Case Analysis: Volkswagen AG

In 2011, Volkswagen was the world’s largest automaker, with brands from Audi to VW to Porsche. Volkswagen was the proud marketer of “clean diesel” cars. But the company, starting in

Improved financial returns (higher share price/ dividends); VW has issued more than 502 million shares (Volkswagen AG, 2016, p.13)

The Volkswagen Group follows a cost leadership and differentiation strategy. The Volkswagen Group achieves low cost leadership by sharing automotive parts amongst its products and as well as sharing vehicle platforms amongst the other 12 brands under the Volkswagen Group, such as Audi, Bentley, Porsche and Volkswagen Passenger Cars. The Group improves product differentiation by focusing on the product quality improvement, innovation and sustainability. This differentiation strategy helps ensure that the customers are satisfied with the products, and that the customers will be willing to pay a premium for the product.

2015 was not a banner year for the car manufacturer, Volkswagen. In September, the Environmental Protection Agency (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 (Hotten 1). It was found that the defeat device altered the emissions of the Volkswagen’s diesel engine; the defeat device software had the capability of sensing if it was in a testing situation or driven normally. In the test environment the software would function properly to provide the expected test results and then revert back to unsafe emissions levels. As a result, the EPA issued notice of violation to Volkswagen on September 18, accusing the company of installing a defeat device that caused NOx emissions at 40 times the standard limit (Alter 4). At the time that the EPA violation was levied it was believed that at least 480,000 cars in the United States would be affected by the defeat device.

Ever since the 2008 recession US automobile companies have been on a steady downhill slide, but actually you can trace this downward trend even further back than 2008. US car companies have been feeling the heat since as early as the late 1980s when Japanese car companies laid claim to American manufacturing plants . Despite a shot in the arm in sales over the past five years, American firms are still on the decline. This case analysis aims to diagnosis the problem, provide analysis of the problem, and propose a viable solution to the problem from the perspective of the US automobile market share leader, General Motors.

As part of the settlement, Volkswagen is required to invest $2 billion to improving infrastructure, access, and education for zero emission vehicles (G22). Of the $2 billion, $1.2 billion will be placed in an EPA-approved investment plan while the remaining $800 million will be placed in an investment plan approved by the California Air Resources Board (G36). The justice approach would say that Volkswagen’s harm to the environment is making the world a worse place. According to Rawls’ just savings principle, the current generation must not leave the world a worse place than when they received it. By going forth with this initiative, Volkswagen is reversing their damages to the environment.

Volkswagen committed an atrocity, worse even than making tanks for Hitler. They (or at least someone) willfully allowed toxic NOx (Nitrogen Oxides) gases to dissipate into the atmosphere. They no doubt need to recompense, but $48 Billion is just too much. That is an insane precedent to be set, and wildly unnecessary. No company in history could survive a hit like that, $48 Billion is over 75 percent of the Volkswagen’s market capital (all of the outstanding stocks multiplied by their value).

At 18th September 2015, The Volkswagen has charged by the US government of using the software which has been defined as a “defeat device” by EPA to hide emissions testing for certain air pollutant on almost a million of its cars. “The VW cars under investigation emit up to 40x the national standard for nitrogen oxide, which is linked to asthma & lung illnesses,” posted by the U.S. EPA in Twitter. According to the test, the nitrogen oxides that have emitted by the Volkswagen product is 10 to 40 times of the permissible level of 70 milligrams per mile which will seriously damage our

In the automotive world, efficiency and power are two elements of vehicle performance metrics that while important to many consumers and critics alike, appear to be elusive when in convolution with one another. In automotive history, good fuel efficiency equaled compromises in power and performance and vehicles with large displacements and torque usually had worse gas mileage. The exception to this rule were diesel engines, which managed to combine better efficiency than many four-cylinder gas engines while providing very high torque number for better performance. The main drawback that diesel’s faced was due to their stigma of being dirty, as they emitted more greenhouse gases including nitrous and sulfur oxides. Coupled with the stricter emissions that many states began to implement, primarily overseen by the EPA, it became harder for car manufactures to certify diesel engines for emissions while maintaining high fuel economy and power output figures. The emission control hardware and software in diesel vehicles also came at a high price and with increased complexity, both unwelcoming additions for any car company wanting to mainstream diesel’s.

Gesellschaft zur Vorbereitung des Deutschen Volkswagens simply renamed to Volkswagenwerk, or “The People’s Car Company” is a German founded car company originally developed by Hitler. Volkswagen states that their morals include being responsible for people, the economy, society and the environment. These morals are quite contradicting due to the 2015 emission scandal where they have abandoned their values by hindering the economy, society, their consumers and the environment. Volkswagen used a software called defeat device on millions of diesel run cars. The software is able to determine when a car is going through an emissions test, making the vehicle appear more environmentally friendly. Volkswagen was caught when the EPA issued a notice

Volkswagen(VW), a classic and adored automaker who ruled the automotive manufacturing business for many decades suddenly found itself in the middle of the tragic business crisis with the news that they deliberately cheated on and falsified emission tests on many of their vehicles over the past several years. On September 15, 2015 VW was charged with allegations of manipulating US emission tests by installing cheating software by the US Environmental Protection Agency (EPA). In its response, VW admitted the charges which led the company to undergo a shakeup among its executives, a drop-in stock and resale values, government investigations, and a serious blow to their

I. Volkswagen is one of the world’s best-known car manufacturers; unfortunately it has damaged its credibility and reputation with the recent emission scandal that the company was involved in. Volkswagen failed in establishing the triple bottom line, social responsibility, and sustainability.

With billions of dollars invested and hundreds of thousands of Americans employed (Department of Commerce, n.d.), the automobile industry has a vast influence in the United States. Since the time Henry Ford developed the assembly line production (Statista, n.d.) the industry has grown into a global market with no signs of slowing down. Top car companies are constantly searching for new innovations to set them apart from their competitors. Among those companies is Volkswagen (VW). A company which strides in emissions and fuel efficiency turned, not only to be false, but caused a severe amount of damage (Ewing, 2016).

The news broke when the US Environmental Protection Agency (EPA) had determined that Volkswagen had installed a “defeat device,” otherwise known as a software code used to cheat on emissions tests, on approximately 11 million vehicles in the US and Germany (Jason Bisnoff, NYDailyNews.com). This device would enable the Nitrogen Oxides (NOx) to be trapped during the testing phase, and at the point it was taken off the dynamometer test device the vehicle would pick up signals that the car is going on the road and the trap would shutoff. By Volkswagen making this horrific adjustment, they have supported one of the key ingredients in the release of a highly poisonous gas into the environment which produces smog, contributes to cardiovascular problems, and respiratory problems, such as asthma, and also produces acid rain. This is a bigger issue for the people who live in Silicon Valley, and all around Southern California; this is very important as people who have these existing medical issues are in

Volkswagen has set a bold goal of dethroning Toyota as the world’s largest auto maker. This goal includes significantly increasing the North American market share, as Volkswagen currently holds only 2.2 percent of the United States market. Volkswagen’s strategy includes cutting prices and tailoring its cars to better fit the American lifestyle and tastes. This includes increasing the size of its vehicles and modifying certain amenities, such as increasing the cup holder size to fit the larger sized beverages which Americans are known to drink. In order to become the world’s largest auto maker by 2018, Volkswagen’s management team has set a lofty goal of selling 800,000 vehicles per year