Vw Diesel Affair Case Study

Improved Essays
Chapter 2
A review about VW Diesel affair

2.1 Outline
The diesel gate emission scandal came into picture in 18 September 2015 when (EPA) Environmental Protection Agency of US found that VW Group had manufactured diesel cars by installing a fraud software known as “defeat device” to cheat emission tests. By the violation of the Clean Air Act this software manipulates the NOX emission rating in order to meet US Tier 2 standards during the laboratory testing, but emit nearly 40 times more NOX during actual driving. Nearly 11 million diesel cars worldwide and 0.482 million in US are affected which are built in between 2009 to 2015 having a Type EA 189 1.2, 1.6, 2.0- liter pre-Euro 6 diesel engine. Meanwhile, VW Group’s stock price shrunk by 30% in a week. ( )

2.2 Why VW took such ‘clean diesel’ steps?
Diesel engines have less COX emission, more fuel economy, and high work efficiency as compared to conventional gasoline engine. That’s why diesel engine plays a key role in order to improve average manufacturers fleet miles per gallon index. This is one of the main reason why Europeans rely on
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VW announced the actual figure of affected vehicle worldwide which was near about 11 million and to fix these affected cars they put aside $7.3 Bn. In November 2015, “goodwill package” worth $500 to $1000 depend on car model is announced by VW for the victims of car owners. US Department of Justice accused VW for the violation of Clean Air Act filing dozens of charges. According to analysts, this scam could cost VW near about $87 Bn including all fines, recalls, incentives to Dealers, goodwill to owner and if VW cost such a huge $87 Bn to fix this then that would be world’s biggest fix as compared to recent BP Deepwater horizon oil spill in 2010 which cost near about $20 Bn or Enron scam in 2001 which cost $60 Bn results in collapse of the corporation. (7),(

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