The case study concerns the controversy over alleged deception of vehicle emissions tests by the Volkswagen Group (VW). On 18 September 2015 US authorities made serious allegations against the firm, the second largest automotive manufacturer in the world, which is 51% owned by the Porsche-Piëch family. It ordered a recall of VW cars, claiming they emitted between 10% and 40% more noxious nitrogen oxide (NOX) gases than the formal tests indicated, and that the firm had fitted sophisticated software or ‘defeat devices’ to detect when a car was being tested. The chief executive resigned and the company lost billions of euros in share value, VW had its first quarterly loss in 15 years. Sales fell by over 5%. Authorities in different countries and car owners launched litigations against the Group, and criminal prosecutions were expected to follow. In December 2015 VW took out a €20 billion bridging loan as a result of the crisis.
Learning Objective
Understand scandal dynamics, incl. how a firm’s executives lose control of the narrative when regulators, politicians and journalists move against it over controversy. Learn importance of communication among key stakeholders. Question organizational ethics (e.g. warning signs of past scandals). Prompt owners to follow company affairs without being too intrusive. Discuss matters such as whistleblowers’ rights, codes of practice and changing public opinion, e.g. on environmental responsibility.
Keywords
Environmental Responsibility, Owner Responsibility, Crisis Management
Settings
World/global, Germany
Volkswagen, Automotive
Mid-2015 to February 2016
Available Languages
English
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