Ethics Of Volkswagen Case Study

Volkswagen is one of the largest automakers in the world and it has a global reputation as a high-quality German auto brand. Social responsibility is included in VW’s corporate culture and it seems that Volkswagen made some advances in Corporate Social Responsibility because the corporation was ranked 11th 2015 in the Global CSR Rep Track 100, which listed companies by reputation (Reputation Institute, 2015).However, the company has been threatened by an emission scandal which broke in September 2015, when the Environmental Protection Agency (EPA) disclosed that Volkswagen had installed defeat devices on diesel cars which were sold in the US. These devices equipped on VW cars cheated regulators in such a way that it could detect

The mistrust between the Volkswagen Company and their customers developed after the scandal associated with the incorrect emission of data and cheating of the system unfolded.  The scandal occurred on the eighteenth of September 2015 when it was found that the company had made a car with a turbo that released emission directly into the real word atmosphere. The allegations were genuine and were proved by the Environment Protection Agency in the United States (EPA) (Hotten, 2016).The chief

Kantian ethics and rule utilitarianism disagree on the morality of creating a “defeat device.” This device determined when its engine was undergoing emissions testing then switched from its normal operating mode into a lower emission mode. The normal emission mode was 40 times the limit dictated by the Clean Air Act [1]. By creating a dirty engine, Liang contributed towards the destruction of the atmosphere. This will negatively impact the quality of life for many future generations of people. Because damaging the environment negatively impacts millions of people, rule utilitarianism declares it to be morally wrong. The prosecution of six executives of Volkswagen, including the head of engine development, indicate that Liang’s superiors were involved in this conspiracy from the beginning [2]. The most applicable maxim to this situation is “I shall fulfill

But was it ethical? This question will often be asked regarding the case of engineer James Liang and his role in the Volkswagen emission scandal. During the period of early 2006 to 2014, James Liang and his team of engineers developed a “defeat” device that allowed diesel powered vehicles to pass the EPA emission test, when in fact the vehicles were emitting up to 30 times the allowable limit. To many, this may seem a black and white case of ethics due to the fact that Liang’s team and Volkswagen blatantly cheated on a governmental testing regulation and then proceeded to falsely advertise the vehicles as “clean diesel and environmentally friendly” as reported by the United States Department of Justice; however, different ethical

Loss of reputation and sales; fines for VW → loss of status and being made responsible for the scandal

As a multinational corporation, the implication of the scandal determines the fate of numerous stakeholders both internal and external. Internal stakeholders comprise of the board, managers and employees while external stakeholders subsume shareholders, customers and suppliers. The economic, political and social impacts of the dishonest practices would shape the fate of Volkswagen and affect the future prospects of the automotive industry. Common shareholders whilst not involved in the day to day running of the business placed faith and belief in the firm by providing capital had suffered severe economic loss as share prices (get something for stat). Despite the callous deception in advertising the defeat device displayed no signs of disturbing vehicle performance, however, customers of Volkswagen and its subsidiary vehicles suffer from lower resale value. In addition, even though the scandal was global, European consumers were the most affected with diesel cars accounting for 41% of all European cars (Fontaras, 2016). This high percentage in respect to other nations is a result of incentives provided by the European Union for the purchase of diesel vehicles such as subsidies towards the production process resulting in lower premiums compared to petrol counterparts (Vidal, 2015) In additional with sales falling suppliers of Volkswagen would likely lose future contracts or have current contracts downgraded as less parts are required. Thus, this loss of future

Legal: Legal action taken by car owners, shareholders and the EPA have the power to fine and sue VW for up to 37, 000.00 dollars per vehicle for breaching environmental standards regarding nitrogen oxide emissions from their vehicles, and a maximum fine of roughly 18 billion dollars may be issued by the EPA (Hotten, 2015). Breaching legal regulations, particularly environmental regulations, set out by government departments will result in poor company reputation as VW will be seen as a significant contributor to environmental issues such as air

Numerous issues but primarily the environment fall under the jurisdiction of the Environmental Protection Agency (EPA). According to their website, the EPA was established on December 2, 1970 in order to consolidate several areas of government control concerned with protecting the environment. (n.d.) One of the major topics the EPA has addressed was the impact of the automobile industry on the environment. In the 1970’s several hearings occurred that called Automobile manufacturers to give an account to the measures they were taking to reduce pollution from the emissions given off by their products. The administrator of the EPA, William D. Ruckelshaus did this due to the Clean Air Act of 1970 (n.d.) The Clean Air Act required auto manufacturers

Kenneth Floyd’s speculates that the CEO of Volkswagen may not have known, or was completely unaware of the defective devices because of poor communication (Floyd,2017). While this opinion might be possible my opinion dissents from Floyd’s as I believe that all things rise and falls with leadership, and for this reason the CEO complied and was fully aware of the deception that was occurring within the VW organization that led to fraud. At the core, many levels within the VW organization was participating in a culture of unscrupulous, immoral behavior to deceive the American public over a lengthy amount of time orchestrated by unapologetic leadership (Elson, Ferrere & Goossen, 2015). Knowing the strict regulation of the Clean Air Act Winterkorn,

“The Volkswagen engineers neither discussed with nor hid what they were doing from Volkswagen’s in-house lawyers, and the in-house lawyers didn’t realize what was going on. Most likely, maybe 50 percent.” (Lippe, 2015) If this idea were the case, it is my feeling the lawyers were not doing their job. As Volkswagen’s attorney’s they should have been well versed on the workings each department within the company. Their product deals with a specific set of environmental laws, I would think that would have known every detail to reduce risk.

Volkswagen (VW), the world 's best-selling automotive OEM, has been caught in a vehicle emissions scandal of unprecedented proportions. At least 11 million diesel-powered VW cars worldwide use a specially-coded piece of software to purposefully cheat during emissions testing. The result is that VW 's diesel cars appear sufficiently clean to government regulators – enough to be eligible for sale – but when consumers drive their cars in the real world, the vehicles ' software switches the engines ' behavior: In consumer hands, these VW diesel engines switch into a mode where they perform better (more power and more fuel efficient) but pollute up to 35 times more than during official testing.

Volkswagen Group a German multinational car manufacturer headquartered in Wolfsburg, Germany has got itself into a major legal issue. In return, it has effected many different stakeholders throughout the world. The legal issue in this case is that the car company was exposed by the Environmental Protection Agency for installing a “defeat device” in diesel cars that lead the car to be able to emit toxic gases 40 times the legal limit. This device would recognize when the car was being tested and changed the emissions of the car so it would pass emissions tests. The company has admitted in September to installing this specific device in 11 million cars around the world, more specifically 500,000 in the United States and 8.5 million in Europe (Hakim). It is also important to note that Volkswagen owns the brands Audi, Porsche, SEAT, and Skoda. Class actions suites have already started pouring in from the United States and group litigations have also started in Europe, Netherlands, Ireland, with a shareholders suit in the company’s home of Germany.

Volkswagen is a German car manufacturer that has risen to become the second largest player in the motor vehicle industry in the world, behind Toyota. The organization has approximately 590,000 employees that produce 41,000 cars daily (Bowler, 2015). The organization currently owns 12 subsidiaries that have enabled it to have a significant market share around the world (Bowler, 2015). In addition to producing passenger jobs, it produces Audi, Skoda, Bentley, Bugatti, Porsche, Scania, Man and Lamborghini. The organization was championed by Adolf Hitler who wanted to give German’s their first family car. Futhermore, Ivan Hirst, a British army major saved it from destruction since it was expected to be destroyed as part of the war reparations. The significant history of the organization as well as its impact in the world, were undermined by a revelation that it had cheated in emissions tests. The admission followed allegations by the Environmental Protection Agency that some cars sold by the company in the United States of America had devices that could detect when the emission standards of the car were being tested. In response to this detection, the devices then proceeded to implement effective invention measures that produced desirable results.

Nevertheless, Audi’s US sales continue to rise despite the EPA’s stop-sale order for its diesel engines. Indeed, customers have discovered that the marque’s family of gasoline-powered models are a sufficient substitute — lower fuel prices across the board has relieved consumer pressure to find the most efficient cars too.

During September of 2015, the “US Environmental Protection Agency accused Volkswagon of programming 500,000 diesel-powered vehicles sold in the U.S. to cheat on emissions tests (Colvin, Geoff, 2015)”. As the crisis unfolded, it was discovered that Volkswagon had actually installed illegal emissions software in over 11 million vehicles sold throughout the world. Estimates to correct the crisis came in around $7.3 billion and in the United States alone, the fines total $18 billion. Winterkorn and his team deliberately installed deceitful software in Volkwagon engines to pass emissions testing through the transmission of faulty information producing lower pollutants data than the vehicles were actually emitting. Post-investagation results concluded that the Volkswagon engines were actually producing 40 times more