1) In September 2015, Volkswagen was discovered to have rigged emissions tests on their diesel vehicles by programming the vehicles to emit less nitrogen oxide during laboratory tests than during normal driving. 2) Volkswagen did this to comply with strict US emissions regulations, as diesel engines naturally emit more nitrogen oxide than gasoline engines. 3) The scandal had major economic impacts for Volkswagen, including decreased sales, a $1.84 billion net loss, and a drop in stock price that reduced the company's market value by $16.9 billion. 4) A settlement was reached where Volkswagen would pay $2.7 billion for environmental mitigation and promote zero emissions vehicles, and owners could

1. CRITICAL SITUATION IN AN
ORGANISATION AND
MANAGERIAL SOLUTION
ASWIN P
RA 1952001020055
MBA A

2. Contents
1.INTRODUCTION
2.MOTIVE BEHIND RIGGING DIESEL ENGINE
3.IMPACT OF VOLKSWAGEN DIESEL SCANDAL ECONOMICALLY
4.CASE CLOSURE

3. INTRODUCTION
In September 2015, the emission gate also more
commonly referred to as The volkswagen Scandal came
to public when the US environmental protection agency
(EPA)issued a notice of violation of the Clean Air Act to
Volkswagen group of Germany. The EPA had
discovered that the German giant had programmed it's
Turbocharged Direct Injection (TDI) diesel engines to be
under emissions control during laboratory emission test
by meaning that when tested in laboratories the
volkswagen motors are below the NOx output
maximum limit allowed in the US. However in real life
the NOx were up to 40 times higher.

4. Motive behind rigging diesel engines issue
1. The reason why diesel engines are needed over gasoline are due their
economical values as easy repaired and tendency to be more enduring
over time as well as fuel efficiency.
2. In terms of economy diesel engine can go more miles per gallon
compared to petrol engines and this is since they burn fuel at higher
temperatures.
3. This results in a higher proportion of nitrogen oxide compared to their
counter part of petrol engines.
4. The volkswagen system had in their engines a trap to nitrogen oxide.

5. The Volkswagen emissions scandal, also known as Dieselgate or
Emissionsgate, began in September 2015, when the United States
Environmental Protection Agency issued a notice of violation of the
Clean Air Act to German automaker Volkswagen Group

6. 5. However, more fuel was needed to trap nitrogen oxide and this was only
activated during the laboratory testing as the software programmed it that
way and hence the explanation of the Scandal.
6. Volkswagen chairman Hansdieter at that time in December 2015
delecared that the decision to manipulate the diesel engine test was made
in 2005 and this was due to EPA'S Strict regulations on automobile
industries.

8. Impact of Volkswagen Diesel Scandal Economically
1. Volkswagen was the second largest in automobile industry.
2. Following the Scandal the company has been dealing with
overwhelming many legal and public relations office and they had to cope
with a new adjustment they had to make from employing three public
relations firms and to deal with crisis.
3. In addition the sales of Volkswagen cars decreased from 2.44 million in
September 2014 to 2.45 million in September 2015 and a total net loss of
1.84$ billion after the Scandal.

9. 4. On September 2015 volkswagen stock were sold off immediately which
resulted a loss of 16.9 billion of its. Former market value.
5. Volkswagen stock went down to 23.08 on October 2nd 2015 although it
was only 2 weeks ago 38.03% on September 17th.

10. Case closure
A California state judge Charles breyer, has offered a planned supported
by US government and several environmental agencies to steal down the
case by giving the options to owners of Volkswagen liter diesel cars to
either fix their engines according to US emission standards or sell back the
cars to Volkswagen with loan cancellation in case if the car is still on loans.
The judge as well proposed considerable compensation and remediation
hardship for any enivornmetal harms caused by volkswagen.
In the settlement a 2.7 BN$ will be paid for environmental Mitigation
and $2 billion to promote zero emissions vechiles and $603 million for
claims by 44 states. Washington D. C, and Puerto Rico. The total
settlements for all courts and customer repayments are estimated to be
15 BN$

11. Thankyou