Dieselgate Scandal: The People's Car

Introduction Volkswagen has recently been under extensive investigation due to the dieselgate scandal. Three federal agencies sued Volkswagen for $14.7 billion for its excessive diesel emission, this settlement was the highest ever paid lawsuit under the Clean Air Act. Volkswagen has been around since 1937 and was founded in Wolfsburg, Germany. Although back then it was known as “Volkswagenwerk” or “The People’s Car”. The original idea behind Volkswagen was to mass produce an affordable but speedy car.

Unfortunately, there was a disconnect somewhere along the way, due to the fact of the the faulty computer systems. These systems allow the driver to experience more power and mileage per gallon, however, the cars affected also release heavier

Showing that the dieselgate scandal had a devastating effect on the stock of Volkswagen. This shows that people knew Volkswagen was going to take a huge hit in penalty expenses. The stock has dropped -20% since the start of the scandal, which hurts Volkswagen because people do not think they are worth as much anymore. Many investors in fact lost money as of now, thus, hurting Volkswagen even more because possibly some people lost faith or loyalty to Volkswagen due to the lies they have

This shows the disgate had a temporary effect of the gross profit margin of Volkswagen. However, it is known that GM and Toyota also took a hit in 2015, both these car manufacturers had a hit in profits for their own reasons. Not nearly as devastating as Volkswagen, nonetheless, this makes Volkswagens hit seem less harsh. It is important to state that Volkswagen itself took a hit but the subsidiaries of Volkswagen being: Porsche, Audi, Lamborghini, SEAT, Bentley, and a few more, still managed to turn profits. The dip in 2015 for Volkswagen shows that the people truly did have an opinion towards the faulty emissions software. However, the spike the following year shows that the scandal did not have a long lasting impression on the public, brand loyalty is huge among car companies for many of families. Brand loyal persons toward Volkswagen will most likely be repeat customers and will not be devastated by the emission scandal. However, in society as a whole, there is a trend in the perception of businesses to help the environment. For Volkswagen to release a car, intentionally, that releases 40 times the legal limit of pollution into the atmosphere, does not sit well with the social activists who promote an eco friendly