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Corporate Governance Of Gas Scandal In The Automotive Industry

836 Words4 Pages

KOÇ UNIVERSITY

GRADUATE SCHOOL OF BUSINESS

DEPARTMENT OF BUSINESS ADMINISTRATION

KALENDER AKGÜL

MGMT 512: Corporate Governance

Exam-I

SUPERVISOR

Aymelek KOZİKOĞLU

ISTANBUL

2017

1 | P a g e

ABSTRACT

Volkswagen gas emission problem is of the major scandal in automotive industry in 2015.

This paper defines the reason of scandal as a corporate governance case. The reason of problem,

decision of VW management, and problem solving method is defined in this article.

2 | P a g e

Table of Contents

ABSTRACT ...................................................................................................................................................... …show more content…

It was known that nearly half million of vehicles were effected from this

problem in USA, and 11 million in Europe and Asia [4-]. The problem was not a technical issue,

it was claimed that VW board of management hide this problem. For that reason, company had

lost about 25 billion € of their shares in a short time.

The main question is that why VW made this big mistake that it would drag itself into

the business. One of the article about the subject claims that, brand manager Wolfgang Bernhard

and engineer Rudolf Krebs were working on the new diesel engine to be used in the US [4-].

However, it is defined that it has $ 335 cost per vehicle to bring vehicles to US emissions

standards. However, it is also asserted that head of Volkswagen 's finance department found this

cost very high and for that reason they suggested another way to solve this important issue.

Hence, they improved a new software or device that realizes that vehicle is in test condition. This

dishonesty situation caused that VW to save nearly 4 billion € in total. However, they lost 25

billion € of their shares in a short time and also VW was punished that to pay 15 billion €. In

addition to that, they called back nearly 600000 vehicles

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