Discuss about the Volkswagen Diesel Emissions Scandal.
The notorious scandal related to Volkswagen emission started in 17 September 2015. The issue started for the first time when the United States environmental protection agency issued a notice against the company for violating clean energy usage. The German Giant has however admitted the allegation made against it due to emission. The agency got to know that the company has been intentionally using turbo charged direct injection diesel engines to activate certain level of emission. The vehicles were emitting 40 times more NOx output than the allowed output. The company deployed programme in 11 million cars across the world from 2009- 2015(The Volkswagen Emissions Scandal, 2016). The data was retrieved from the study of discrepancies in between the European and US model which was commissioned in 2014 by the International Council on Clean Transportation. They collected the data from the 15 vehicles through the research group (Oldenkamp, Zelm and Huijbregts, 2016). The emission was detected by the group of five scientists from West Virginia University. The detected the emission during the road tests on two out of three vehicles. The council purchased the data that was generated by PEMS invented in 1995. All the findings were given to California Air Resources Board. Meanwhile the company has become a target of all the regulatory bodies across the world due to which the stock price of the stock fell. Consequently the group CEO resigned. Later the company announced to make an investment to rectify the emission by recalling the vehicles (Barrett, et al 2015).
The system failed due to some dishonest people in the company. The decisions to manufacture the car in an unethical manner are to increase the overall profit margin. Some of the parts were expensive for the company that gradually can put an impact on the profit margin. There was a lot of competitive pressure on the company and some of the people in order to make excess profit are getting more affected by the situation (The Volkswagen emissions scandal explained, 2016.). There must be a better understanding among the employees in order to prioritize the cost over quality. This will gradually affect the overall profit to the company. Secondly being dishonest with the consumer will somehow affect the brand image on a long run. Thirdly, the project visibility is really invaluable. There should have been a proper involvement of all the senior members. This would have gradually helped in reducing the occurrence of such event (Ewing, 2015).
|
1999 |
· The New US Tier 2 rules recognized to replace Tier 1. The total amount of NOx Emission rates was reduced. |
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2004–2009 |
· the following period was for period of diesel emissions rules · Volkswagen defers sales of current diesel lines waiting for usage of new technology. · Volkswagen broadcast new Clean Diesel cars. · US Tier 2 was completely in effect. |
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2009-2015 |
· Volkswagen diesel sales in the US won numerous environmental awards · International Council on Clean Transportation asks Volkswagen to display the profit of US diesel technology · As an alternative they found inconsistency viewing poor on-road emissions. All the results were announced publically. · EPA replicate the tests and asks Volkswagen to explain poor NOx emissions · Volkswagen guidelines regarding voluntary recall of TDI cars was not satisfactory. · EPA warns Volkswagen to not confirm 2016 diesels. · there was a Public announcement by EPA to 2009–2015 cars · Volkswagen confesses dishonesty and issued a public apology · Volkswagen stock down by 20% · Volkswagen ready to spend $7.3 Billion to hide costs of scandal · CEO Martin Winterkorn resigns · Volkswagen announced to repair 11 million vehicles those are affected by the emission. · The investigation found CO2 emissions and figures are also affected by the irregularities. · The German Federal Motor Transport Authority (KBA) approved certain model of Volkswagen |
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2016-2017 |
· Volkswagen announces substantial compensation for nearly 500,000 2.0-litre vehicles. · Volkswagen agreed to appeal guilty against the scandal and to pay $4.3 billion in penalties. · Six of the executives were charged for the scandal (Gates et al 2017). |
The scandal created awareness among people and various other governing bodies. A wide range of companies were under scrutiny. They were prone to legal proceeding against them. A study has shown that this eventually led to decline in the market of few of the companies like Volvo, Renault, Jeep, Hyundai etc. there were discussions across the world that the software controlled machinery is generally prone to cheating. The only way possible is to make the software code accessible to the public. Rigging pollution has resulted in huge legal fines and a possible criminal investigation. The blow to the German Engineering company has blown the economic growth in return. The total net value of the entire diesel-gate including all the fines and expenses is estimated to be $34.5 billion (Milne, 2015; Smith, and Parloff, 2016). The recent revelation has caused a negative impact on the automotive companies. The scandal has affected the other market players that sell diesel vehicle in the US now. It was later discovered that around 11 million cars worldwide were using the same software causing pollution. The European commission asked every member state to investigate into the matter. There was more strict law in order to control the pollution emitted by the defected engine. It has however affected the future revenue of the company by denting the image of the brand. The brand has lost the faith of most of its customers across the globe. This will take time to retain the similar previous place (Blackwelder et al 2016). Six of the executives were charged for the scandal. They were charged for misusing their position in the organization. The company is moreover facing charges from the government across the world. This is affecting the brand image and will consequently affect the other brands in the market who are manufacturing automotive vehicle. Environment is rarely given importance by the companies these days however it is one of the major concern for the government bodies (Cue, 2015).
Cheating on the customers is not a victimless crime. This has been affecting the human health and environment. In crime against the environment it is difficult to evaluate the amount of damage caused to it. The emission was about 30 to 40 times more than the allowed level that has a potential to cause a lot of health damage. This case is just a hint against the consequences caused by corporate cheating. The Volkswagen failed to effectively control Nitric Oxide (NO) and Nitrogen Dioxide (NO2). It can cause respiratory damages and can hamper the environment. There must be a better understanding among the employees in order to prioritize the cost over quality. This will gradually affect the overall profit to the company.
In the United States Volkswagen has managed to fix or buy all the affected vehicles. They have given compensation to the car owners for misleading them. It has to however fix majority of vehicles that are generating pollution. They have agreed upon buying back vehicles by December 2018(Crête, 2016).
In Europe the company has agreed upon installing a small tubular part in some of the engine. This would however slightly affect the emission control but not enough with the American standard. The total net value of the entire diesel-gate including all the fines and expenses is estimated to be $34.5 billion. The recent revelation has caused a negative impact on the automotive companies. The scandal has affected the other market players that sell diesel vehicle in the US now. The company is however trying to replenish the brand image by complying with the strict norms. This is a necessary step that needs to be carried further in order to organize the current environmental problems. There are already many problems happening in the surrounding which is affecting the overall automotive industry. There were discussions across the world that the software controlled machinery is generally prone to cheating. The only way possible is to make the software code accessible to the public (Lane, 2016).
In the recent time this situation has already created a pressure on the other companies to take proper regulatory measures. Moreover government across the world is taking strict actions against the automotive companies to adhere properly. There is a necessity to look into the matter carefully so that such incidences can be controlled. Such an incidence however affects the brand image for a long term. People find difficulty in trusting the brand once again due to previous incidence. In such a situation it is important to look seriously on all the defaults that are caused during the tie line (Jung and Park, 2017; Boodoo, 2016).
Conclusion
To conclude the overall scandal related to the Volkswagen has a deep and long lasting impact on the company. Companies want to outperform against various competitors by putting burden on the consumer. In order to make huge profits company are finding wrongful methods to make profits. . There was a lot of competitive pressure on the company and some of the people in order to make excess profit are getting more affected by the situation. There must be a better understanding among the employees in order to prioritize the cost over quality. In order to earn an effective market place it has become important for the companies not to depend upon a wrongful technique. The German Giant has however admitted the allegation made against it due to emission. The agency got to know that the company has been intentionally using turbo charged direct injection diesel engines to activate certain level of emission. In the competitive environment it is necessary to manage the issues by keeping a mandatory check over the current and future. The company deployed programme in 11 million cars across the world from 2009- 2015. This is however important for every company across the world to keep effective measures while checking the negative impact on the environment.
References
Barrett, S.R., Speth, R.L., Eastham, S.D., Delouse, I.C., Ashok, A., Malina, R. and Keith, D.W., 2015. Impact of the Volkswagen emissions control defeat device on US public health. Environmental Research Letters, 10(11), p.114005.
Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J.S. and Wozniak, D., 2016. The Volkswagen Scandal.
Boodoo, M.U., 2016. Volkswagen affair: global coordination is needed to enforce ethical corporate behaviour. LSE Business Review.
Crête, R., 2016. The Volkswagen Scandal from the Viewpoint of Corporate Governance. Eur. J. Risk Reg., 7, p.25.
Cue, A., 2015. Volkswagen’s Diesel Emission Scandal “Dieselgate”.
Ewing, J., 2015. Volkswagen says 11 million cars worldwide are affected in diesel deception. The New York Times, 22.
Gates, G. et al 2017.. How Volkswagen’s ‘Defeat Devices’ worked. (Online) Available at: https://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html Accessed on: March 17, 2017
Jung, J.C. and Park, S.B., 2017. Volkswagen’s Diesel Emissions Scandal. Thunderbird International Business Review, 59(1).
Lane, E.L., 2016. Volkswagen and the High-tech Greenwash. Eur. J. Risk Reg., 7, p.32.
Milne, R., 2015. Volkswagen: System failure. Financial Times November, 15.
Oldenkamp, R., van Zelm, R. and Huijbregts, M.A., 2016. Valuing the human health damage caused by the fraud of Volkswagen. Environmental Pollution, 212, pp.121-127.
Smith,G. and Parloff,R.2016. Hoaxwagen. (Online) Available at: https://fortune.com/inside-volkswagen-emissions-scandal/ Accessed on: March 17, 2017
The Volkswagen Emissions Scandal,2016. (Online) Available at: https://www.valuewalk.com/2016/02/volkswagen-emissions-scandal/ Accessed on: March 17, 2017
The Volkswagen emissions scandal explained,2016. (Online) Available at: https://www.theguardian.com/business/ng-interactive/2015/sep/23/volkswagen-emissions-scandal-explained-diesel-cars Accessed on: March 17, 2017
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