Volkswagon Faces a Huge Public Outcry Over it S Lies

Volkswagen Scandal Why would a highly successful automobile manufacturing company -- the largest car company in the world, having overtaken Toyota in early 2015 -- deliberately and stealthily develop technologies that hide the truth about carbon-related emissions? And what are the financial and social ramifications of the deception that Volkswagen engaged in? This research paper has the objective of reviewing the Volkswagen Company, its history, its success, and its decision to create software that cleverly -- yet demonically -- hides the fact that diesel exhaust is dirty, fouls the air, and fails to meet clean air standards.

The technical decision-making process at Volkswagen is clearly among the corporate culprits that contributed to this enormous scandal. But moreover, the executive decision-makers, and the board of directors share responsibility for the shaming firestorm of public outcries that followed revelations of this scandal. Statement of the Problem Volkswagen had made plans to launch a massive marketing campaign in the United States in 2005, promoting its diesel vehicles; but when the company learned that its autos would not meet the " .. strict nitrogen oxide requirements in the U.S.

within the required time frame and budget," the company had to make adjustments to its cars' emissions (McGinty, 2016). That decision ultimately led to the massive public relations nightmare that resulted from revelations of the deceptive software installed to mask the true amount of emissions. Hence, the problem that Volkswagen faced in terms of meeting emission standards led to decisions that ultimately proved not only embarrassing but costly -- both in financial and image-related issues.

Stakeholders in this case, the Volkswagen owners, dealers, and vendors supplying parts and service, were left with significant problems; but the bigger problems were to be borne by the manufacturers of these automobiles. Intended Audience -- Value to the Audience This paper will review the history of the Volkswagen automobile, the decisions made to hide the true amount of emissions, and the current crisis for the company and the company's management hierarchy.

Any consumer that plans to buy an auto, or is simply interested in the business and environmental side of automobiles -- and seeks background, in-depth narratives that delve into decision-making and corruption -- would be interested in reading this report. In fact the scandal created through Volkswagen's arrogant deception has enormous economic, political and environmental themes beyond corporate corruption.

An alert citizen seeing the headlines and watching business news reporters relate the story is very likely to want to go well beyond the fringe explanation for this debacle, and this paper seeks to provide that deeper level of understanding. A Brief History of the Volkswagen Author Bernhard Rieger, who published The People's Car: A Global History of the Volkswagen Beetle in 2013, explains in his book that the Volkswagen was the first car to have sold "more often than Ford's Model T" (Scholz, 2014).

But the sales of Volkswagens hit the global market -- in particular, in Brazil, Israel, South Africa, Mexico, Germany and of course the United States -- which lifted it well above the successes of the Model T. Because of its sales around the world, the VW " .. embodied a larger variety of cultural meanings" (Scholz, 667). Apparently the success of Ford's revolutionary production methods " .. fascinated Hitler and his followers," and since the goal of Nazi Germany was to create a socialist consumer society, the promotion of the Volkswagen " ..

went hand-in-hand with anti-Semitism" (Scholz, 668). Although the VW Beetle did not have overwhelming success during the Third Reich -- Rieger claims the car was an "economic failure" -- after the war the car " .. embodied values such as reliability that Germans could identify with," and it was an enormous success internationally (Scholz, 668). Even though it carried the negative connotation of "Hitler's people's car," it transcended that title and especially in the U.S., the car " .. filled a void in the niche market" of smaller cars (Scholz, 668).

Because of the company's brilliant marketing strategy ("think small") -- presenting the Beetle as an honest, economical car as opposed to Detroit's big, "flashy sedans" -- the American consumer went through "historical amnesia" and basically forgot that the car had a Nazi history (Scholz, 668). How the Scandal Evolved Volkswagen engineers created a "defeat device" that could detect when the vehicle was being tested for pollution emissions; in other words, the car would produce results that were within the limits of U.S.

emission standards when hooked up to a smog testing system. But on the road, the car would seamlessly switch out of its test mode and emit nitrogen oxide pollutants " .. up to 40 times above what is allowed in the U.S." (Hotten, 2015).

The scandal actually broke in September, 2015, after the Environmental Protection Agency (EPA) announced that the German company had programmed up to half a million vehicles with the "defeat device"; shortly thereafter, Audi (owned by VW) acknowledged that 2.1 million Audis were also equipped with that deceptive software (13,000 in the U.S.) (Thompson, et al., 2015). After news broke about the deceptive devices in VW vehicles, shares in Volkswagen (VLKAY) dove about 17%; in fact within a week after the EPA findings -- and company admissions as to the deceit -- " ..

about a third of the value of the group" was lost (Thompson, p. 1). The financial damage VW is incurring is enormous -- an estimated $46 billion in fines is expected for various violations of the Clean Air Act, based on a lawsuit by the U.S. Department of Justice (DOJ) -- but the cost of recalling 580,000 diesel Volkswagens, Porches, and Audis that were sold in the U.S. since model year 2009 will certainly cost billions more (McGinty, p. 2).

Those 580,000 vehicles have emitted an estimated 56,000 tons of nitrogen oxide into the air in the U.S. -- above what is legally allowed, McGinty explains. How does the DOJ come up with $46 billion in fines? McGinty writes that the suit requests $37,500 per vehicle for violating emission laws; $37,500 for tampering; $37,500 for employing "defeat devices; and $37,500 per day for false reporting of emission data (McGinty, p. 2).

Volkswagen's Leadership Statements Matthias Mueller is the CEO for Volkswagen (he replaced Martin Winterkorn), and when he was interviewed by the National Public Radio (NPR) in January, 2016, he appears to be in denial as to the truth about the deceptive software ("defeat device"). Mueller said his company did not lie to regulators at the EPA; he said it was " .. a misunderstanding of U.S. law" (Glinton, 2016). The NPR reporter said the American people believe it is an ethical, not a technical problem. But Mueller replied, " .. it was a technical problem.

We .. reached targets with some software solutions which haven't been.