Crisis Management in VW's Dieselgate Scandal
This paper examines Volkswagen's "Dieselgate" emissions scandal, in which VW equipped millions of vehicles with engine control software that cheated EPA emissions tests from as early as 2008 until the violations were publicly revealed in 2015. The analysis covers the technical nature of the deception, its effects on a broad range of stakeholders — including consumers, shareholders, employees, dealerships, and regulatory bodies — and the legal and financial consequences that followed. The paper also considers VW's crisis communication strategy, the role of social media in shaping public perception, business ethics failures rooted in organizational culture, and how cultural differences across markets influenced the company's recovery. Despite severe reputational damage, VW returned to profitability within two years.
- Introduction: Trust as the foundation of organizational success
- Background of the Case: ECU cheat device and emissions deception explained
- Stakeholder Relationships: How the scandal damaged all stakeholder groups
- Legal and Regulatory Effects: Charges, recalls, and ongoing legal consequences
- Business Ethics Considerations: Cultural differences and financial recovery analysis
- Consumer and Employee Impacts: Governance failures, layoffs, and brand damage
- Conclusion: VW's crisis recovery and lessons learned
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The paper applies a clear multi-stakeholder framework, systematically analyzing how VW's deception affected consumers, shareholders, employees, dealerships, and regulators — demonstrating an understanding that corporate crises have layered, interdependent consequences.
- It integrates concrete financial data (e.g., €1.6 billion loss in 2015, net profit of €11.35 billion by 2017) alongside reputational metrics from the Reputation Institute, grounding abstract arguments in measurable evidence.
- The paper distinguishes between a product defect and an intentional ethical breach, drawing a meaningful conceptual line that explains why the reputational damage was more severe and persistent than a typical product recall.
Key academic technique demonstrated
The paper effectively uses a case study structure to move from factual background through stakeholder analysis, legal impact, and ethical evaluation before reaching a synthesizing conclusion. This layered progression — from what happened, to who was affected, to what it means — is a strong model for applied business ethics writing at the undergraduate level.
Structure breakdown
The paper opens with a trust-centered framing before providing technical background on the ECU deception. It then evaluates stakeholder damage, legal consequences, cross-cultural business ethics considerations, and internal organizational impacts. The conclusion synthesizes these threads, assessing VW's recovery trajectory and the lasting lessons for crisis communication and corporate governance. Each section builds logically on the previous one.
Introduction
Trust is the most important factor in the success of any organization, extending to all levels of stakeholders. If customers feel they cannot trust a company, they will not purchase its products. Shareholders must trust that the organization will make sound business decisions to maintain profitability and manage value. This is increasingly prominent in the global economy, where people of different cultures must interact with one another. Most critically, customers and other stakeholders must be able to believe a company when it tells them something is true. This analysis explores the "Dieselgate" incident involving Volkswagen AG — also known as the Volkswagen Group, commonly referred to as VW.
Background of the Case
Consumers worldwide are becoming more environmentally conscious and more sensitive to vehicle emissions. Features that promise to improve fuel economy, reduce emissions, and deliver other positive environmental benefits are major selling points in today's global market. In addition to consumer demand, federal clean-air requirements are becoming increasingly stringent, with manufacturers required to comply with stricter regulations over time (Bartlett, Naranja, and Plungis, 2017). The case involved several Volkswagen models, including the Touareg, Passat, Jetta, Golf SportWagen, Golf, Beetle, several Audi models, and the Porsche Cayenne (Bartlett, Naranja, and Plungis, 2017). Cars involved in the recall included models from model years 2009 through 2015.
The problem centers on a component called the engine control unit (ECU). The Volkswagen models in question could operate in two distinct modes: an on-road mode and a dynamometer (dyno) mode. In the recalled models, the dyno mode served as a "test" mode, while the on-road mode was used during regular consumer driving. The system could manage engine performance and switch between maximum fuel efficiency and a high-performance mode. In high-performance mode, the car produced more power but also emitted significantly higher levels of nitrogen oxide.
The problem arose because the engines were switched to high-efficiency mode during EPA tests, and then reverted to the high-performance setting once vehicles were sold to consumers. As a result, cars being driven by consumers were producing nitrogen oxide emissions that exceeded EPA standards (Bartlett, Naranja, and Plungis, 2017). Emissions exceeded maximum limits by a factor of 15 to 35 times on some models (Bartlett, Naranja, and Plungis, 2017). Furthermore, Volkswagen admitted to having been aware of the problem as early as 2008. The company knowingly circumvented the law and continued to do so until 2015, when it was caught and issued EPA violations (Bartlett, Naranja, and Plungis, 2017). This analysis examines the consequences of those actions in terms of stakeholder trust, legal liability, and the company's future.
References
AFP (2018). Five things to know about VW's 'dieselgate' scandal. Phys.org. Retrieved from https://phys.org/news/2018-06-vw-dieselgate-scandal.html
Bartlett, J., Naranja, M., & Plungis, J. (2017). Guide to the Volkswagen emissions recall. Consumer Reports. Retrieved from https://www.consumerreports.org/cro/cars/guide-to-the-volkswagen-dieselgate-emissions-recall-
Continuity Central. (2015). Five crisis management lessons from the Volkswagen incident. Retrieved from
Crete, R. (2016). The Volkswagen scandal from the viewpoint of corporate governance. [University], 7(1): 25–31.
Environmental Protection Agency (EPA). (2018). Former CEO of Volkswagen AG charged with conspiracy and wire fraud in diesel emissions scandal. Press release. Retrieved from
Ferrell, O., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases. Stamford, CT: Cengage Learning.
GEC Risk Advisory. (2015, September 23). The Volkswagen emissions scandal will be one for the books: The long-term effect on stakeholder trust. Retrieved from
Lyons, S. (2015, December 7). Road to recovery: How does Volkswagen bounce back from emissions scandal? Hub. Retrieved from https://hub.jhu.edu/2015/12/07/volkswagen-scandal-explained-sylvia-long-tolbert/
Reputation Institute. (2016). How VW lost the public's trust. Retrieved from https://www.reputationinstitute.com/sites/default/files/pdfs/How-VW-Lost-Public-Trust-2016.pdf
Zhang, B., Veijalainen, J., & Kotov, D. (2016). Volkswagen emission crisis — managing stakeholder relations on the web. In Proceedings of the 12th International Conference on Web Information Systems and Technologies (WEBIST 2016), 1: 176–187. Retrieved from http://www.scitepress.org/Papers/2016/58924/58924.pdf
Already a member? Log in
Unlock the rest of this paper
135,000+ research papers · AI writing tools · Plagiarism & AI detection
7-Day Pass
Does not renew
Get 7-Day PassMonthly
Renews at $12.99/month until canceled
Start MonthlyAnnual
Renews at $99/year until canceled
Start Annual- Unlimited AI writing tools
- Plagiarism and AI text detection tool
Plan details
Unlimited AI writing tools are for individual, non-automated use and are subject to our Terms of Service and abuse-prevention measures.
TextChecker scans: 3 during the 7-Day Pass, or 5 per month with Monthly and Annual.
Prices exclude applicable tax.
Always verify citation format against your institution’s current style guide requirements.