Crisis Management - Volkswagen Case Study

The Volkswagen emissions scandal
Disaster management and crisis communication

The Crisis
About the Volkswagen crisis
In September 2015, the Environmental Protection Agency

accused Volkswagen of manipulating its engine controls
to be able to pass laboratory emissions tests. Not only
was the company violating the Clean Air Act by selling
vehicles that didn’t meet environmental requirements,
but it was also violating its customers’ trust by making
its cars seem more environmentally friendly.
About the Volkswagen crisis
Unfortunately, the way the company handled the scandal made things even
worse. As the story continued to evolve, the company’s response was seen as
inconsistent and, at times, contradictory to previous statements. Executives
claimed they didn’t know about the cheating, only to reveal they did just a few
days later. Meanwhile, the company’s PR and social media teams struggled to
keep up.
As the company set out to recall millions of vehicles, officials promised to
reimburse some, but not all, customers for their troubles.
All the while, consumers reported that the company seemed to be handling the
crisis in a dishonest way by not fully “owning” its role in the scandal.
Pre-crisis
According to the EPA, Volkswagen
had insisted for a year before the
outbreak of the scandal that
discrepancies were mere technical
glitches. Volkswagen only fully
acknowledged that they had
manipulated the vehicle emission
tests after being confronted with
evidence regarding the "defeat
device".
Former Volkswagen AG CEO-

Martin Winterkorn in March 2015
The first sign that Volkswagen was
ready to come clean reportedly
occurred on 21 August 2015 at a
conference on green transportation
in Pacific Grove, California, where
an unnamed company representative
approached Christopher Grundler,
director of the EPA Office of
Transportation and Air Quality, and
surprised him by informally
admitting that the company had been
deceiving regulators.

Post-crisis
Volkswagen’s CEO Martin Winterkorn
said: "I personally am deeply sorry that
we have broken the trust of our customers
and the public."
Winterkorn was in charge at Volkswagen
from the start of 2008 to September 2015.
He attributed the admitted wrongdoing to
"the terrible mistakes of a few people".
Winterkorn initially resisted calls to
step down from his leadership role at VW,
but then resigned as CEO on 23 September
2015.

Volkswagen Group of America CEO Michael
Horn was more direct, saying, "We've
totally screwed up.” Horn added, "Our
company was dishonest with the EPA, and
the California Air Resources Board and
with all of you.” Olaf Lies, a Volkswagen
board member and economy minister of
Lower Saxony, later told the BBC that the
people "who allowed this to happen, or
who made the decision to install this
software" acted criminally, and must be
held personally accountable. He also said
the board only found out about the
problems "shortly before the media did",
and expressed concerns over "why the
board wasn't informed earlier about the
problems when they were known about
over a year ago in the United States". Former Volkswagen AG CEO-
Stakeholders
INTERNAL STAKEHOLDERS EXTERNAL STAKEHOLDERS
Volkswagen group general public
International council on clean

transportation Communities that are affected because of
the comapany’s fault
US EPA
Government
Stockholders
business support groups
Customers
the media
Suppliers
Creditors
Employees
Message
action plan
Repercussions in India
As of 25 September 2015, the Indian government directed the Automotive
Research Association of India (ARAI) to investigate whether Volkswagen's
vehicles had circumvented Indian laws and regulations on vehicle emission
testing. On 22 September 2015 the Indian Foundation of Transport, Research
and Training (IFTRT) demanded a probe into Volkswagen's Confirmation of
Production process for vehicles sold in India. In October the Government of
India later extended its deadline for the test results to the end of October
2015. On 11 January 2017, ARAI's investigation into defeat devices was
published and revealed that Volkswagen India had installed a derivation of
the software used in the U.S. to defeat emission testing procedures in all of
the Volkswagen group's product range in India with EA 189 engine series. This
included 1.2-L, 1.5-L, 1.6-L and 2.0-L diesel engine variants across three
different brands - Audi, Skoda and Volkswagen. The report called the defeat
device "not a product failure but a clear case of cheating".
New orders, September 2015
As of October 2015, Sales of vehicles with EA 189 engines were halted
in some European countries, including Spain, Switzerland, Italy, the
Netherlands, Belgium and the UK.
In the United States, VW withdrew its application for emissions
certification for its 2016 diesel models, leaving thousands of
vehicles stranded at ports in October 2015, which the company said
contained software which should have been disclosed to and certified
by the EPA.EPA quarantined some 2016-models until it would become
clear that their catalysts perform the same on the road as they do in
tests.
Compensation, November 2015
● On 18 November 2015, VW said that approximately one quarter of the
affected vehicle owners had applied to the program, which was estimated
to cost at least $120 million in benefits.
● VW confirmed that it is offering vouchers including to customers in

Canada.
● On 21 April 2016, the federal district court for the Northern District of
California, announced that Volkswagen would offer its US customers
"substantial compensation" and buyback nearly 500,000 2.0-litre
vehicles, as part of a settlement in North America.
Media
Mapping
Advertising, 2015
On the occasion of German Unity Day, Volkswagen launched an ad

campaign in German Sunday newspapers, that it wanted to express its
joy about the 25th anniversary of German reunification, its pride
about having shaped the country together with all people for the last
25 years, to give thanks for the confidence of the customers it had
experienced during all this time and that it wanted to thank all its
employees and trade partners in Germany, and that in one sentence,
that "it would do everything to win back the confidence of its
customers"
Clear Social Media Engagement or Crisis
Management Strategy.
On September 22, four full days after recalls were announced, Volkswagen
published a tweet directing people to an online apology video by
Volkswagen’s recently resigned CEO, Martin Winterkorn. This was the only
official statement published on their social media accounts.
Hashtags including #BuyBackMyTDI, #VWGate, and #VWCares have sprung up

on Twitter, allowing car owners to express their frustration and
disappointment. Because so much of the backlash has come through
Twitter, it would have been a wise strategic decision to reach out to
customers individually on that platform. Ignoring angry Tweeters never
makes them go away.
Media and its
manifestatio
n
The brand likely would have fared better
through this crisis if it had taken a few
key steps:
● Been up front and honest as soon as the story broke
● Kept its response consistent, with an empathetic and apologetic tone
● Reimbursed all affected customers the same amount
● Demonstrated a commitment to change in some way
(e.g., by setting new emissions goals or partnering with an environmental
organization to help combat air pollution)
A presentation by
Sugandha Taneja, Apoorvaa Singh
and Aditya Sardana
Subject: Corporate Communication

Assignment #3: Disaster Management and Crisis
Communication

Crisis Management - Volkswagen Case Study

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What caused the Volkswagen emissions scandal?

How did Volkswagen initially respond to the scandal?

The Volkswagen emissions scandal

Disaster management and crisis communication

In September 2015, the Environmental Protection Agency

Former Volkswagen AG CEO-

Former Volkswagen AG CEO-

Former Volkswagen AG CEO-

Volkswagen group general public

International council on clean

● VW confirmed that it is offering vouchers including to customers in

On the occasion of German Unity Day, Volkswagen launched an ad

Hashtags including #BuyBackMyTDI, #VWGate, and #VWCares have sprung up

Subject: Corporate Communication

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