Business Case Studies,Corporate Governance & Business Ethics Case Study, Dell Going Private

Code : GOV0064

Case Length : 13 pages

Period : 2015-2016

Organization: Volkswagen AG

Year :2016

Industry : Automobile

Region : -------

Countries : US; Europe; Global

Teaching Note: No

Structured Assignment :---------------

INTRODUCTION: In September 2015, the United States Environmental Protection Agency (EPA) issued a notice to Volkswagen AG (Volkswagen) for violating the Clean Air Act after which the German car maker admitted to having installed ‘defeat devices’ in Turbocharged Direct Injection (TDI) diesel engines. The EPA’s findings covered Volkswagen’s diesel cars sold in the United States since 2009, including the Volkswagen - manufactured Audi A3, and the VW models Jetta, Beetle, Golf and Passat. The company admitted that about 11 million cars worldwide, including eight million in Europe were fitted with the so-called ‘defeat device’. These devices manipulated the emission during laboratory tests in order to meet standards during testing, while on the road, the emissions were up to 40 times higher.

As a result of this scandal, the CEO of Volkswagen, Dr. Martin Winterkorn, (Winterkorn) resigned and Matthias Müller (Müller) assumed the role of CEO. Volkswagen was ordered by the Obama administration to recall 482,000 diesel passenger cars manufactured and sold in the United States between 2009 and 2015. The scandal landed Volkswagen in the worst crisis it had experienced in its 78-year history. It not only pulled down Volkswagen’s stock price, sale, and brand value drastically but also attracted fines and penalties worth billions of dollars.