in the U.S. Interestingly, the NHTSA’s investigation concluded that driver error was to blame for the “unintentional” acceleration due to pedal misapplication.
Even so, Audi tried to address the issue by adding a shift lock mechanism in its cars, requiring pressing the brake pedal before shifting out of “Park.” Unfortunately, that didn’t stop Audi’s U.S. sales from plunging nearly 75,000 units in 1985 to around 12,000 in 1991.
The complaints started surfacing in the early 1980s, but it wasn’t until CBS’s “60 Minutes” carried the story in November 1986 that the issue gained nationwide attention. The dramatic demonstration of the Audi 5000’s unexpected acceleration on TV fueled the fire. Audi denied the accusation even as it faced numerous lawsuits, most of which got settled out of court.
Mitsubishi Recall Cover-up
A huge scandal ensued in the early 2000s when Japanese authorities got hold of internal documents detailing how Mitsubishi Motors systematically covered up more than 800,000 customer complaints spanning decades, enough to have instigated numerous recalls over the years. The veiled complaints were as serious as defective fuel tanks, faulty brakes, bad clutches, and other high-risk defects that must have caused untold accidents and fatalities.
Mitsubishi admitted to having concealed defects required by law to report. Thousands of Mitsubishi vehicles since the 1970s were affected, mostly JDMs (Japanese Domestic Market). The company had not fully recovered from the fallout of this scandal when it emerged in 2016 that it had falsified fuel economy data and tire pressure figures for over 600,000 of its JDM models.
Renault Industrial Espionage
In January 2011, Renault said it had suspended three senior executives accused of industrial espionage. It was a big scandal with widespread media attention, especially considering the French government’s stake in Renault, making it all the more consequential when it turned out to be a hoax.
Michel Balthazard, Bertrand Rochette, and Matthieu Tenenbaum allegedly leaked/sold sensitive information about the company’s EV (electric vehicle) technology to competitors or foreign entities. Renault brought in independent firms to help with its internal investigations. With the government’s involvement in the company, the allegations took on a national security dimension, with French intelligence services wading into the matter.
Roughly three months after announcing the suspensions, Renault tendered a formal apology to the defamed executives, admitting it had been misled by an internal informant. Renault’s Chief Operating Officer Patrick Pélata took the fall and resigned, with CEO Carlos Ghosn narrowly escaping the hammer.
Nissan’s Carlos Ghosn Arrest
Carlos Ghosn survived Renault’s espionage scandal but got caught in a worse infamy involving financial misconduct. Being a high-profile executive who’s held top positions with Renault, Mitsubishi, and Nissan, his arrest in Japan on November 18, 2018, and dramatic escape from detention roughly a year later shook the automotive industry to its foundations.
Japanese authorities accused him of underreporting his income by tens of millions of dollars over several years and converting company assets for personal use. It was a massive fall from grace for a man celebrated for creating the formidable Renault-Nissan-Mitsubishi Alliance and helping to turn Nissan’s fortunes around in the early 2000s.
Few executives matched Ghosn’s global influence in the auto industry, but it took a whistleblower to undermine him. Unlike the Renault espionage case, the informant wasn’t wrong. Ghosn denied the accusations and blamed his ordeal on high-ranking executives who wanted him gone because he planned to integrate Nissan deeper with Renault. The Alliance rattled, relationships strained, and leadership changed.
Fiat Chrysler Emissions Cheating
The FCA (Fiat Chrysler Automobiles) ensured Volkswagen’s Dieselgate isn’t the last time we’d hear a legacy manufacturer manipulated emissions tests with some kind of “defeat device” software. In January 2017, the California Air Resources Board (CARB) and the EPA accused FCA of playing a similar gimmick with some of its diesel vehicles.
The software was allegedly smart enough to detect when it was being tested and adjust the emissions accordingly, returning the vehicle to its regular old self later on. Interestingly, the automaker denied knowingly cheating.
The models in question were 2014–2016 Jeep Grand Cherokee and Ram 1500 trucks. As FCA found out, nothing stays hidden forever. The consequence of that trick was $800 million paid to the U.S. government for violating the Clean Air Act and false certification of emissions compliance.
Hyundai and Kia Fuel Economy Misstatements
In 2012, the US EPA accused Kia and its parent company, Hyundai, of embellishing the efficiency performance of some of its cars. Apparently, the Korean automaker misrepresented the fuel economy ratings to make their vehicles seem more efficient than they really were, but consumer complaints led to a federal investigation, and Hyundai/Kia had a scandal in its hands.
As usual, Hyundai denied intentionally overstating the fuel economy figures of its cars and attributed the errors to its testing procedures that were more lenient than the methods used by the EPA.
In any case, the inaccurate efficiency claims made Hyundai $395 million poorer in 2014 in compensations to the affected customers, settlement with the United States, vehicle buybacks, and a funded fuel economy awareness program. It was one the biggest of such settlements in U.S. history.
The affected cars included the Kia Optima, Hyundai Elantra, Kia Soul, and Hyundais Santa Fe and Sonata. Along with the payments, the automaker also updated the efficiency ratings of the affected cars and revised its emissions testing methods to align with the EPA standards.
Fiat Chrysler Rollaway Risk
Some FCA models, including the 2014–2015 Jeep Grand Cherokee and Dodge Durango models, featured a flawed shifter design that made the affected vehicles prone to rolling away. The dangerous shifter defect morphed into a full-blown scandal after it was linked to a series of incidents, most notably the death of Star Trek actor Anton Yelchin in 2016.
According to the Los Angeles Times, the 27-year-old actor’s 2015 Jeep Grand Cherokee suddenly rolled backward and crushed him to death in the driveway of his Los Angeles home, pinning him between a mailbox and security fence. In 2018, FCA filed a confidential settlement agreement in the Los Angeles County Superior Court with Anton’s parents for an undisclosed sum.
It was discovered that the affected vehicles’ gearshifts, specifically the electronic shifters, were designed in such a way that they did not properly indicate when the car was in “Park” or another gear, making it easy for drivers to misjudge where they’ve shifted in. “Anton Yelchin was crushed and lingered alive for some time,” lamented Anton’s parents, “trapped and suffocating until his death.”
Tesla Autopilot Concerns
Tesla is a new-age company known for innovation and the pursuit of excellence, but even its cutting-edge Autopilot system became subject to heated controversies and regulatory scrutiny following a series of high-profile accidents blamed on the driverless software.
Most notable of these incidents was the May 2016 fatal crash of a Tesla Model S in Florida with the Autopilot system engaged. Concerns were raised, and accusations got thrown around concerning the system’s effectiveness and safety. Ultimately, investigations did not find Tesla’s Autopilot defective or directly to blame for the mishaps.
The debates never became a full-blown scandal, although the accidents raised questions about the system’s ability to adequately monitor driver input and quickly respond to suspicious behaviors and the complexities of various driving conditions.
The biggest criticisms came from people who opined that Tesla — more or less — purposely refrained from fully stating the limitations of its Autopilot system, inadvertently raising the risk of over-reliance by users who assume the system is fully autonomous. They pointed out marketing terminologies such as “Full Self-Driving” and “Autopilot,” which may have confused consumers and misrepresented the scale of the system’s capabilities.
Ford Explorer Carbon Monoxide Leaks
In 2015, complaints started coming in, indicating that certain Ford Explorer models were prone to carbon monoxide leaking into the SUV’s cabin, bringing on symptoms like headache and nausea. The reports prompted an NHTSA investigation, with Ford cooperating with the Administration to root out the problem.
It turned out that a defect in the exhaust system allowed harmful gases to enter the vehicle’s interior via an improperly sealed area around the vehicle’s rear. Ford recalled the affected models (specifically 2011 to 2017 Explorers) and fielded lawsuits from owners over potential health issues linked to CO exposure.
BMW Emissions Investigations
It seems that meeting emissions standards poses the greatest temptation for automakers, big and small. In 2018, BMW emerged as the latest suspect for using “defeat devices” to fool emissions tests for some diesel vehicles. The news went viral when German authorities raided the company’s offices while investigating it for possible emissions cheating.
Apparently, other companies became subject to heightened scrutiny following the shocking revelation that Volkswagen used software to manipulate emissions tests. As usual, BMW denied any willful wrongdoing. In June 2023, the German regulatory agency Deutsche Umwelt Hilfe (DUH) established “software” that helped the BMW X3 2.0d fare better with emissions tests.
It stated that the luxury SUV had a software program in the engine’s management system that deactivated or reduced the effect of exhaust gas filtering. According to DUH CEO Jürgen Resch, “More than seven years after the diesel scandal became known, we find the highest nitrogen oxide emissions we have ever measured in diesel vehicles during real driving and discover defeat devices in the engine control software.”
Chevrolet Bolt EV Battery Fires
The general public became aware of this problem in 2020 when General Motors announced that some Chevrolet Bolt EVs (specifically 2017 to 2021 models) were a fire risk due to their defective lithium-ion batteries. Most of the blame landed on Bolt’s battery supplier and producer, LG Chem.
Investigations revealed the flawed battery design made the cells prone to short-circuit. GM recalled the affected cars from November 2020 until 2021, advising owners to always park the Bolt outside and away from structures until they’ve sent in and had the faulty batteries replaced. An estimated 143,000 Chevy Bolts EVs and EUVs were recalled, although GM got its Korean battery partner LG to fork over $1.9 billion of the $2 billion cost of fielding the recall.
DMC DeLorean Scandal
Building a car with a widespread reputation for horrible reliability and outrageous upfront pricing can hardly be called a scandal. However, the DMC-12’s automaker didn’t help the poor car’s chances when it was roped into a drug trafficking scandal, thanks to John DeLorean’s decision to mule drugs for a notorious cartel as it searched for funds to make the D-12 project successful.
John’s arrest on October 19, 1982, marked one of the most sensational drug sting operations linked to the automotive sector. John had found himself between the proverbial rock and hard place as he struggled to produce and sell his precious and — let’s face it — iconic D-12 sports car.
Smelling the man’s desperation, Uncle Sam, via the FBI and DEA, orchestrated an elaborate undercover operation designed to lure DeLorean into a $24 million drug trafficking scheme. Of course, he got caught pants-down handing over a suitcase of cocaine.
Two years later, DeLorean was acquitted of all charges, supposedly as should any man entrapped by overzealous government agents. Be as it may, the man’s reputation never recovered from the scandal, and neither did his precious automobile company.
Daimler (Mercedes-Benz) Emissions Cheating
The globally renowned German luxury carmaker was among the latest accused of using “defeat devices” to cheat emissions tests in its diesel-powered vehicles. In 2018, German authorities raided Daimler AG’s (Mercedes-Benz’s parent company) offices during investigations into the marque’s possible use of software to manipulate emissions tests.
Unlike counterparts like Audi, which maintained their innocence, Daimler manned up and admitted to using software that didn’t fully comply with emissions regulations to get more favorable test results, pledging to improve its compliance and quality control procedures to meet international standards.
In 2019, the company agreed to pay over €1 billion (approximately $1.9 billion) in settlements, protecting it from fines and further prosecutions related to its use of “defeat devices.” Notwithstanding, Daimler dealt with ongoing legal proceedings in various countries, including the United States.
Helmut Werner Scandal
The former Mercedes-Benz chairman should be remembered, among other things, for his role in revitalizing the Mercedes brand in the 1990s. That legacy was ultimately marred by allegations of financial misappropriation, even though he was not criminally convicted.
The scandal wasn’t as sensational as the Carlos Ghosn case, but it brought up controversies over ethical issues at the highest levels of corporate leadership, both in the automotive industry and elsewhere.
Like Ghosn, Werner was accused of financial irregularities as Mercedes-Benz chairman, specifically improperly reported expenses and mismanagement. The details of the internal investigations were not fully disclosed, but the media had a field day anyway.
BMW And Toyota Price Fixing
Competition among service providers and manufacturers is a critical driving force of economic development and living standards in economies worldwide. It breeds innovation, lower prices, better customer service, and greater variety.
So, when news broke of possible anti-competitive practices by BMW and Toyota in various markets, relevant authorities like the European Commission took the allegations seriously. In 2002, the Commission investigated BMW over accusations that it colluded with other automakers to fix the prices for spare parts.
The companies involved in the price-fixing scandal settled with the Commission and agreed to pay fines for their despicable practices. Fast forward to 2015, Toyota got caught in a series of investigations by various regulatory bodies over similar accusations of price fixing for certain spare parts. The Japanese automotive giant also agreed to pay fines and make changes to correct its anti-competitive behavior.
Rupert Stadler’s Arrest
Rupert Stadler’s case is worthy of a separate entry on this list even though it was part of the Volkswagen “Dieselgate” emissions scandal discussed earlier. The then-Audi CEO Stadler was arrested in 2018, roughly three years after news of the emissions cheating scandal first broke. It was one of the highest-profile detentions in the Dieselgate scandal, as Stadler was a high-ranking executive and influential figure.
The accusations against him centered on fraud and false advertising, stating that he knew about the “defeat device” by late 2015 but didn’t halt Audi car sales until early 2018. Prosecutors moved for his arrest and detention, supposedly to prevent him from tampering with evidence and/or influencing witnesses.
Stadler ended up spending months in detention. His ordeal was hardly over upon his release in October 2018 under specific conditions. He and other Audi/VW executives were eventually formally charged with fraud, false certification, and criminal advertising practices in 2020.
Tesla Solar Panel Fires
Tesla was subject to investigations and lawsuits following complaints of fires linked to the company’s solar panels. Again, Tesla remains mostly unscathed by this accusation, as the ignitions are mostly blamed on faulty inverters or electrical connections.
In any case, the incidents have raised doubts over the safety and reliability of Tesla’s solar technology and installation processes. Tesla remains ‘mostly’ but not entirely unscathed by its solar panel issues.
At least not after a California family’s home was left severely damaged from a fire allegedly caused by Tesla’s solar panel system in 2020. There’ve been other high-profile judicial proceedings, including Walmart’s lawsuit claiming Tesla’s solar panels caused fires in seven of its stores.
Nissan Leaf Range Overstatement
Nissan joined the scandalous roster of automobiles accused of misrepresenting the range of its vehicles — specifically, the Nissan Leaf EV. The scandal ensued when some Leaf drivers and auto reviewers suggested that the Leaf’s real-world driving range was considerably shorter than Nissan’s advertised range estimates.
It’s understandable for a real-world range to differ slightly from an official range estimate based on standardized testing procedures. That’s because real-world factors, such as terrain, driving style, and weather, influence normal driving conditions.
However, Leaf’s case raised eyebrows because the real-world range was significantly lower than advertised. This gap provided solid grounds for complaints about the accuracy of Nissan’s advertised range estimates.
Volkswagen CEO Martin Winterkorn Resignation
Volkswagen CEO Martin Winterkorn did not go to jail following the company’s infamous emissions scandal, but his resignation in September 2015 rocked the industry as much as Rupert Stadler’s 2018 arrest and subsequent incarceration. It signaled the internal turmoil at Volkswagen at the time.
Lower-level executives usually take the fall for criticism and legal challenges, but Winterkorn couldn’t escape the consequences of the massive financial penalties and legal settlements. With the CEO butted out, Volkswagen overhauled the company’s leadership and operations.
