5 December 2016

What we can learn from the emissions scandal

On September the 18th 2015 the US Environmental Protection Agency revealed the Volkswagen emissions scandal (some also call it “dieselgate”). What sounded for most impossible became truth, because before only environmental activities showed highest concerns and saw these figures as a problem. The well-known German car manufacturer Volkswagen who also owns the car brands Audi, Porsche, Seat and Skoda was accused of manipulating Diesel cars in large numbers in terms of lowering the CO2 emissions. This led to an enormous damage and loss of reputation and the stock price lost a third during the days after it went to public. Until today the Volkswagen stock price hasn’t recovered fully and it probably won’t for the next 2-3 years.

Volkswagen stock price falling, autum 2015

In the meantime the stock price went up again to EUR 130.-. Whether and how Volkswagen will overcome this situation is not predictable, some Analysts say that up to 20 – 25 billion Euro have to be paid as an overall compensation. Alone in the US the costs are estimated by almost 15 billion US Dollar. Some other estimations by Analysts even say that the overall compensation costs worldwide will be almost as high as 30 billion Euro. The scandal proves again that manipulation does not pay off, because the high fines are much more expensive than what the company could have possibly earned through higher sales figures of Diesel cars. Basically it is shocking that a multinational company of this size and so much environmental responsibility could have chosen this strategy to increase the sales figures.

It is a mystery how the Volkswagen company got tempted by this impudent manipulation of the emissions on the car market. Either the Top Management really didn’t have any idea what was going on, which is highly unlikely or they thought that no one will find out what they were doing. The advertisement clip from 2015 in which elderly ladies talk about the new clean Diesel engines makes the whole manipulation even more cynical as it already is.

The next years will show how the car industry is handling its environmental responsibility or if it is still treated as a figure that gets a little make-up so it looks good in the fancy sales brochures. In the meantime we are already confronted with the next scandal, if one takes a closer look to the fuel consumption of cars. This is already for longer a hot topic and you can read more about it on the European NGO Transport & Environment’s website. The common tests have to be renewed and adjusted to the real circumstances of the daily usage of a car, so that the customers have the chance to make themselves a broader picture of the car they are choosing to buy.

Our conclusion is that all sorts of manipulation within the car industry or any other industry will be sooner or later revealed and that it doesn’t pay off for anyone. The opposite is the fact, because the loss of reputation and the tremendous costs of compensation payments will be much higher than what companies have gained through manipulating. Hopefully that will discourage many companies from doing the same mistakes.

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