Volkswaagen scandal

Case study presentation
on Volkswagen Scandal

Group 1
 A – 10 ( Kalpita A Dalvi)
 B – 62(Akshay)
 B - 63 (Swati)
 B – 65(Urmila)
 B - 67(Ritika)

• Established in 1937
• Volkswagen is a German car manufacturer headquartered in
Wolfsburg, Lower Saxony, Germany
• The word Volkswagen means "People's car" in German
• Its current CEO is Matthias Muller
• Volkswagen surpassed Toyota as the world's largest automaker in
the first half of 2015
• Volkswagen sold 5.04 million vehicles in the first six months of
the year, edging Toyota's 5.02 million

History Of Volkswagen Scandal
2009
• Volkswagen started installing Defeat devices
2013
• Abnormalities found in test by Researchers from the International
Council on Clean Transportation and West Virginia University.
2014
• Environmental Protection Agency Investigation begins.

2015
Sept 3
• Volkswagen admits that it has used sophisticated software to trick
regulators.
Sept 18
• Environmental Protection Agency makes Volkswagen deception
public
Sept 23
• Volkswagen CEO Martin Winterkorn resigns

 Volkswagen intends to deploy intelligent innovations and technologies to become a world leader in
customer satisfaction and quality. We see high customer satisfaction as one of the key requirements for
the Company's long-term success.
 The goal is to generate unit sales of more than 10 million vehicles a year; in particular, Volkswagen intends
to capture an above-average share of growth in the major growth markets.
 Volkswagen's aim is a long-term return on sales before tax of at least 8% so as to ensure that the Group's
solid financial position and ability to act are guaranteed even in difficult market periods.
 Volkswagen aims to be the most attractive employer in the automotive industry by 2018. To build the best
vehicles, we need the best team in the sector; highly qualified, fit and, above all, motivated.
Source :
http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.html
Group Strategy 2018

Continue…
 Environmentally friendly orientation and profitability of their vehicle projects for
creating the right products for success even in more challenging economic
conditions.
 Selectively expanding, the strong position of the brands in the markets
worldwide.
 Setting new ecological standards in the areas of vehicles, drivetrains and
lightweight construction.
 Improve production efficiency and flexibility, thus increasing the Group's
profitability.
 To continually expand the Volkswagen Group's customer base by further
increasing satisfaction among the existing customers and acquiring new, satisfied
customers around the world, particularly in the growth markets.
Source :
http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.html

Volkswagen Scandal
 It's been dubbed the "diesel dupe“
 The German car giant has admitted cheating emissions tests in the US
 According to EPA, some cars being sold in America had devices in diesel
engines that could detect when they were being tested, changing the
performance accordingly to improve results.
 VW has had a major push to sell diesel cars in the US, backed by a huge
marketing campaign trumpeting its cars' low emissions. The EPA's findings
cover 482,000 cars in US only
 VW has admitted that about 11 million cars worldwide are fitted with the so-
called "defeat device".

 The EPA said that the engines had computer software that could sense
test scenarios by monitoring speed, engine operation, air pressure and
even the position of the steering wheel.
 When the cars were operating under controlled laboratory conditions the
device appears to have put the vehicle into a sort of safety mode in which
the engine ran below normal power and performance. Once on the road,
the engines switched from this test mode.
 The results were engines emitted nitrogen oxide pollutants up to 40 times
above what is allowed in the US.

 With VW recalling almost 500,000 cars in the US alone, it has set aside
€6.5bn to cover costs. But that's unlikely to be the end of the financial
impact
 The EPA has the power to fine a company up to $37,500 for each vehicle
that breaches standards - a maximum fine of about $18bn.
 Legal action from consumers and shareholders may follow, and there is
speculation that the US Justice Department will launch a criminal probe.

Strategies
 Social Media Engagement or Crisis Management Strategy
 Volkswagen to refit cars affected by emissions scandal
 More authority will be given to individual brands and regions
 Special Group created , in an effort to repair its reputation in the market
 Pairing of brands , to have centralization and strict monitoring
 Increase in the Hierarchical structure
 PR stratergies – Video Apology to the Customers on twitter
 Offer of Incentives to attract customers and offset lost sales

Future Outlook
 Volkswagen will now come under extreme scrutiny, with the company issuing its own
external investigation in addition to investigations by the U.S. and German governments
 European standards are not as strict as those in the US, consequences are likely to be a
change in the test cycle rather than legal action and fines
 Volkswagen Canada is offering incentives to attract customers and offset lost sales
 Until Nov. 2, Volkswagen says it is offering a choice of:
o Finance interest rates as low as zero per cent for up to 84 months, depending on the model
o Customers can opt for lease rates as low as 0.9 per cent for up to 48 months, depending on
the model, or up to $6,000 cash back
 "The revelations are likely to lead to a sharp fall in demand for diesel engine cars," said an
expert at consultants Vendigital

 In the US, the diesel car market currently represents around 1% of all new car sales and
this is unlikely to increase in the short to medium term
 In Europe the impact could be much more significant, leading to a large tranche of the
market switching to petrol engine cars virtually overnight
 The carmaker will launch country-specific websites where customers can enter details of
their vehicles to find out if they're affected
 New chief executive Matthais Mueller sent a letter to staff promising “relentless” efforts
to investigate the scandal and promote the “strongest compliance and governance
standards in the industry”
 The Obama administration has been racketing up fuel economy standards in the United
States, which puts a higher premium on mileage

 A drop in VW’s stock price, currently at £ 92
 From the close of trading on October 5, Volkswagen will no longer be part of the Dow
Jones Indices
 Fitch said its biggest concerns were the "reputational damage" to the VW brand, a likely
hit to the company's profits and that the company's corporate governance is weaker
than its main rivals

Recommendations
 VW should initiate contact with customers with the concern of repair of their cars
 Consumers could be entitled to seek compensation for any increased fuel costs, depreciation
of vehicle value, out of pocket expenses and costs associated with future repair including
potential increases in Road Tax
 Those drivers who were charged more for the ‘clean diesel’ version of a vehicle could also be
entitled to a refund of the difference in price

Volkswaagen scandal

Related slideshows

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (14)

Similar to Volkswaagen scandal

Similar to Volkswaagen scandal (17)

Recently uploaded

Recently uploaded (20)

Volkswaagen scandal