Volkswagen Emission Scandal Case Study

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Volkswagen’s Emission Scandal and the Fallout The Scandal: Earlier this month German automobile giant Volkswagen was caught bluffing the American pollution testing authorities with the help of an electronic manipulation in its cars sold between 2008 and 2015. The sophisticated software known as "defeat devices" was installed in the electronic control module of diesel vehicles issued by the company during these years. The software takes the position of the steering wheel, vehicle speed, the duration of the engine's operation and barometric pressure as input and senses when the emission test is taking place for the car. Then it controlled the emissions well below the acceptable levels throughout the test duration. But on road, the same cars were found to release 10 to 40 times more emissions than detected during the tests. The company admitted that the act was intentional soon after the U.S. Environmental Protection Agency’s (EPA) allegations based on doubts raised by some independent researchers about the emission levels. CEO Martin Winterkorn released a public apology and resigned while several probes are going on regarding various…show more content…
As a result of the scandal, Volkswagen could face of up to $ 37,500 per vehicle from the EPA itself. This will amount to about $ 18 billion in penalty. Globally, about 11 million cars across various countries have this flaw according to the company. Thus the financial consequences of this scandal are going to be huge for Volkswagen. Volkswagen said it would set aside $ 7.3 billion to help cover the costs of the scandal. Would that be enough? Further, there are going to be serious criminal charges from several government agencies as well as the public. Volkswagen’s stock plummeted by 30 % in just 5 days last week soon after the scandal came to
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