In 1968, my father purchased a new Volkswagen Beetle for U.S. $1,800. It was fully loaded with a heater; however, a radio was not standard equipment. He bought it because the Beetle was inexpensive and easy to work on, and he trusted the Beetles reputation of reliability.

During the 1960s, Volkswagen worked hard to leverage its reputation of economy and reliability to create a young, cool, but still reliable, brand. A famous 1960s ad showed a Beetle floating on a lake, pointing out that its tight construction allowed such performance. An investigative journalist challenged Volkswagens claims, and it turned out that the VW Beetle could definitely float, but not indefinitely.

Volkswagens recent problems are also related to brand, reputation and trust. VW installed software on its diesel engines that recognized the driving cycle of an emission test and then changed engine settings to pass that test. The full extent of the damage to Volkswagens brand or even to the automotive industry cannot yet be known. However, three lessons can be learned about this fracture of trust.

This is a really big deal. One measure of how big is the change in share price. As of November 5, Volkswagen AGs shares have lost nearly $60/share since the mid-September announcement of the scandal. This represents nearly a $30 billion loss of shareholder value and does not include loss in value to VWs suppliers.

Fines paid to government authorities are estimated in the billions, and the damage to the brand is large. There will be some recovery, but the scars will take years to heal.

Focus on the spirit, not the letter, of the law. VW applied world-class science and engineering to pass a test rather than on delivering reliable performance with low emissions. Direct engagement with regulators working toward the legislative intent, is a better approach and a better deployment of technology.

The whole industry is now under pressure. Ultimately, VWs decisions will create a large burden on the rest of the automotive industry. VWs stance will invite – in fact, force – regulators to push for more fuel economy gains and better emission profiles.

Often, the complaint to regulators is What you are asking is too expensive or We dont have the technology. These positions will be harder to justify, and given the amount of shared technology in the industry, other brands will likely be touched.

While the direct impact on the lubricants industry cannot yet be determined, there will be a continued need for lower viscosity oils as regulators insist on lower emissions for both diesel and gasoline engines

And my dad? He would be disgusted by the misuse of his beloved profession – engineering.

William R. Downey is Senior Vice President Novvi LLC, Emeryville, California, United States. Contact him at downey@novvi.com.