GROUP - 4
Volkswagen, headquartered in Wolfsburg, Germany is one of
the most iconic automobile manufacturers in the world.
It was founded by the Nazi Socialist Party under the rule of
Adolf Hitler in 1937, then known as Gesellschaft zur
Vorbereitung des Deutschen Volkswagens mbH. Later that
year, it was renamed simply Volkswagenwerk, or “The
People’s Car Company.”
Parent Company : Volkswagen AG
It operates more than 60 production plants around the world
Volkswagen (10.1 million units sold) was the 2nd biggest car
manufacturer after Toyota (10.2 million units sold) in 2014.
VW overtook Toyota in the first half of 2015 from January to
June by selling 5.04 million units as compared to 5.02 million
of Toyota but ended up 2nd in 2015 by selling 9.93 million units
as compared to 10.15 million units of Toyota.
Volkswagen emissions scandal
What has VW done?
Volkswagen has been cheating in emission tests by making its cars appear
far less polluting than they are. The US Environmental Protection Agency
discovered that 482,000 VW diesel cars on American roads were emitting
up to 40 times more toxic fumes than permitted - and VW has since
admitted the cheat affects 11m cars worldwide.
How did they do it?
VW’s “defeat device” is not a physical device but a programme in the
engine software that lets the car perceive if it is being driven under test
conditions - and only then pull out all the anti-pollution stops. “Clean
diesel” engines cut emissions through techniques such as adjusting air-
fuel ratios and exhaust flows, and in some (though not most VWs)
injecting a urea-based solution to render NOx harmless. When running
normally, requiring greater performance, VW’s controls would not
operate in the same way.
How does the defeat device know it's being tested?
The EPA tests have known practices and profiles. In many cases, the test vehicles
are put on rollers and run at a certain speed for a certain time, then at another
known speed for another known period. The car's central computer can detect
whether inputs match those expected in test conditions.
How was the scandal exposed?
An NGO, the International Council on Clean Transportation (ICCT), performed
independent – and crucially on-road – emissions tests, on the VW Passat, the
VW Jetta, and a BMW X5. These tests followed five routes on similar lines to the
EPA simulations: highway, urban, suburban and rural up/downhill driving. The
emissions performance of the Volkswagen, but not the BMW, cars was so much
worse than expectations that the ICCT ran further tests on a dynamometer. In
these circumstances, the cars passed with flying colors. It was at this point that
the ICCT contacted the EPA.
Causes of the scandal
To overcome fundamental problems with the company’s
system to for controlling harmful emissions by it’s smaller
Inadequate internal controls
Tiff with former CEO
Consequences of the scandal
11 million cars affected worldwide (5,00,000 cars in US;
70,00,000 cars in Europe)
Engines emitted nitrogen oxide pollutants up to 40 times
above what is permitted in the US that may result in 1m
tonnes of air pollution every year
VW recalling millions of cars worldwide from January 2016 for
which it has set aside €6.7bn ($7.3bn) to cover costs. That
resulted in the company posting its first quarterly loss for 15
years of €2.5bn ($1.84 bn) in October 2015
The EPA has the power to fine a company up to $37,500 for
each vehicle that breaches standards that may result in a
maximum fine of about $18bn
The costs of possible legal action by car owners and
shareholders "cannot be estimated at the current time”
Share prices have fallen by a third resulting in a loss of €30
billion in market-capitalization
Steps taken by Volkswagen
Volkswagen is conducting an internal investigation, aided by U.S.
law firm Jones Day.
VW suspended at least two engineers — Ulrich Hackenberg, an
Audi executive who was head of technical development at the VW
brand; and Wolfgang Hatz, a Porsche manager who was responsible
for engines and transmission systems across the VW group
Martin Winterkorn, the CEO of VW Group resigned 5 days after the
scandal broke out. Matthias Muller, CEO of Porsche has taken over
In U.S Volkswagen has promised owners $500 in cash plus $500 in
gift cards -- at a cost of about $250 million.
Future plan for Volkswagen
"My most urgent task is to win back trust for the
Volkswagen Group - by leaving no stone unturned,"
Mr. Matthias Muller, new CEO of Volkswagen
Volkswagen needs to demonstrate a renewed commitment to
the environment, consumers and its own integrity in order to
recover its brand image.
Volkswagen is accelerating efficiency program to improve
Plan to equip all cars with Adblu technology and selective
Future plan for Volkswagen
Increase focus on plug-in hybrids and electric vehicles.
The markets in USA, Mexico, and Canada will be combined
and significantly strengthened to form a new North America
Volkswagen will mandate new and stricter emissions testings
which will be verified by an independent third party