Automotive Management Perspective to Volkswagen Diesel Scandal. Data till 20th November 2015

1. Diesel Gate
Utsav Agrawal
Vaibhav Chawla
Viswak Aanur Ganapathi
Sooraj Edayattu Manoharan
HTW Berlin- Automotive Management 1 -
WS 2015/16
1

2. Introduction
• What ?
• How ?
• Why ?
• When ?
• Where ?
• Who ?

3. Automotive Management 1 - WS 2015/16 3

4. Automotive Management 1 - WS 2015/16
Brands Affected
4
Source : Volkswagen Interim Report Oct 28, 2015

5. The TDI League
Automotive Management 1 - WS 2015/16 5
League 2.0 League 3.0

6. 1973
1995
• Temperature sensing switches which
cut out pollution controls at lower
temperature.
• 25000 vehicles.
• Fined for Violation of Clean air act
• Paid 120,000$ without admitting
wrongdoing
• Circumventing Pollution controls
• 470,000 Cadillac sedans with 4.9 Liter
V8 engines.
• Pollution controls turned off when
Air-conditioning is turned ON.
• 45 million $
History
Automotive Management 1 - WS 2015/16 6
Source : Forbes.com

7. 2005
Adopted
Daimler
Ad-blu
2006
Hint of
entry into
US Diesel
Market
2007
Audi
launches its
Diesel in U.S
Detroit Motor
Show.
2008
VW Jetta
2009 Clean
Diesel TDI
2009- Audi
A3 2010
Clean Diesel
TDI
Evolution
Automotive Management 1 - WS 2015/16 7

8. 2013-14
John German Peter Mock
JRC Europe identified on road emissions to exceed 4 to 7 times
Euro standards
Automotive Management 1 - WS 2015/16 8
Source : WVU_LDDV_in-use_ICCT_Report_Final_may2014

9. Dr .Gregory J Thompson
Mr. Marc C. Besch
Mr. Daniel K Carder
Mr. Arvind Thiruvengadam
2014
• May- communicated the result of study to US-
EPA & CARB.
• Dec 2014 – VW agreed upon for a recall
Automotive Management 1 - WS 2015/16 9

10. 2015
April 2015 Emission Service Action letters to customers
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September 2015
September 2015- Volkswagen Deception
exposed
Source : US-EPA

11. Technology Manipulation
Automotive Management 1 - WS 2015/16 11
Lean Fuel Mixture – On
road
Rich Fuel Mixture – On
test platform
Source: jalopnik.com

12. Type Approval
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Source : US-EPA

13. Real World Emission
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14. Possible Solutions
• Reprogrammed software
• Larger NOx trap
• Selective Catalyst Reduction
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15. The Ripple Effect
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Source : Volkswagen Interim Report Oct 28, 2015

16. Automotive Management 1 - WS 2015/16 16
Top Management Restructure
Sep 23rd Sep 25th
Source : Volkswagenag.com

17. The New Board
Dr. Herbert Diess
Chairman of the Board of
Management of the
Volkswagen Passenger
Cars brand
Dr. rer. pol. h. c. Francisco
Javier Garcia Sanz
Functional Responsibility
'Procurement'
Prof. Dr. rer. pol. Dr.-Ing.
E. h. Jochem Heizmann
Functional Responsibility
'China'
Prof. h. c. Dr. rer. pol.
Horst Neumann
Functional Responsibility
'Human Resources and
Organization'
Andreas Renschler
Functional Responsibility
'Commercial Vehicles'
Prof. Rupert Stadler
Chairman of the Board of
Management of Audi AG
Frank Witter
Functional Responsibility
'Finance and Controlling'
Automotive Management 1 - WS 2015/16 17
Source : Volkswagenag.com

18. • Commissioned Jones Day- A U.S Based law firm from
October 1st
• Actions against responsible department heads
Mr Frank Tuch – Head of Quality Control
Mr Richard Dorenkamp- Head of Technical Development low emission engines.
Mr Falko Rudolph- Head of development of diesel engines
Mr Ulrich Hackenberg, Audi management board member
Mr Wolfgang Hatz, Porsche’s management board
Mr Heinz-Jakob Neusser, Management board member of VW
• Ms Christine Hohmann-Dennhardt as new board member for
Integrity and Legal Affairs from Jan 2016
Management Actions
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Source : Reuters.com

19. Measures
Automotive Management 1 - WS 2015/16 19
Source : Bloomberg

20. Automotive Management 1 - WS 2015/16 20
Source : Newyork times

21. The Bear or the Bull ?
Automotive Management 1 - WS 2015/16 21
Source : Credit Suisse/

22. Expensive !
900
million
1.2
billion
?
Automotive Management 1 - WS 2015/16 22
Source : http://fortune.com/2015/09/26/auto-industry-scandals/

23. Market Capitalization
Automotive Management 1 - WS 2015/16 23
Source : Yahoo finance

24. Competitors
Automotive Management 1 - WS 2015/16 24
Source : Yahoo finance

25. German Engineering
Automotive Management 1 - WS 2015/16 25
Source : Yahoo finance

26. Major Shareholder
Automotive Management 1 - WS 2015/16 26
Source : Yahoo finance

27. Rescinded
Automotive Management 1 - WS 2015/16 27
Source : AutoBlog.com

28. Profit or Values
Automotive Management 1 - WS 2015/16 28
Source: Telegraph.co.uk

29. Poor Decisions ?
NOX control technologies for Euro 6 Diesel passenger cars – ICCT – Sep 2015 + Own
Illustration
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Vs
37500$ / Car

30. Lee Iacocca
• Publicize the issue and state of the
company.
• Information Penetration Back and forth
Automotive Management 1 - WS 2015/16 30
Source: Lee Iacocca & Chrysler Rescue

31. References
• http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2015/09/VW_Kaluga.html
• http://www.reuters.com/article/2015/09/24/us-usa-volkswagen-letters-exclusive-
idUSKCN0RO0BD20150924#5AL1tMWG1uPWmMr6.97
• http://www.bloombergview.com/articles/2015-09-23/volkswagen-and-the-epa-s-dirty-little-secret
• http://jalopnik.com/understanding-the-test-mode-that-let-vw-trick-the-emiss-
1732175835?sidebar_promotions_icons=testingon&utm_expid=66866090-
67.e9PWeE2DSnKObFD7vNEoqg.2
• http://www.theguardian.com/business/2015/oct/16/volkswagen-market-share-declines-in-september
• http://www.forbes.com/sites/dalebuss/2012/09/18/volkswagen-grows-up-with-new-why-vw-marketing-
campaign/
• http://www.cnbc.com/2015/10/15/watchdog-orders-vw-to-recall-24m-vehicles-report.html
• http://www.bbc.com/news/business-34536573
• http://arstechnica.com/cars/2015/10/volkswagens-emissions-cheating-scandal-has-a-long-complicated-
history/
• http://www.independent.co.uk/news/business/analysis-and-features/volkswagen-emissions-scandal-
forty-years-of-greenwashing-the-well-travelled-road-taken-by-vw-10516209.html
• http://fortune.com/2015/09/26/auto-industry-scandals/
• www.forbes.com
• www.telegrapgh.co.uk
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32. CONTINUES...
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