2. In September, 2015, EPA found that many VW
cars being sold in America had a “defeat device”
or software - in diesel engines that could detect
when they were being tested, changing the
performance accordingly to improve results. The
German car giant has since admitted cheating
emissions tests in the US.
The company has also been accused by the EPA of
modifying software on the 3 litre diesel engines
fitted to some Porsche and Audi as well as VW
models. VW has denied the claims, which affect at
least 10,000 vehicles.
3. When the cars were tested under controlled
laboratory conditions - which typically involve
putting them on a stationary test rig – the software
installed in the engine activates and the engine ran
below normal power and performance. Once on
the road, the engines switched out of this test
mode.
This results in emission of Nitrogen Oxide
pollutants upto 40% above the prescribed limit.
4. After the reverberation of the scandal, Martin
Winkerton resigned from the post.
The supervisory board emerged to present Matthis
Mueller as the new CEO of the company after a 7-
hour meeting.
One of the famous brand Porsche was also led by
Mueller.
5. There are emission targets set by each country for
the brands.
The idea strike the mind of the engineers when the
realised that they will not be able to hit the
emission target set in the US by “permissible
means”.
The chairman Mr. Hans Dieter admitted that it was
not the fault of the engineers only but was the
result of collection of failures in the company.
6. The Planning
2006
Volkswagen wants to increase its embarrassingly low
market share in the United States as part of a plan to
become the biggest car company in the world. To do
this, it resolves to use fuel-efficient diesel engines as
a way to compete with Toyota. But engineers realize
a newly developed diesel motor cannot meet stricter
American emission standards.
7. November 2006
A meeting was held at the headquarters, where the
executives decided to use the illegal software which can
detect when an emission test is taking place by
presenting layout of the plan.
2008
Volkswagen began with a “clean diesel” marketing push
in US positioning its different models as environment
friendly alternatives to the hybrids like Toyota
2011
VW started selling Passat Sedans, which were equipped
with more advanced emissions technology . (Later
admitted the use of cheating software)
8. 2013
A team from West Virginia University wins a grant from
International Council on Clean Transport to test whether
diesel cars produce more emissions during normal
driving than in the laboratory test.
It was then discovered that two of the VW cars emit more
poisonous Nitrogen oxide then allowed.
2014
After the report was published and one of the product
troubleshooter warned the top managers about it, and the
memo was passed to CEO of the company, who later said
that he may not have read it.
9. 2014
The inquiry was opened by the California Air Resources
Board. But the illegal software was covered up by the
engineers and executives by providing false and
misleading data.
2015
VW recalled the diesel vehicles from US, and assured the
regulators that a software update will fix the excess
emissions, but there was only a modest improvement as
per C.A.R.B.. There was a lot of pressure on the
executives of the company, as the result of which
thousands of potentially incriminating documents were
destroyed by the company.
10. Sep 3,2015
VW confessed to Environmental Protection Agency
and C.A.R.B, that they have equipped the engines
with defeat devices.
Sep 19, 2015
The scandal came out after the formal notice to the
company by EPA.
11. Mr. Winkerton resigned on 23 September but said
that he was not involved in this fraud and insisted
that it was the work of small group of engineers.
9 engineers were suspended.
Muller decided to abolish the production
department at the group level, leaving
manufacturing in the hands of brands.
12. Fine paid
$14.7 billion US civil complaints and consumer
lawsuits
$4.3 Billion United States Justice Department
$1.3 Billion To the owners of Porsche, Audi
$327.5 million paid by auto components
maker Robert Bosch
To vehicle owners
13.
14. Volkswagen disregarded EPS’s Law
Invented software to avoid them
Emission negatively impacted the United
States Air
15. Utilitarian Approach
Actions were not in compliance with the
greatest happiness principle
Egoism
VW lied to its consumers and the government
about the quality of diesel engines that they
were putting in their cars in order to make
sales and profit.
16. Ethics of duties
Human Dignity: VW were concerned with the
end and not the means to the ends. Human
dignity was secondary.
Virtue Ethics: Actions lacked honesty, courage
and justice
17. Stakeholder’s concern
VW stakeholders include the following:
customers, employees, dealers,
shareholders, the environment, other auto
manufacturers
All of these stakeholders have been affected
in different ways ranging from lost jobs,
stock market changes, environmental issues
and tarnished reputations.
18. CSR Performance:
It is impossible for the head of the CSR to
deny what was going on.
VW agreed that cars could poison the planet
by emitting 40 times the legal limit of
nitrogen oxide.
19. With such a significant financial impact to
Volkswagen, a number of analysts and auto
industry observers initially surmised that such an
event would cause irreversible harm to the
company resulting in steep, permanent declines in
auto sales and severe, irreversible damage to the
brand’s reputation.
20. Volkswagen embarked on a four-step process:
Replace,
Restructure,
Redevelop and
Rebrand.
21. Muller wasted little time in moving forward to
stabilize and restructure Volkswagen, and
methodically replaced seven out of the ten top
Volkswagen executives while also eliminating
thousands of additional positions to slash company
costs. While these initial job cuts meant the loss of
over 30,000 jobs (through attrition and phased
retirements), the cost reductions did save $4bn.
“Less than one year after the scandal was made
public, Volkswagen again emerged as the world’s
number one automotive company, beating out
Toyota and General Motors to retake the crown.”
22. According to Muller, the primary goal of the
restructuring was to enable the company to
redefine its focus and simplify the leadership
organization so that the company could make more
efficient, timely and smarter decisions.
23. Müller, through the Chairman of the Volkswagen
brand Board of Management, Dr Herbert Diess,
launched a new strategy for the namesake brand
entitled “Transform 2025,” which was designed as
a brand reorientation set up in three phases.
The Volkswagen brand’s “Transform 2025” was
part of Volkswagen group’s overarching “Together
– Strategy 2025” plan which encompasses all of
the Volkswagen group brands and included a
significant move more toward electric vehicles and
the addition of 9,000 jobs to become the world
leader in electric vehicles.
24. With the new rebranding as an electric vehicle
manufacturer, Volkswagen certainly has the size
and scope to take on industry leader Tesla.
By putting their new strategic emphasis on the
three prongs of electrification, connectivity and
mobility, the company is grasping on to the hottest
trends in the industry and creating a new brand in
the process.
25. What were the challenges faced by company
after the scandal was exposed?
1. Trust of the customers
2. Falling share price
3. Falling Market share
4. Decreasing Sales
5. Criminal charges on 6 executives
26. 1. Disregarded EPA Laws
2. Invented defeat device
3. Emission negatively affected the Environment
4. Lied to the consumers and the government
5. Action lacked courage, honesty and justice.
6. The concerned individuals were not involved in
decision making
27. As clearly seen VW was highly unethical in
their actions.
Regulatory authorities/pressure groups needs
to be thorough in testing before
certification.
Greener technologies in automobile industry
should be encouraged by means of
legislation.
Synergy/collaboration of technical know-how
in automobile industry.
