Volkswagen Case Study

“The Group’s goal is to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” (Volkswagen’s, mission statement) Volkswagen Group is a German corporation, it manufactures: passenger cars, commercial vehicles, motorcycles and engines. Volkswagen extended its lead over Toyota in May 2016, and it has every chance to finish the year as the world’s largest automaker. (Forbes) The company owns Audi, Volkswagen, Bentley, Porsche, Lamborghini and Bugatti. Volkswagen Group used modern technology to cheat the emissions testing for its clean diesel cars for the past six years. Volkswagen programmed computers in: Audi, Volkswagen and Porsche, to detect

German courts have been flooded with lawsuits against Volkswagen from investors who say they have lost billions of dollars because of the emissions scandal. Over 1,400 complaints from institutional and individual shareholders, amounting to over $9 billion in damages. (Clark) The three major stockholders that were the most affected by the emissions scandal are: Porsche SE, German state of Lower Saxony and oil nation, Qatar. The primary shareholder of VW is Porsche SE, which owns 52.2 percent of the voting shares in Volkswagen, says it made a loss of after taxes of 273 million euros or 302.3 million dollars because of the emission cheating scandal. (US News) German state of Lower Saxony owns 20% voting stake in Volkswagen Group, the state is still backing Volkswagen and doesn’t plan on pulling their voting shares. The last major stockholder affected by the VW scandal was oil nation, Qatar, with a 17% stake in the company. The emissions scandal has wiped out a third of the company’s overall value which amounts to over 4 billion dollars. (Pearce) Furthermore, worldwide consumers of Volkswagen cars have been affected by the emissions scandal. South Korea halted sales of any Volkswagen brand cars, such as: Audi, Porsche and VW, Switzerland also banned the sale of any Volkswagen

Consumers bought the “clean diesel” engine version of VW because they were trying to do their part in saving the environment. According to Forbes magazine, clean diesel engines are designed to emit 97% less sulfur emissions and still get 30% better fuel economy than gasoline powered engines. (Newman) This led to customers paying more for the diesel engine car, but without the resale incentive of a “green car” and the expected fuel efficiency it is estimated that each car could lose up to $5,000 in resale value. (Newman) When you add up all the cars that were sold under false pretenses that adds up to over $55 billion dollars. (Newman) Even though many consumers worldwide will feel the effect of the VW scandal, some consumers in Europe were lucky. Ford seized and opportunity and offered incentives of up to 2,000 to new-car buyers who are will to turn in their VW or Audi diesel. Ford only offered this incentive across Europe. (Levin) All in all, the Volkswagen emission scandal will not put the Volkswagen Group out of business. The shock and disappointment caused their stock to drop, but a year later and the Volkswagen Group is on its way to the top, again. The Volkswagen emission scandal is nowhere near over because many lawsuits haven’t even seen the inside of a