Volkswagen scandal

1. Volkswagen

2. GROUP MEMBERS
ADIL NADEEM HAFEEZ
AHSAN IQBAL JANJUA
FAHAD ZAHOOR MALIK
NAUMAN GUL
M. ABDULLAH

3. CONTENTS TO BE DISCUSSED
• The company’s introduction
• Scandal
• The company’s response
• Communication analysis
• Recommendations

4. INTRODUCTION

5. • Their head quarters
• world’s leading automobile manufacturers.
• In 2011, the Volkswagen group delivered 8.3 million
vehicles worldwide.
• Founded by a Socialist Party.
• Later that year, it was named simply
Volkswagenwerk.

9. THE EMISSION SCANDAL
• The company, which owns 70 percent of the U.S.
passenger-car diesel market, was in major trouble for
cheating on diesel-emissions tests.
• A group of the company’s engineers decided to cheat
on emissions tests in 2005 because they couldn’t find
a technical solution within the company’s “time
frame and budget” to build diesel engines that would
meet U.S. emissions standards.
• Volkswagen installed emissions software on more
than a half-million diesel cars in the U.S.—and
roughly 10.5 million more worldwide to cheat the
test.

10. • International Council for Clean Transportation
organization hired the West Virginia University to do a
standard emissions tests on diesel cars in the U.S.
Volkswagen has been hyping diesel cars that are
environmentally friendly and fuel efficient.
• Volkswagen had the boldest claims and the highest sales,
but lab tested two VW cars and found that the claims of
low emissions never spread out in the real world.
• After the research report, Environmental Protection
Agency and California Air Resources Board opened
investigations.
• The EPA discovered that 482,000 Volkswagen diesel cars
on American roads were emitting up to 40 times more
toxic fumes than allowed.

11. CONSEQUENCES FACED
• VW sales in many countries suspended or banned.
• Sales reduced from 11m to 6.6m in 2015.
• Volkswagen Hit with Record $32 Million Fine Over Its
Emissions Scandal by South Korean authorities.
• VW says company will be cutting 30,000 jobs over next 3 years
in order to boost profit and recover from scandal.
• The EPA has the power to fine a company for each vehicle
that breaches standards that may result in a maximum fine of
about $18billion.
• The costs of possible legal action by car owners and
shareholders .
• Share prices have fallen by a one third resulting in a loss of 30
billion in market-capitalization.

13. VOLKSWAGEN’S
RESPONSE

14. • Volkswagen started conducting an internal
investigation.
• Suspended two engineers who were responsible for
the engines’ transmissions of VW group.
• Martin Winterkorn, the CEO of VW group, resigned
after 5 days and Matthias Muller took over, and said:
“My most urgent task is to win back the trust for the
Volkswagen Group, by leaving no stone unturned”
• Furthermore, he told everyone that this could be
beneficial.

15. “The crisis has also opened doors,” he said. “It
forced us to strengthen and speed up overdue
changes, and to set new priorities. To turn this
crisis into an opportunity has been my goal from
the beginning.”
• Mueller pledged to create a more transparent
environment in the company.
• In U.S, they promised the owners $500 in cash
and gift cards at a cost of about $250 million.
• Video apology to the customers on twitter.

16. • Stopped selling further 2015 model VW and
Audi diesel cars and stopped offering the 2016
models too.
• Muller said that VW needs to demonstrate a
renewed commitment to the environment.
• Accelerated efficiency programs to improve
car performances.
• Equipped all cars with ‘AdBlue’ for selective
catalytic reduction.

17. • Increased focus on plug-in hybrids and electric
vehicles.
• The markets in USA, Mexico and Canada
combined to make a more strengthened North
American region.
• Mandated new emissions testing, which got
verified by a third party.
• Launched country-specific websites to let the
customers check if they’re vehicle is affected.

18. COMMUNICATION
ANALYSIS

19. Further divided into 3 parts:
POSITIVE, NEGATIVE
and their RESULTS

20. POSITIVE
• Volkswagen before the scandal was very strong and around the
globe it had a positive perception. The public required a positive
response to the scandal so that it could lessen the impact which
was given upon Volkswagen.
• Our analysis of the event is that; Volkswagen pulled a smart move
by admitting to the guilt and said “yes, and we have been doing
cheat test” the worst thing a brand can do is deny allegations if they
are actually true otherwise there would be series of claim with
genuine prove.
• Conducting press conferences to limit the impact of allegations.
• Apologizing to the consumer through the media in order to build
trust.
• As we all know this is an era of technology. Internet, journalists will
always uncover the truth.
• Finally the CEO resigned in few days and that was a great move in
building trust.

21. NEGATIVE
• The bad thing about the scandal was that VK
actually cheated and there was no way around it.
• They had to face public outrage and media
outburst.
• The engineers were not accounted for as much
as the executive were because the decision was
in their hand and they approved it one way or the
other way.
• VK had a great name before the scandal and now
it difficult for them to come back to that level of
potential excellence

22. RESULT
• VW is now in a fight for its life — and even if
regulators leave it in a position to survive, its
ultimate fate is in the hands of consumers.
• If they want those consumers to keep them
alive, they have to embark on an
unprecedented set of efforts, no matter the
cost, to win trust back.
• If they’re willing to do so , they have a chance.

23. RECOMMENDATIONS

24. While Volkswagen would have been subject to
fines whether they publically announced the
production error in their diesel vehicles or
whether it was revealed by the EPA, we believe
Volkswagen has an opportunity to use this
scandal as a learning experience and can utilize
moral imagination to implement a stronger
ethical decision making framework to ensure
this does not happen again.

25. • Volkswagen should hire an independent consulting
group to thoroughly test each model of vehicle for
emissions and safety standards to ensure their vehicles
are legally fit to be driven.
• Secondly, we would suggest that the Volkswagen board
of directors implement a comprehensive stakeholder
impact analysis when presented with an ethical
decision in the future.
• Should create a foundation that financially and
publically supports green technological innovation as
an effort to help repair some of the environmental
damage they are responsible for.

26. THANK YOU 