Volkswagen installed defeat device software in their diesel vehicles that could detect emission testing scenarios. During tests the software would put the engine into a "safe mode" where it met emissions standards, but on the road the vehicles emitted nitrogen oxide at levels up to 40 times the legal limit. In 2015 Volkswagen admitted to cheating emissions tests in the US, affecting 11 million vehicles worldwide. The scandal has major financial and reputational costs for Volkswagen, and they have launched initiatives to repair damage, increase compliance, and address customer concerns regarding affected vehicles.

1. Case Study on
Volkswagen Emission
Crisis

2. Introduction to Company:
• 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

3. Did You Know:
• Ironically, the idea for the Volkswagen, 'People's car', came from Adolf
Hitler.
• One of the Volkswagen car Beetlewas produced from 1938 up to 2003.
That's astonishing 65 years!
• By 1972 more then 15 million VW Beetles had been sold, making it the
most popular vehicle ever sold in the world. The product number passed
the previous best selling Ford Model-T.
• Volkswagen owns many companies or you can say these companies are
using VW name as their base:
Audi
Skoda
Porsche
Bentley
Buggati
Scannia

4. 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.

5. 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

6. What’s This Device or Software ?
• This device or software is called as “Defeat Device”. This device or software is being installed by
Volkswagen in their 2.0L diesel TDI engines.
• This device is used in the VW-manufactured Audi A3, and the VW models Jetta, Beetle, Golf
and Passat. VW has admitted that about 11 million cars worldwide, including eight
million in Europe, are fitted with the so-called "defeat device".
• This Defeat Device is purely digital it’s a matter of coding. This device can detect itself when the car is
being under emission testing and allows it to pass the test.
• According to the EPA the defeat device knows whether or not to activate based on
various inputs including the steering wheel position, vehicle speed, duration of engine
operation, and barometric pressure.
• Once on the road, the engines switched out of this test mode and engines emitted
nitrogen oxide pollutants up to 40 times above what is allowed in the US.

7. Starting of Crisis
• It's been dubbed the "diesel dupe”.
• The German car giant has admitted cheating emissions tests in the US.
• According to EPA(United States Environment Protection Agency), 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".

8. Continue….
• 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.

9. • Continue….
• 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

10. 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

11. 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:
1. Finance interest rates as low as zero per cent for up to 84 months, depending on the
model
2. 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

12. Continue…
• 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

14. 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

15. Thank you !!