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Volkswagen Dieselgate: an analysis of Volkswagen AG's crisis communication as a response to the emissions scandal from 2015

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Volkswagen Dieselgate:
An Analysis of Volkswagen AG's Crisis Communication
as a Response to the Emissions Scandal from 2015

By
Anne Bez

A thesis submitted in partial fulfillment
of the requirements for the degree of
Master of Strategic Public Relations
Annenberg School for Communications and Journalism
University of Southern California
For a proposed graduation date of May 13, 2016

2
ACKNOWLEDGEMENTS

I would first like to thank my committee chair, Professor Daren Brabham of the Annenberg
School for Communication and Journalism for his insightful comments and continuous support.

I would also like to thank my committee members Professor Burghardt Tenderich and Professor
Jennifer D. Floto of the Annenberg School for Communication and Journalism. I am grateful for
the guidance they have offered, for the expertise they have given and for the enthusiasm they
have relentlessly shared with me.

Finally, I would like to express my profound gratefulness to my parents; without them none of
this would have been possible. To my fiancé and my friends I express my deepest gratitude for
their continuous support, patience and their reassuring smiles. These have become invaluable to
me throughout not only the process of writing this thesis, but throughout my years of study at the
University of Southern California.

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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION .................................................................................................... 4
CHAPTER 2: THE CRISIS UNFOLDS ......................................................................................... 6
CHAPTER 3: VOLKSWAGEN HISTORY ................................................................................. 11
a.1934-1945 Volkswagen During Nazi Germany ..................................................................... 11
b. 1945-1949 The Post-War Era ............................................................................................... 14
c.1959-1960 ............................................................................................................................... 17
d. 1961-1972 ............................................................................................................................. 20
e.1973-1981 ............................................................................................................................... 21
f. 1982-1991 ............................................................................................................................ 22
g.1992-2012 .............................................................................................................................. 23
h. 2013-Present ........................................................................................................................ 25
CHAPTER 4: CRISIS WEEK 1 à 18-24 SEPTEMBER 2015 ................................................... 27
CHAPTER 5: CRISIS WEEK 2 à 25 SEPTEMBER – 1 OCTOBER 2015 ............................... 34
CHAPTER 6: CRISIS WEEK 3 à 2 – 8 OCTOBER 2015 ......................................................... 41
CHAPTER 7: CRISIS WEEK 4 à 9 – 15 OCTOBER 2015 ....................................................... 47
CHAPTER 8: CRISIS WEEK 5 à 16 – 22 OCTOBER 2015 ..................................................... 48
CHAPTER 9: CRISIS WEEK 6 à 23 – 29 OCTOBER 2015 .................................................... 50
CHAPTER 10: CRISIS WEEK 7 à 30 OCTOBER – 5 NOVEMBER 2015 .............................. 52
CHAPTER 11: CRISIS WEEK 8 à 6 – 12 NOVEMBER 2015 ................................................ 54
CHAPTER 12: CRISIS WEEK 9 à 13 – 19 NOVEMBER 2015 ............................................... 56
CHAPTER 13: CRISIS WEEK 10 + 11 à 20-26 NOVEMBER UNTIL 3 DECEMBER 2015 . 59
CHAPTER 14: CRISIS WEEK 12 à 4 – 10 DECEMBER 2015 ................................................ 61
CHAPTER 15: CRISIS WEEK 13 à 11 – 17 DECEMBER 2015 .............................................. 66
CHAPTER 16: CRISIS WEEK 17 à 8 – 14 JANUARY 2016 ................................................... 68
CHAPTER 17: MARKET ANALYSIS ........................................................................................ 71
CHAPTER 18: ANALYSIS .......................................................................................................... 74
1. Unified Corporate Messaging ................................................................................................ 74
2. Review the Role of Key Spokesperson in the US ................................................................. 75
3. Develop a National Campaign ............................................................................................... 75
4. Engage External Management Teams ................................................................................... 76
5.Create a Shareholder Informational Package ........................................................................ 77
6.Uphold the Value of Diesel Technology ............................................................................... 78
7.Hold a Dealership Conference in the U.S./Intensify Training .............................................. 78
CHAPTER 19: CONCLUSION .................................................................................................... 80

WORKS CITED ............................................................................................................................ 87

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CHAPTER 1: INTRODUCTION
The transportation industry is no stranger to crises, and the automobile sector is no
exception. Recent history has demonstrated that companies must expect the unexpected and be
prepared to face challenges head on. Issues that cause a crisis can have potentially damaging
effects on the corporate reputation of a company and can therefore influence the corporate brand
value. Although research is not conclusive, some theories suggest that firms who have created a
more positive image for their brand might benefit from this in economic terms (Smith, Smith and
Wang 201). Public Relations and corporate communications practitioners have long identified
the need to tackle the eventuality of a crisis situation and formulate strategic plans that allow
corporations to be better prepared to handle the unknowns. This preparation is done to minimize
damage to corporate reputation and ensure that the crisis response does not in itself create a
crisis.
It comes as a surprise, then, that large automobile corporations still demonstrate varying
degrees of crisis preparedness. Volkswagen is no exception. The German corporation takes pride
in being the world’s largest automobile manufacturer that is “on the side of the common person,”
says Vada Manager in an interview with the author. Like many large enterprises, “the strategy
that companies employ is that they like to own their own backyard, their backyard meaning their
home country,” explains Manager. The Volkswagen Group dominates the German backyard, as
the corporation employs hundreds of thousands of workers in Germany alone, and employs a
total of 600,000 workers worldwide. After Q1 2015 sales, the Volkswagen brand alone sold
757,630 cars, with a total market share of 22 percent in Germany. Volkswagen was ahead of
Mercedes Benz, Audi, BMW and Opel, all of which are the top brands in a rather crowded
German backyard (Bekker). Contrary to BMW or Mercedes, Volkswagen’s “heritage is more of
a people’s wagon and less of a luxury brand, has a very unique cache and there is a lot of pride,”

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says Manager. On an international level, Volkswagen profited from the ‘Made in Germany’
label. In the United States of America, Volkswagen had a market share of approximately 4.4
percent from January to March 2015 (Volkswagen AG, “Group Key Figures”), ahead of other
German manufacturers BMW and Daimler (Cain). In Western Europe, Volkswagen reported a
market share of 23.8 percent as well as a market share of 12.2 percent in Asia during the same
time period (Volkswagen AG, “Group Key Figures”). Volkswagen’s Group Strategy from the
2014 annual report states the following for its forward-looking strategy (Volkswagen AG,
“Group Strategy”):

Furthermore, Volkswagen added that they put a particular focus on “the environmentally
friendly orientation and profitability of [their] vehicle projects so that the Volkswagen Group has
the right products for success even in more challenging economic conditions” (Volkswagen AG,
“Group Strategy”). The corporation describes the current fleet of vehicles as “attractive and
environmentally friendly” and the Group’s “activities are primarily oriented on setting new
ecological standards” (Volkswagen AG, “Group Strategy”).

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Chapter 2: The Crisis Unfolds
Volkswagen put a particular focus on the US market, where the German manufacturer
still lagged behind its competitors—especially Toyota, Volkswagen’s direct competition in terms
of sales volume. In 2014, Michael Horn, CEO of the Volkswagen Group of America, announced
an updated strategy for the US division in order to better serve the American market with new
models more quickly (Bloomberg).
However, Volkswagen (“Group Strategy”) was confronted with reality when their goals
to be the “most successful, fascinating and sustainable automaker in the world by 2018” were
under heavy criticism. Volkswagen has been facing some turbulent times since September 2015,
when the Environmental Protection Agency (EPA) announced an investigation into a deliberate
software operation that manipulates nitrogen oxide, NO
x
, emissions readings in EA 189 1.2, 1.6
and 2.0 liter diesel engines and 3.0 liter TDI engines. Probing into the Volkswagen diesel
engines actually began in 2014, when Peter Mock of the International Council on Clear
Transportation (ICCT) found that there were significant discrepancies in emissions when
comparing laboratory-tested diesel vehicles and street-tested vehicles, leading him to notify his
American colleague John German to perform the same tests with American vehicles (Focus
Online). In collaboration with West Virginia University, German and his team tested
Volkswagen models Passat and Jetta and the BMW model X5; from the testing, only the BMW
met the United States’ emissions limits (Focus Online). The Volkswagen models exceeded legal
limits by multiples of up to 35, and the team of researchers reported their findings to the EPA,
causing the government agency to start an investigation to the matter (Focus Online).
After Volkswagen tried to replicate the results presented in Germany, the corporation
issued a software update recall of approximately 500,000 vehicles in December 2014 (Focus

7
Online). Unfortunately for Volkswagen, the California Air Resources Board continued testing
and was not able to determine any improvement, as emissions continued to far exceed the legal
US limits (Focus Online). The EPA and Volkswagen were notified about these findings by June
8, 2015, and Volkswagen faced a sales ban for the new 2016 models that still required
certification prior to their allowance (Focus Online). It was not until Volkswagen faced the risk
of losing the certification of their vehicles, and thus faced a sales ban, that they admitted to a
possible software manipulation (Focus Online).
According to online sources (Spiegel Online), employees of the corporation were
informed about possible illegal activities as early as 2011, but internal investigations have yet to
discover why there were no consequences following this discovery. The German automobile
supplier Bosch, who produced the manipulation software for Volkswagen, allegedly informed
the company of the misuse and that the software could be used for testing purposes, but that were
illegal when sold in vehicles (Spiegel Online). Volkswagen confirmed in September that
approximately 11 million cars of the brands Volkswagen, Audi, Porsche, SEAT and Skoda and
commercial vehicles from the years 2009-2015 have been affected (Ewing). Not long after this,
Volkswagen also announced that carbon dioxide (CO
2
) emissions are also being investigated,
with a total number of 36,000 vehicles being affected, although the manufacturer had initially
estimated a total of 800,000 affected vehicles (Bowley and Ewing).
The media meticulously followed the development of the crisis and the uproar among
stakeholders in both the USA and in Germany. Soon, Volkswagen was facing a media frenzy
that took its toll and left the company flabbergasted. Magazines, newspapers and social media
outlets across the United States and Germany called Volkswagen out on their sham, and the
corporation received much in the way of public mockery. Some examples of this can be seen in

8
satirical memes, such as in figure 1 (Darcy) and figure 2 (MassyBiagio) that have circulated
across numerous online platforms. The memes, parodies of common brand slogans such as
‘Fahrvergnügen’ and ‘Das Auto’ represent only a small number of the derisive content that can
be found on the World Wide Web. Der Spiegel, a prominent German magazine, was no less
contemptuous with the image of a group of men carrying a Volkswagen Beetle to what seems to
be its own funeral.

Figure 1 Figure 2

Figure 3

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The company’s brand image as a “people’s wagon” suffered as a result, as “people [felt]
let down, regardless of geography” (Manager); the public in both Germany and the United States
was widely affected. What followed were substantial changes in management, starting with the
resignation of Chief Executive Officer Prof. Dr. Martin Winterkorn and spiraling into the release
of many more employees. The last fourth months of the year 2015 proved to be some of the most
difficult in the history of the German corporation and left the world to question the corporate
governance of the previously largest automobile manufacturer in the world.
Now as of 2016, there are still many unanswered questions and uncertainties surrounding
the crisis. Volkswagen has pushed their corporate messaging and tried to back it up through
operational tactics. There is no doubt that the corporation’s actions and communications
demonstrate some evidence of the company’s awareness of how recent developments have
affected Volkswagen’s corporate reputation. Yet it remains questionable how effective
Volkswagen’s strategic communication has been and how their tactics have influenced
stakeholder’s perceptions of the company. Whilst the earnings reports from October 2015 may
have given some indication as to how the crisis may have affected Volkswagen’s performance,
the following months will give more concrete evidence as to how the company’s messaging is
resonating with stakeholders and how this is influencing their behavior.
This case analysis will aim to examine Volkswagen’s corporate communication strategy
between 18 September, 2015, and 14 January, 2016, by closely scrutinizing the company’s crisis
messaging throughout the United States of America and Germany. The terms Volkswagen, the
Volkswagen Group, the Volkswagen Aktiengesellschaft, the company, the corporation,
Volkswagen AG, VW and VW AG will be used interchangeably. Definitions of the term ‘crisis’
vary, even within the PR industry. This thesis will primarily use Coombs’ (Ongoing Crisis

10
Communication 2-3) definition of crisis: “the perception of an unpredictable event that threatens
important expectancies of stakeholders and can seriously impact an organization’s performance
and generate negative outcomes.” What is more, Coombs (Parameters for Crisis Communication
19) also suggests that stakeholders have a role in “co-creating the meaning of a crisis” as a result
of their perceptions of an event. Others have noted that a crisis, rather than being purely
negative, may also be viewed as an opportunity for growth and development (Ongoing Crisis
Communication 3). An important aspect to note is that “how stakeholders view an event has
ramifications for whether or not that event becomes a crisis”; a crisis can well be expected, but a
company cannot predict the crisis, as suggested by Coombs (Ongoing Crisis Communication 3).
Moreover, the term “crisis” should not be confused with the term “incident,” which
suggests a rare occurrence that does not warrant for a large appropriation of attention from a
company’s management (Coombs, “Ongoing Crisis Communication” 3). ‘Crisis management,’
in this thesis, will refer to the process used to address and handle any consequences caused by a
crisis. In addition to addressing crises, adequate crisis management strategies also involve
anticipating a crisis and creating a plan to minimize the negative impact. Therefore, the
management process consists of pre-crisis, crisis and post-crisis stages (4). Crisis communication
is a specific set of actions within the crisis management that is responsible for “the collection,
processing, and dissemination of information required to address a crisis situation” (4). The
analysis looks at Volkswagen’s crisis communication through official company statements as
well as corporate interviews and other channels, such as social media. The goal of this paper is to
study the corporation’s approach to communicating with consumers, government officials and
agencies, employees and shareholders.

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Chapter 3: Volkswagen History
a. 1934-1945 Volkswagen During Nazi Germany
Volkswagen’s early company history is scabrous and “highly unusual,” having received
crucial support from Adolf Hitler and the Nazi regime during World War II. The idea behind the
company name, which is literally translated into “People’s Car,” had its origins as early as 1934,
when Ferdinand Porsche and Adolf Hitler identified the need for a lightweight, inexpensive
passenger car that would cost buyers 990 Reichsmark and accommodate four average adults.
The vehicle was intended to serve the people, as opposed to many other utility military vehicles
that were being built for war. By 1935, Porsche had constructed an initial prototype that was
shown to the Reichsverband der Deutschen Automobilindustrie (RDA) (Tolliday).
While Porsche was able to overcome various production issues, it remained questionable
whether or not the car would be a lucrative endeavor or if the low price would even be able to
cover the costs of production. In an effort to better control future production and finances, a
group consisting of the Deutsche Arbeitsfront, Paul A. Brinckmann, Alexander Halder and
Werner Boltz founded the Gesellschaft zur Vorbereitung des Deutschen Volkswagens GmbH
(The Association Preparing the German Volkswagen) on May 28, 1937, with Porsche in the
leading role as director of the association. The creation of the manufacturing plant in Wolfsburg,
Germany, was said to cost the government more than 180 million Reichsmark. It was expected
that more than 1.5 million so-called W30 vehicles would be produced at this location and that the
manufacturer would employ more than 21,000 workers. Porsche acquired logistical and
operational insights from visits to other automobile production facilities, such as the Ford plants
in Detroit, where the director also purchased specialized machines necessary for the production
in Germany (Grieger and Lupa 10-12).

12
Preparations for the construction of the Wolfsburg plant started in February 1938, and by
May 26, 1938, Hitler gave a speech commending the start of construction and he introduced the
term KdF-Wagen, Kraft durch Freude, alluding to the “strength through joy.” Later in the year,
an advertising campaign was launched, and the Deutsche Arbeitsfront made use of Hitler’s
propaganda campaigns to create demand for the vehicle by incentivizing Germans to invest a
small amount in the DAF that would allow them to later purchase a vehicle (Grieger and Lupa
14).

Figure 4

Still struggling with the financial constraints of production and rising costs of inventory
and machines, the company’s capital nevertheless increased tremendously and a newly formed
Board was appointed to the company—now named Volkswagenwerk GmbH. With the new
structures in place, Volkswagen officially presented the new KdF vehicle at an automobile show
in Berlin in early 1939. The company also gave journalists the opportunity to visit the
construction underway in Wolfsburg and test drive the new vehicles (Grieger and Lupa 18).

13
The beginning of World War II left Volkswagen with no opportunities to manufacture
civilian vehicles, as the company’s facilities were needed strictly for military purposes. In the
early 1940s, Volkswagen was required to work with the German Wehrmacht to create military
utility vehicles. Furthermore, the company also assisted in servicing and repairing airplanes for
the Luftwaffe. Following some changes in management, Dr. Anton Piech was introduced to the
company as one of the new directors. His role was predominantly to lead the new Wolfsburg
plant. Meanwhile, in order to maintain the illusion of the success of the company’s mass-
production, a small number of KdF vehicles were produced and distributed to highly ranked
members of the regime. The production was accompanied by images (like those below) to
support the propaganda (Grieger and Lupa 22).

Figure 5

In 1942, the Minister of Armaments, Albert Speer, was able to secure that
Volkgswagenwerk would be the only auto manufacturer in the German Reich (Grieger and Lupa

14
24). The company therefore continued to supply the German regime with utility vehicles such as
the VW166, a four-wheel drive car that had the ability to float on water (23). At this time,
Volkswagenwerk had produced more than 9,000 military vehicles and limousines (25). The
company later played a key role for the German military not only for the production of utility
vehicles, but also because Volkswagenwerk would be one of the key producers of flight bombs.
Towards the end of 1943, the company underwent structural changes after the Board was
essentially demoted and the replaced by Heinrich Simon, central officer of Financial
Management for the DAF. Volkswagenwerk was also named as the “Patenfirma,” or
collaborator, of Automobiles Peugeot, enabling the company to access materials through the
French car manufacturer (26). Despite the lucrative production, the company faced some
setbacks in 1944 when American troops bombed the main plant in Wolfsburg. At this time,
Volkswagen’s supply of “regular” German workers were becoming increasingly sparse; many
prisoners of war and prisoners from concentration camps like Auschwitz and Neuengamme were
forced into labor in Wolfsburg in order to battle the dwindling German labor force. Between
December 1939 and December 1944, roughly two thirds of the total labor group was forced
workers composed of Jewish, Soviet, Polish, French, Serbian, Italian and Dutch forced laborers
(Kocks and Uhl 7, 9). Until American troops reached the Wolfsburg plant on April 11, 1945 and
freed the laborers, nearly 20,000 prisoners were or had been forced into working for
Volkswagenwerk (10).

b. 1945-1949 The Post-War Era
On April 11, 1945, American troops marched into the Volkswagenwerk Wolfsburg plant,
freeing forced laborers and taking command of the plant. After the end of World War II, both

15
American and British troops recognized the importance of Volkswagen as one of the only large
employers with the potential to accommodate a large number of workers. In rebuilding the
industry, Volkswagen played a central role not only for the region, but also for Germany.
Employees struggled with minimal supplies and provisions, so it became the responsibility of
Volkswagen to secure these for workers in order to stabilize the work force. The British military,
now fiduciary of the company, had high expectations of Volkswagen and sought to produce
4,000 limousine vehicles a month, mainly the VW Type 1 that was later dubbed Käfer (Beetle).
However, this amount simply could not be met due to the scarcity of labor, machinery and raw
materials, so the number was decreased to a volume of 1,000 vehicles a month (Grieger and
Lupa 37).

Figure 6

Under the British fiduciary, Volkswagen created a customer service division that entailed
writing handbooks and letters to customers and also included training for mechanics, enabling

16
the company to create a feedback system to help eradicate systematic errors in the vehicles
(Grieger and Lupa 38).

Figure 7

A network of 10 main distributors and 28 dealers was created to better uphold
Volkswangwerk’s growing reach. 1947 marked a milestone in the company’s history as the
corporation decided, in conjunction with the British fiduciary, to export Volkswagen’s vehicles
(Grieger and Lupa 39). This strategic decision laid the groundwork for Volkswagen’s
international success (39). In 1948, Volkswagen boasted a total number of 4,385 exported
vehicles within Europe; sales were made to countries such as Switzerland, Belgium and Sweden.
Within the next year, European sales accounted for 15 percent of the corporations overall sales

17
(39). Meanwhile, Europe was undergoing structural changes, such as monetary reform that
helped simplify the market and eradicate some of the scarcity many companies were struggling
with after the official end of the war (46). The increased stability within the company and the
industry allowed for a greater development within Volkswagen, which included the creation of
an advertising division in July 1948 and the establishment of the new Volkswagen “company
style” that included a newly formed advertisement division that was put into place as a measure
to help Volkswagen to emerge from the difficult economic conditions of the time (46). The
efforts of the new division meant Volkswagen distributed information through paid channels,
including cinema advertising, which culminated in the initiation of a film development project
named Sinfonie eines Autos (46).
Within the next year, Volkswagenwerk GmbH was no longer under British control. The
State of Niedersachsen, under the German government, had been designated as the new fiduciary
and was left with a respectable company; under British hands Volkswagenwerk had developed
into a 10,000 employee strong company that boasted a fourfold of monthly manufactured
vehicles than only a couple of years before, claiming almost half of the West German market
share (Grieger and Lupa 39). Volkswagen then introduced a system of social benefits for
employees over the age of 25 that had been working for the company for a minimum of four
years, allowing them to enhance their state pensions (50).

c. 1950-1960
In 1950, Volkswagen celebrated the 100,000
th
Post-war car rolling out of production
while also introducing a new model that was quite unlike the previous compact models, such as
the Beetle (Grieger and Lupa 58). What would later be known as the VW Bulli was primarily

18
intended to be a transporter for families and would also serve police and fire brigades. After the
continued national and international expansion of Volkswagen, the company founded
Volkswagen Canada Ltd. and Volkswagen do Brasil Ltda. in an effort to increasingly operate
overseas through local networks (62). Volkswagen was then forced to produce and assemble
vehicles in Brazil due to the local importation restrictions (64).
Meanwhile, Wolfsburg and the surrounding areas were struggling with a housing
shortage, which Volkswagen aimed to combat by founding the VW-Wohnungsbau-
Gemeinützige Gesellschaft mbH, an organization intended to supply more housing for
employees that were forced to commute long distances to work. Knowing that an improved local
housing situation would better accommodate employees and help to create more stability among
the workforce, the organization was responsible for building an additional 1,400 apartments
(Grieger and Lupa 64). Volkswagen’s role as socio-political leader started to develop (69). This
notion was enhanced when the company implemented the system of paid-leave of absence in the
case of sickness (69).
With Volkswagen’s sight set on increasing its international presence and sales, the
company founded Volkswagen United States Inc. on July 21, 1955. The main purpose of this
endeavor was market research, as the company discovered that US labor costs were too high.
The company was later replaced by Volkswagen of America, Inc., with the headquarters situated
in Englewood Cliffs, New Jersey. Additionally, the company created an office on the west coast
in San Francisco and on the east coast in New York in an effort to support and expand sales and
to manifest a stronger brand presence. Meanwhile, German workers celebrated another milestone
for the company after completing the 1 millionth vehicle (Grieger and Lupa 68).

19
By 1959, Volkswagen of America, Inc. embarked on the first large advertising campaign
with Doyle Dane Bernbach Inc., a New York-based advertising agency. This campaign, using
slogans such as “Nobody is Perfect,” and “Think Small,” laid the groundwork for Volkswagen’s
legacy in the automobile advertising realm. The campaign came as a reaction to Renault’s rising
market share in the US, which Volkswagen consequently felt as a drop in market share (Grieger
and Lupa 76).

Figure 8

The year 1960 marked a further milestone for Volkswagen; the company went public on
August 22 of this year, making 60 percent of the shares public. In a measure to ensure the role of
the German government in the corporation, 40 percent of the shares remained in the federation’s

20
hands. Volkswagen was on a strong path into the future after almost two decades of turbulence
and uncertainty (Grieger and Lupa 78).

d. 1961-1972
The Volkswagen Corporation was booming in the early 1960s; Volkswagen was the
leading German auto manufacturer, and with a national market share of 33 percent, it was
building twice as many cars per year as the next largest company. More than half of
Volkswagen’s vehicles were being sold overseas. 330,000 of those vehicles were being delivered
to the United States as a result of the ever-growing popularity of the Beetle. Yet the competitive
environment became increasingly strong and other German manufacturer Opel, alongside
American corporation Ford, were gaining popularity among Europeans, especially Germans
(Grieger and Lupa 82).
To counteract the increasing presence of other brands, Volkswagen took over a large
majority of the Auto Union GmbH, allowing for an additional capacity of 100,000 vehicles
(Grieger and Lupa 83). In 1995, Volkswagen became the owner of the Auto Union GmbH that
would later become the Audi AG, allowing for a larger array of products to offer to consumers,
such as engines. Due to the construction of the Berlin Wall and the resulting decrease of workers
from the DDR, Volkswagen was experiencing shortages in labor that were to be filled by Italian
workers who would be accommodated in a 15 million DM housing investment (88). Volkswagen
invested a further 25 million DM into housing for the general workforce (88).
However, by 1966, the German economy came to another post-war hurdle and went into
a recession. As a result, the demand for vehicles, mainly type 1 (the Beetle) and the VW 1600,
was affected and decreased 14 percent and 35 percent, respectively (Grieger and Lupa 83). The

21
economy showed signs of improvement towards the end of the year; by 1968, Volkswagen
implemented several measures to increase profitability while also placing increased emphasis on
the research and development of new technologies (84).
Nevertheless, the classic Type 1 or Beetle still made up the majority of the company’s
sales until a new generation of automobiles heavily impacted the Beetle’s competitiveness
(Grieger and Lupa 84). Fluctuations and changes in currency and exchange rates posed an
additional challenge for Volkswagen, not only on a national level, but also on an international
level. Sales in the United States were particularly unstable, falling almost 15 percent between
1970 and 1972, as the fluctuating currency strongly disadvantaged German imports while
favoring those from elsewhere, e.g. Japan (85). Regardless, Volkswagen introduced the VW-
Porsche 914 at the International Automobile in Frankfurt, Germany. This opened new doors for
the corporation in the United States where Volkswagen of America was responsible for the
distribution of Porsche as well as Audi (106).

e. 1973-1981
Through the introduction of the VW Passat in 1973, the VW Golf in 1974 and the VW
Polo in 1975, Volkswagen began the production of a new age of cars and set the mark for the
following years (Grieger and Lupa 120). The Golf, a car seating up to five people, was especially
seen as a fresh start for the company and was well received by the media (122). By 2002, the
success of the Golf manifested itself as sales far outnumbered those of the Beetle, the most
successful car up to that point. Volkswagen then entered the market for small diesel engine
vehicles after the launch of the diesel powered Golf only two years later (122). Thanks to the
Golf’s success at the expense of the Beetle, the company ceased production of the VW Beetle at

22
the Wolfsburg plant after building almost 12 million of the beloved car at this German facility
since the model’s introduction (122).
With exports to the USA struggling, Volkswagen decided to combat the problem by
producing vehicles locally in West Virginia and Pennsylvania. The endeavor was backed by the
founding of the Volkswagen Manufacturing Corporation of America, and after merging with
Volkswagen of America, Inc., the company no longer purely relied on the importation of parts
for distribution access (Grieger and Lupa 126).

f. 1982-1991
Volkswagen’s growth boomed when the worldwide automobile industry, particularly in
Asia, far transcended any prior speculations (Grieger and Lupa 144). China was of great interest
to Volkswagen, as the company saw the potential to work with a country that was undergoing a
tremendous change, both politically and economically (144). The Chinese government saw the
possibility of a mutually beneficial relationship from which China could reap industrial know-
how, so much so that agreements were made that would entail the production of the Santana
model in China (145). Later, Volkswagen signed Joint-Venture contract under the eyes of the
current German Chancellor Helmut Kohl. The company then had production facilities on five
continents. In the meantime, the American automobile industry saw increased competition
between American, German and Japanese manufactures, leading Volkswagen to be forced to
close a plant in Westmoreland in 1987 (146). Yet the company was able to profit nationally
from the collapse of the Soviet Union in 1989, which enabled them to establish an increased
production facility in previous parts of Eastern Germany.

23
Volkswagen’s research and development initiatives became increasingly important with
the rising interest in emission-reducing technologies. New technologies that allowed for a 60
percent reduction of pollutants in only 15 years were accompanied by a regional campaign called
“Wir sind bereit” (“We are ready”) (Grieger and Lupa 152). In a step to support these and other
developments of the corporation, a European Board was created and included Volkswagen AG,
Audi AG, Seat, S.A. and Volkswagen Bruxelles S.A. (166). Similarly, the North American
Region (NAR) was created in 1991, entailing USA, Canada and Mexico.

g. 1992-2012
The globalization of Volkswagen has been well underway for more than 20 years. In the
USA, this meant Volkswagen continued to battle increasing entries from the Asian market that
now also included Korean brands. The resulting increase in competition required Volkswagen to
evaluate current methods and to implement cost-cutting and controlling measures in order to
maintain and increase the market share. The pressure on Volkswagen was immense and required
the corporation to restructure production systems to become leaner and more cost effective.
What’s more, Volkswagen battled increasingly high consumer demands and a fast-changing
environment that required more flexibility from the corporation (Grieger and Lupa 174). Part of
this included the introduction of “Teamarbeit” or teamwork in the year1992, which would
change the nature of the internal decision-making process by eliminating certain levels and
simplifying the work process between individuals, as well as training employees to become more
involved with the improvement measures in their own workplace (175).
The company saw success with the new systems as productivity increased almost 30
percent (Grieger and Lupa 176). Volkswagen also pushed the boundaries of the industry after

24
introducing an airbag system to the Golf, Vento and Passat models that would increase the safety
of passengers, so that these measures would no longer only be available for luxury vehicles
(178). The introduction was accompanied by a campaign to raise awareness and explain to
consumers the benefits of the newly included airbags (179).
The continued success encouraged Volkswagen to continue on a path of a multi-brand
strategy by acquiring luxury brands Lamborghini, Bentley and Bugatti as well as by developing
the premium label Phaeton under the Volkswagen brand. One of the main contributing factors to
Volkswagen’s expansion was the management under Chairman Ferdinand Piech, who was also
responsible for introducing geography-specific vehicle types that would better fit international
demands. During his time as Chairman, Volkswagen officially dedicated their efforts to
environmental protection through a set of guidelines to reduce emissions and pollution, as well
as through improved and optimized use of raw materials that would minimize waste. But not
only environmental issues were addressed in this time, as Volkswagen also hoped to make
amends with approximately 2,150 people that were forced into labor at Volkswagen during
World War II, for which the company created a fund for monetary compensation (Grieger and
Lupa 176).
In 2007, the corporation further developed their long-term strategy, backed by new CEO
Martin Winterkorn, to become the largest, most sustainable car manufacturer in the world,
defeating competitors such as Toyota (Grieger and Lupa 226). In the same year, Volkswagen
announced the introduction of the “Volkswagen-Weg,” which formed the basis of future
business strategy. The new approach included continuous improvement, future-oriented
processes, teamwork and compensation and stability for employees (226). In 2010, the
Volkswagen brand launched the multilateral, sustainability-focused campaign “Think Blue.” The

25
campaign, which includes several sustainability projects across the world, claims to be “more
than just food for thought; it’s a state of mind” that was to act as “a global call to action”
(Volkswagen “Think Blue “) (237). Volkswagen’s expansion course continued when in 2011 the
corporation completed the Chattanooga plant in Tennessee. More than 2000 employees still work
there on manufacturing the VW Passat, which received the award for Best Car of the Year in
2011 (240).

Figure 9

h. 2013-Present
Volkswagen’s success continued into the year 2015 and the German corporation
maintained their status as the largest auto manufacturer in terms of sales volume, employing
more than 600,000 people worldwide. The State of Lower Saxony, which has traditionally held
shares in the company since the privatization in 1960, continues to hold approximately 20
percent of the VW corporation, thereby guaranteeing the state’s influence in the company that
provided hundreds of thousands of local jobs and was seen as the “jewel of the industry”
(Osterloh qtd. in Exner) in Wolfsburg. In April 2015, the VW corporation experienced a tense
period when the supervisory board continued to criticize CEO Winterkorn, allegedly as a result

26
of difficulties between Ferdinand Piech, chairman of the Volkswagen Group, and Winterkorn
(Bryant). Piech was quoted to have said that he was “at distance from Winterkorn” (Piech qtd. in
Bryant) as he felt that the CEO was responsible for “misreading global markets and costing
Volkswagen precious momentum in its heated competition with Toyota and GM” (Boston and
Buell). Only days later, it seemed that Piech had lost the “rancorous battle” against Winterkorn,
resulting in his resignation from all of his positions in the corporation (Boston and Buell). The
process caused a lot of attention from media and analysts alike, as the power structures within
the company had been seen as stable for many years. “Piech’s departure represents a seismic
shift in Volkswagen’s power structure,” explained an industry analyst from the Kelly Blue Book
group, and it “could foretell drastic changes in how one of the world’s largest auto makers
operates” (Brauer qtd. in Boston and Buell).

27
Chapter 4: Crisis Week 1 à 18-24 September 2015
On September 18, 2015, the Volkswagen Group of America, Inc. released the following
statement on their US Media Newsroom website regarding the investigation that had been
initiated jointly by the U.S. Environmental Protection Agency (EPA), the U.S. Department of
Justice and the California Air Resources Board:

The investigation concerning the Volkswagen AG and Audi AG was looking into
“certain emissions compliance matters” that the corporation was taking very seriously and thus
“cooperating with the investigation.” At this point, Volkswagen refrained from giving any
detailed information of the issue at hand; it’s likely that the corporation did so in order to avoid
any possible legal ramifications at such an early stage (Volkswagen Group of America, Inc.,
“Statement Regarding EPA Investigation”).
By September 20, 2015, when Prof. Dr. Martin Winterkorn, CEO of the Volkswagen AG
made an official statement through the company’s U.S. and Germany online newsrooms, the
company mentioned “diesel” for the first time.

28
CEO Winterkorn specifically addressed Volkswagen’s infringement of emissions
standards in the U.S., stating his regret of betraying the public and especially the customers’
trust. He also asserted in the statement that Volkswagen would “cooperate fully with the
responsible agencies, with transparency and urgency,” as well as announced the launch of an
internal investigation into the matter. The statement is concluded as follows (Volkswagen AG,
“Statement of Prof. Dr. Winterkorn”):

Two days later, Winterkorn issued a video statement for the Volkswagen AG. In his
statement, the CEO explains that “the irregularities that have been found in our Group’s diesel
engines go against everything Volkswagen stands for.” Although there were no answers at the
time, the company was trying to gather information and was “putting everything on the table, as
quickly, thoroughly and transparently as possible.” Winterkorn promised cooperation and
transparency and that “Volkswagen and Manipulation—that must never be allowed to happen
again.” The statement also included the following (Winterkorn in Volkswagen AG, “Text Video
Statement”):

29
The corporation issued a further statement, calling the issues that had been found
“irregularities concerning a particular software used in diesel engines,” thereby making a first
attempt to express the particular issue that was being investigated. More importantly, the
corporation explained that the type EA 189 diesel engine was affected, while the EU 6 diesel
engines were not fitted with the particular software responsible for the “irregularities” that
caused a “noticeable deviation between bench test results and actual road use.” In the same
announcement, Volkswagen declared that a sum of approximately 6.5 billion EUR would be set
aside from the profit and loss statement of the 2015-2016 third quarter to manage future costs
that the corporation would incur (Volkswagen AG “Volkswagen AG has issued”)..
The first crisis week was concluded on September 23 by the resignation of CEO
Winterkorn, which was accompanied by the following statement (Volkswagen AG, “Statement
by Prof. Dr. Winterkorn”):

Furthermore, Winterkorn stated that “Volkswagen needs a fresh start,” in order to regain
trust and to “overcome this grave crisis” (Volkswagen AG, “Statement by Prof. Dr.
Winterkorn”). The Executive Committee of the Volkswagen AG Supervisory Board backed
Winterkorn’s resignation and acknowledged that he “had no knowledge of the manipulation of
emissions data” (Volkswagen AG, “Statement from the Executive Committee”).
Volkswagen’s initial announcement on September 18 perplexed audiences worldwide.
Although there was no specific mention of the problem at hand, Volkswagen reassured the

30
public that the issue would be fixed swiftly and that the safety of vehicles had not been
compromised. The Volkswagen AG and Winterkorn were adamant about being transparent and
cooperative; however, the sequence of their statements is highly questionable. It took the CEO
Winterkorn two days before making an official statement addressing the “issue” as one
concerning diesel cars and their emissions. Another two days passed before the Volkswagen AG
gave a precise explanation of the software problem and the affected engine, as well as stating
that a large sum of money had already been set aside for any future payments (although the
purpose of these payments was not specified). Stakeholders are left to wonder what was going on
behind the scenes, and most importantly, how long this issue had been going on before the public
was made aware of it. The fact that VW had already made financial plans alludes to the notion
that it is highly likely that the firm had already started their crisis plan. Later information proved
that the corporation was indeed aware of the software manipulation as early as September 4,
2015 and did not share the information with the public. Rather, it seems that Volkswagen let the
EPA disclose the investigation, and they put out their first press release only as a reactive
measure to the agency’s announcement.
By not proactively disclosing information about the investigation, Volkswagen gave
control of the issue’s communication to another party and thereby missed the opportunity to take
the first and vital step towards transparency right from the beginning of the events. Furthermore,
the official press releases, though mentioning the term “manipulations” twice, used the term
“irregularities” to describe the emissions deviations. This could, according to Feldman, partner
and co-founder of Pule Point Group and member of the Board of Trustees of the Arthur W. Page
Society, in an interview with the author, “suggest a lack of accountability and credibility, [as] it
sounds like its unintentional,” whereas the word “manipulation suggests its intent.”

31
Volkswagen’s decision to delay the announcement also remains under legal scrutiny.
Winterkorn and the VW AG emphasized that they are dedicated to re-establishing the trust
between the firm and the public. This also became clear in the video statement by Winterkorn, in
which he apologized for the apparent “misconduct.” The purpose of the video was arguably to
demonstrate the company’s and Winterkorn’s humility. Unfortunately, the statement was far
from showing a proactive step by Volkswagen; rather, it depicted a tired-looking, defeated-
sounding CEO in a drab video that lacked any real energy or creativity that would be expected
from a multinational corporation such as the Volkswagen AG.
When Winterkorn announced his resignation, speculations about Winterkorn’s demise
were fueling heated debates and there was mention of Matthias Müller, CEO of Porsche AG, as
the new possible Volkswagen CEO (Federl, Mortsieffer, Jahrberg and Fries). However,
Volkswagen denied that this would be the case; a spokesperson for Volkswagen called the
allegations “ridiculous” (Addady). Much debate ensued again when Winterkorn accepted
responsibility for the “irregularities” but denied any fault in the issue.
Volkswagen’s Supervisory Board supported his statement, and thus the resulting
discussion about Winterkorn’s authenticity came as no surprise. It was often noted that
Winterkorn had heavy involvement in the company’s operations, and emissions regulations in
particular have influenced strategic and operational behavior. Thus, it is difficult for stakeholders
to imagine that Winterkorn was not aware of the software manipulations. The issue is a double-
edged sword; by stating that he was not aware of the manipulations, many stakeholders came to
the conclusion that Winterkorn was not sufficiently involved in such an important decision-
making process. This seems worrying as emissions regulations are such an important part of
contemporary legislations and should play a big role in management’s planning.

32
On the other hand, if Winterkorn knew about the manipulations and admitted to it, he
could have not only faced legal ramifications, but would likely have lost his standing as one of
the most influential managers in the automobile industry. Speculations about his involvement
continue, but it is likely that in any case, Winterkorn denied his role in the software manipulation
in order to avoid any legal consequences he could have faced both in Germany and the United
States. What is more, it is likely the Volkswagen corporation would have protected the CEO and
prevented any negative messaging about his connection to the case. Unfortunately, the heavy
speculations that were already well underway were only fueled by the rebuttal of his statement.

News Article Titles Generated for Week 1
Car and Driver Online

(Stoklosa, “Volkswagen Offering Payment”) (Stoklosa, “VW CEO Issues Statement”)

(Meiners “Porsche CEO to Become VW Group CEO”)

Auto, Motor und Sport Online

(Baumann, “Die Kandidaten”)
Süddeutsche Zeitung Online

(Fromm) (SZ.de “Manipulierbare Software”)

33

(Busse, Bauchmüller and Fromm) (SZ.de “Es tut mir unendlich leid”)

(Fricke)

The news articles generated in the German and American media show somewhat of a
divide in regards to how well the VW corporate messaging was received. Whilst the American
news headlines closely reflected the messaging in the corporate press releases, such as “VW
CEO Issues Statement on EPA Emissions Violations, Apologizes for Wrongdoing” (Stoklosa) as
written by Car and Driver on September 21, 2015, the German headlines were more direct and
contained less of the German wording used in the press releases. The Süddeutsche Zeitung
(SZ.de) interestingly used the title “Manipulierbare Software in elf Millionen Autos,” the first
part of the headline translating to “softwares that can be manipulated” rather than stating
“manipulated software.” This title suggests that while this software was installed, it may not have
been manipulated. The Süddeutsche Zeitung also blatantly calls the crisis “Der VW-Scandal”
(Busse, Bauchmüller and Fromm) in their headline from September 21, 2015, as well as dubbing
the crisis “Dieselgate” (Fricke).

34
Chapter 5. Crisis Week 2 à 25 September - 1 October 2015
Following the first week of uncertainties and speculations, Volkswagen AG announced
on September 25, 2015, that approximately 5 million diesel cars of the Volkswagen passenger
brand had been fitted with manipulative software. Most of these vehicles had been or are
equipped with type EA 189 engines, including the first generation VW Tiguan as well as sixth
and seventh generations of the VW Golf and VW Passat, respectively, while newer vehicles such
as those in accordance with EU6 regulations in Europe have not been equipped with the
software. The CEO of the Volkswagen Passenger Car brand, Dr. Herbert Diess, explained that
the corporation was already working on a solution for the problem in an accompanying statement
(Volkswagen AG, “Dr. Herbert Diess”):

After the situation unraveled, the Volkswagen Supervisory Board presented the first
measures that had already been implemented by the company in order to ensure a quick
resolution and announced a broad corporate restructuring. The Executive Committee was
officially made responsible for the monitoring and “safeguarding” of the immediate process
within the corporation. One of the future steps, as announced by the Supervisory Board, would
be the election of Hans Dieter Pötsch as a member of the Supervisory Board through a meeting
with Shareholders in November 2015, with the intention of a future election to appoint Pötsch as
Chairman of the Volkswagen AG. The current Deputy Chairman, Berthold Huber, called the
diesel issue “a moral and political disaster for Volkswagen” and stated that the company itself

35
was shocked at the illegal behavior of some employees. He concluded his statement with an
apology to the public and customers, as well as to investors and authorities (Volkswagen AG,
“Statement by the Supervisory Board”).
On the same day, Volkswagen officially appointed Mathias Müller, previous CEO of the
Porsche AG, as the new CEO of the Volkswagen AG, stating that “he is what the company needs
now” and that he is “exactly the right man at the right time to make a fresh start and drive
clarification of the current crisis that has hit our company with decisiveness and to draw the right
conclusions” (Volkswagen AG, “Statement by the Supervisory Board”). In an accompanying
statement, Müller was described as a “team player” by Bernd Osterloh, Chairman of the Group
Works Council, and as “a person of great strategic, entrepreneurial and social competence” by
Berthold Huber, interim Chairman of the Supervisory Board (Volkswagen AG, “Matthias Müller
appointed”). Müller himself, who worked for various branches of the Volkswagen AG since
earlier than 1978, said that his priorities lay in regaining trust by enforcing transparency in order
to “emerge from this crisis stronger than before,” while also acknowledging (Volkswagen AG,
“Matthias Müller appointed”):

36
Following this apology, the corporation announced the first action plan on September 29,
2015 that would “correct the emissions characteristics of diesel vehicles.” The plan includes
directly communicating with affected customers and keeping them up-to-date with any future
solutions, with a first set of measures to be submitted to responsible authorities by October
(Volkswagen AG, “Volkswagen AG announces action plan”).
They announced that the initial General Meeting scheduled for November 9, 2015 would
be postponed for the meantime. The Executive Committee came to the agreement that not
enough information would be gathered by this time to “provide well-founded answers which
would fulfill the shareholder’s justified expectations,” but rather that regular updates would be
given at regular intervals to both shareholders and the public (Volkswagen AG, “Statement from
the Executive Committee following meeting on September 30”).
Meanwhile, Michael Horn sent a letter to US customers, in which he apologized for the
manipulative software and gave a list of all affected vehicles (see appendix for full letter). Müller
also wrote a letter to shareholders in which he addressed his new position on October 1, 2015
(Volkswagen AG, “Letter to Shareholders”).

37

In the beginning of the second week, Volkswagen continued to explain the diesel issue in
greater detail, offering some specific information about details and volume of the affected
vehicles. At this point, it was strategically important for the CEO of the VW Passenger Brand to
release a personal statement, as most of the outrage in the media and other public outlets focused
heavily on the vehicles of this brand. Meanwhile, the Supervisory Board wanted to communicate
that VW had been proactive in generating an emergency plan of action for direct customer
communications. As suggested by Feldman in a personal interview, “what people want to know
is if [Volkswagen is] taking responsibility as people are evaluating reparations for the future,”
and Volkswagen started to tackle this issue. Like Winterkorn and Diess, the Supervisory Board
also emphasized that VW would do their best to regain the trust of important stakeholders, such

38
as customers and the many dealerships around the world. Their many announcements meant to
regain the publics’ trust were now also backed by an external firm that would conduct an internal
investigation, and this was certainly a step in the right direction, as it signaled to the stakeholders
that the corporation was swiftly looking for solutions and would willingly undergo the scrutiny
of outsiders.
However, the Supervisory Board postponed the General Meeting for shareholders in
November after explaining that at the current time, it was not possible to give any complete
answers, and that instead the corporation would regularly update shareholders. This step may be
understandable, as Volkswagen would certainly have been wary of the lack of information at the
point of the conference. They most likely thought it best to wait until more precise information
could be given so as to look in control of the given situation. Nonetheless, their announcement to
regularly update shareholders was arbitrary and may have possibly eliminated the corporation’s
opportunity to tell their own story rather than leaving it up to shareholders to fill in blanks
through other sources, such as the media. By postponing the General Meeting, Volkswagen ran
the risk of losing touch with shareholders. Albeit the possible lack of information, it signaled to
shareholders that Volkswagen was not confident that enough information could be gathered
within the next five weeks. The General Meeting could have also been an opportunity for VW to
not only share their own messaging, but to understand the sentiment of shareholders and grasp
the questions and expectations this particular group had.
The General Meeting could have also enabled shareholders to meet newly appointed
CEO Matthias Müller. This change of leadership had been speculated about, although
Volkswagen publicly denied the possibility of Müller as Winterkorn’s successor. After calling
the possibility of Müller becoming the new CEO “ridiculous” (Addady) it was somewhat

39
surprising that only days later he did, in fact, take over this position. It’s difficult to imagine why
Volkswagen so heavily repudiated the notion of his succession, and it certainly did not help in
building Volkswagen’s communicative credibility. After Winterkorn and the Supervisory Board
so heavily emphasized the importance of transparency, there was clearly a gap between
communication and actions presented by Volkswagen. In Müller’s first statement, he also
mentioned the necessity of transparency and the corporation’s dedication to rigorous governance
standards, but it has remained challenging for the media and the public to believe these
statements after such a big slip up.
Stakeholders were left to question the structure of internal communications, as it is
unclear why the VW spokesperson so harshly denied the possibility of Müller as the new CEO
and made little apparent effort to respond to the speculations in a more neutral fashion. Müller’s
letter to shareholders reiterated that there was not enough information to adequately answer their
questions. Müller asked for clarification time before giving any details about the issue. Although
it is understandable that they are unwilling to make any statements without backing these with
definitive facts, it is unsatisfactory for shareholders to be left with such an ambiguous time frame
in which to expect information.
Similar to the statement made by the Supervisory Board, Müller’s explanation signals the
company’s insecurities about its actions and their unwillingness to face a possibly uncomfortable
situation. By asking shareholders to give him some time, Müller and Volkswagen have
demonstrated their reluctance to commit to a timeline that could have served as a useful
indication for shareholders to understand the crisis development and could have aided in
minimizing uncertainty among this particular group. It is therefore hard for shareholders to
imagine how Müller will achieve his goals if he shows so little dedication to engage in a

40
dialogue with the stakeholders that are so vital for the corporation’s success in these volatile
times.

News Article Titles Generated for Week 2
Car and Driver Online

(Lorlo, “VW Sets up Website”) (Meiners, “Shame and Degradation in Wolfsburg)

Auto, Motor und Sport Online

(Baumann, “Müller wird VW-Chef”)

Süddeutsche Zeitung Online

(Busse and Fromm) (Leyendecker and Ott)

Car and Driver set a far more critical tone in the headlines starting September 28, 2015.
The news outlet called the affected models “Cheaty TDI Diesel Models” (Lorl) and set a sinister
tone with their headline through terms such as “shame” and “degradation” (Meiners, “Shame and
Degradation”). The Süddeutsche Zeitung continued with their critical tone from the previous
week, calling the scandal “Amtliches Desaster” or an official catastrophe (Leyendecker and Ott).

41
Chapter 6: Crisis Week 3 à 2-8 October 2015
The Volkswagen Group, which had so far limited communications to mentioning only
Volkswagen as the main affected brand, released an announcement for Audi customers in
Germany on October 2, 2015. In this statement, the corporation explained that Audis with the EA
189 1.6 liter and 2.0 liter engines were also affected by the manipulations, and that customers
could access the website www.audi.de to check if their vehicle was affected. Only the newer
EU6 engines, as well as V6 and V8 TDI engines (regardless if they are EA 189 or EU6), were
unaffected (Volkswagen AG, “Diesel emissions”).
On Sunday, October 3, 2015, Volkswagen launched a national campaign in German print
publications and on their website in honor of the German Reunification Day. Rather than
commending Germany for the development the country has undergone in the past 25 years,
Volkswagen concluded the campaign with the sentence “Wir werden alles tun, um Ihr Vertrauen
zurückzugewinnen,” meaning that VW will do everything to regain the public’s trust. After the
Reunification Day, Volkswagen removed this statement from their website.

42
At his first official announcement in front of 20,000 Volkswagen AG employees at the
Wolfsburg plant, CEO Müller declared that the corporation would guarantee a “swift and
relentless clarification” of the current issue in order to create stability in a company that
“continues to stand for good and secure jobs in the future.” Furthermore, he stated, “We can and
we will overcome this crisis, because Volkswagen is a group with a strong foundation. And
above all because we have the best automobile team anyone could wish for.” He alluded to the
restraints of crisis management in terms of predicting the “enormous” financial impact and that
the forthcoming process would be a “painful” one. Volkswagen, according to Müller, will be
forced to make “massive savings” in an effort to minimize the effects of the crisis and to secure
the company’s position in the future. Müller highlighted to employees that the Volkswagen
Group must continue to “stand for sustainability, for responsibility, for credibility” (Volkswagen
AG, “Matthias Müller: ‘We will overcome this crisis’”).
As the more recent EU6 diesel engine was not equipped with the software, production of
this specific engine, as well as the production of vehicles with this engine, would continue in
Wolfsburg, thereby reassuring employees that work in this area would continue. Müller also
highlighted the need for patience during this crisis as “care is even more important than speed.”
Part of the crisis management process included the project team’s action plan, which included
customer communications about a software upgrade as well as a website that had been launched
as a way for customers to check if their vehicle was affected, which they’d find out by entering
the chassis number of their car. The corporation’s plan to present authorities with technical
solutions was reiterated, as was the notion that Volkswagen would stay in touch about any
updates with affected customers (Volkswagen AG, “Matthias Müller: ‘We will overcome this
crisis’”).

43
A day later, Müller appeared in his first public interview with the German newspaper
Frankfurter Allgemeine Zeitung (FAZ). The first question by journalists Holger Appel and
Holger Steltzner, asked Müller to explain why the engine was manipulated. Müller explained
that Volkswagen had made the decision to reintroduce the diesel engine to the United States, but
that the then-current emissions standards could not be reached (Müller qtd. in Appel and
Steltzner). According to Müller, only a small number of employees were responsible for the
manipulations and the Executive Board’s involvement with such decisions was minimal and
indirect, thereby upholding prior comments such as those by Winterkorn (Appel and Steltzner).
However, the CEO was reluctant to give any more information regarding this particular
issue, as he explained the current investigations would reveal specifics in time, but he did reveal
that three of the four suspended employees had worked on the development of engines
throughout their careers at the corporation. The journalists stated that “VW deceived the public
and their customers,” to which Müller replied that “a grave mistake crept in. Now we have to
take the responsibility,” Nonetheless, Müller argued that Volkswagen had the ability to
overcome the crisis and that the corporation had the potential to excel in the near future.
Volkswagen, so said Müller, needs a structural change that also enables the corporation to
decentralize its operations, speed up the decision-making process and thereby increase efficiency
through evolution, not revolution (Appel and Steltzner).
In the same week, Horn, CEO and President of the Volkswagen Group of America,
volunteered to speak before the Subcommittee on Oversight and Investigations of the House
Committee on Energy and Commerce, and to whom he offered the following apology: “On
behalf of our company, I would like to offer a sincere apology for Volkswagen’s use of a

44
software program that served to defeat the regular emissions testing regime” (Volkswagen Group
of America, Inc. “Testimony”).
Horn explained that he had been aware of the “possible emissions non-compliance” since
2014, after the publication by the West Virginia University and the EPA. The agency, so Horn
was informed, would be able to test for fraudulent software such as a “defeat device.” These
devices, or hidden software, would be able to detect the difference between testing for emissions
in a laboratory versus on an actual road. Horn calls the current crisis “deeply troubling” as the
trust between stakeholders such as regulators, dealerships, customers and employees has been
broken. Volkswagen had become such a vital part of American culture through the latter
stakeholders, with 6,000 employees working for the group across the country. Horn stated that
the problems the company was facing were “fundamentally contrary to Volkswagen’s core
principles of providing value to [their] customers, innovation, and responsibility to [their]
communities and the environment.” Horn presented a five-step plan (Horn in Volkswagen Group
of America, Inc. “Testimony”):

The third week of the crisis was important for Volkswagen, as it was the first time that
the new CEO Müller spoke directly to another important stakeholder: the employees. At a time
where uncertainty affected not only the markets, it was crucial for Müller to try to create stability

45
among other stakeholders such employees and to maintain normality within the firm. Once
again, Müller highlighted the corporation’s determination to win back the public’s trust and
create transparency. In the interview with Frankfurter Allgemeine Zeitung, Müller candidly
admitted that the reason behind the manipulations was an unattainable emissions standard set by
the American government. Only a small number of employees, says Müller, were responsible for
the manipulations, but this statement left many to question if the VW leadership was trying to
avoid exposing that in fact they had little information in regards to the responsible employees.
Müller’s statement about a mistake that “crept in” that followed the journalists’ notion that “VW
deceived the public and their customers” was awkward and misleading. Purposefully equipping
an engine with fraudulent software is far from being a mistake that simply occurred, as Müller’s
statement suggests. Quite the contrary could be said about the software, and this abstruse
statement in no way supported his otherwise heavily emphasized dedication to transparency.
Meanwhile, Horn demonstrated the company’s willingness to work with and cooperate
with government agencies. His admission that he knew about a software problem since 2014 was
shocking, but it also showed that he was willing to present this fact and face the uncomfortable
consequences it may bring. Although his actual testimony had been prepared in advance and
contained similar messages to the many previous manager statements or press releases, Horn
seemed more authentic and personable during his questioning. While he clearly stated that the
software installation was “not a corporate decision” (Horn qtd. in Chappell), he also admitted
that it was “very hard to believe” that the top management level was unaware of the software,
which earned him some respect for his honesty from Rep. Joe Barton, R-Texas.
While this voluntary testimony was important for government relations, it was also an
important signal to U.S.-based dealerships that the Volkswagen Group of America was dedicated

46
to supporting dealerships and that Horn was “damn sincere about this” (Horn qtd. in Chappell).
Contrary to his counterparts in Germany, Horn proved his courage to the US government,
customers, employees and dealers. This step helped the American group to gain credibility that
the German Volkswagen AG continues to lack. As noted by Feldman, his willingness to speak so
candidly was a “good move” to demonstrate “accountability to listen, to be respectful, to provide
insurances of improvement.” His five-step plan, albeit somewhat imprecise, did specify that
communications to affected stakeholders would increase, tools such as a hotline and website had
been implemented to help affected customers and he’d sent a letter to all affected customers.
Additionally, the press coverage garnered by this step was likely to benefit Volkswagen in an
effort to demonstrate more transparency (Feldman). However, these promises, especially the
latter, must be followed by action so as not to leave the American public with hollow words.
Volkswagen faced another challenge when the corporation was forced to admit that the
affected EA 189 engines were also used in Audi brand vehicles. While most of the prior crisis
had been contained under the Volkswagen brand, the company now had to admit that their more
prestigious Audi line was not left untouched.
News Article Titles Generated for Week 3
Car and Driver Online

(Lorlo, “VW Remedies”)

Süddeutsche Zeitung Online

(Fromm, Hägler and Ott) (Slavik)

47
Chapter 7: Crisis Week 4 à 9-15 October 2015
On October 13, 2015, the Board of Management for the Volkswagen Brand announced a
series of strategic decisions that would be vital for the company. Diess, the CEO of the
Volkswagen Passenger Brand, announced that the corporation would change the orientation of
the current diesel strategy to become a more efficient, forward-looking creator of innovations
and products (Volkswagen AG, “Volkswagen brand board”). However, Volkswagen was also
forced to announce that the Federal Motor Transport Authority (KBA) of Germany would recall
approximately 8.5 million vehicles with the engine EA 189 in Europe (Volkswagen AG,
“Federal Motor Authority”). Although no concrete actions have yet been disclosed, the solutions
would not cost anything of the customers and must first be presented to authorities of the
individual European countries (Volkswagen AG, “Federal Motor Authority”).

News Article Titles Generated for Week 4
Car and Driver Online

(Stoklosa, “VW Management Unveils”)

48
Chapter 8: Crisis Week 5 à 16-22 October 2015
Stephan Weil, Prime Minister of Lower Saxony and member of the VW Supervisory
Board, visited the main Volkswagen production plant in Wolfsburg on October 21, 2015.
Accompanied by Müller, as well as Osterloh, Weil visited various parts of production and
conversed with employees. The visit was part of an effort to highlight the close relationship
between the State of Lower Saxony and the Volkswagen Group (Volkswagen AG, “Prime
Minister”). Even though there were no official plans for a public statement by Müller, the CEO
eventually took to the microphone to answer some of the waiting journalists’ questions. Müller
reiterated that Volkswagen would become “schlanker, effizienter, entscheidungsfreudiger,”
meaning that the corporation would become leaner, more efficient and more decisive (Exner).
In his concluding statement, the CEO said “Wir sind fest davon überzeugt, dass wir aus
dieser Krise schadlos herauskommen,” explaining that he was sure of Volkswagen’s ability to
emerge from the crisis unharmed (Exner). As the state of Lower Saxony still has such high
stakes in the company, namely 20 percent, it’s important to reinforce the importance of
Volkswagen not only for the city Wolfsburg, but also for the whole region. Many people are
dependent on Volkswagen’s success, not only those working for the company directly, but also
those working for subcontractors or suppliers, as well as the state that would suffer twice over
from a decreased share value and large layoffs. Although the local government should condemn
the illegal use of the manipulation software, it should be supportive of any measures to minimize
the effect it has on the workforce.

49
News Article Titles Generated for Week 5
Auto, Motor und Sport Online

(Stegmaier)

50
Chapter 9: Week 6 à 23-29 October 2015
After Volkswagen AG reported earnings in mid-October; the company issued another
statement regarding the financial impact of the diesel crisis on October 28, 2015. In this
statement, the corporation explained that “earnings were impacted by EUR 6.7 billion in the third
quarter for forthcoming measures relating to the diesel issue,” and Müller explained that the
“initial impact of the current crisis [was] becoming clear.” However, Volkswagen had already
published some of these details in order to create a context for the earnings results. Meanwhile,
Chief Financial Officer Frank Witter said that Volkswagen had “very solid and robust liquidity
resources” that would be helpful in the management of the “challenging situation” (Volkswagen
AG, “Volkswagen Group generates”).
On the same day, CEO Müller presented five steps the Volkswagen Group will take to
support customers and to move beyond the crisis “so that Volkswagen remains one the world’s
leading automobile manufacturers in the future.” Now, the first priority of the Volkswagen
Group, according to Müller, is to give support and technical solutions to those customers with
vehicles equipped with the software as “customers are at the core of everything that [their]
600,000 employees worldwide do.” Second, the corporation is working towards the completion
of the investigation into the events, together with the external audit firm Deloitte. Third, Müller
presented a new, more decentralized structure of the corporation’s management to maximize
resources. The fourth priority for CEO Müller is to reevaluate current company behavior,
especially in terms of management, surrounding how Volkswagen deals with errors and mistakes
(Volkswagen AG, “Matthias Müller unveils”).
According to Müller, the corporation was in need of more displays of “courage, greater
creativity and a more entrepreneurial spirit in their dealing with one another.” What is more, in

51
“the pursuit of perfection,” said Müller, “the employees’ commitment and social responsibility in
the Volkswagen Group must be retained.” Finally, for the fifth point, the CEO called for a
change in Strategy 2018 to Strategy 2025, as many people believed their Strategy 2018 was more
about “the desire to be ‘Faster, Higher, Larger,’ especially return on sales” (Volkswagen AG,
“Matthias Müller unveils”).

News Article Titles Generated for Week 6
Car and Driver Online

(Atiyeh, “Volkswagen Believes”) (Stoklosa, “Volkswagen Confirms”)

52
Chapter 10: Crisis Week 7 à 30 November - 5 November 2015
On November 2, 2015, Volkswagen denied accusations from the EPA that V6 TDI
engines had a software function that had “not been adequately described in the application
process” and that “no software has been installed in the 3-liter V6 diesel power units”
(Volkswagen AG, “Statement on the announcement”).
However, only a day later, Volkswagen made an announcement regarding specific
findings of the internal investigation underway at the corporation. The investigation found that
there were “unexplained inconsistencies” in the CO2 levels that could affect approximately
800,000 vehicles. As a result, the corporation may still face an impact of EUR 2 billion, yet only
further communications with authorities will reveal the scale of the impact (Volkswagen AG,
“Statement on irregularities”).

In a clarification published on the same day, Volkswagen (“Clarification”) further
explained more specific details of the issue:

CEO Müller vehemently expressed that Volkswagen “will stop at nothing and nobody
(…) For us, the only thing that counts is the truth. That is the basis for the fundamental
realignment that Volkswagen needs” (Volkswagen AG, “Clarification”). Volkswagen’s decision

53
to announce the investigation into the above mentioned inconsistencies was much more proactive
than the first reactive announcement made in September. Rather than waiting for another
involved party to tell the story, Volkswagen tried to combat the possibility of receiving the same
criticism they initially got for neglecting the opportunity to take matters into their own hands
rather than acting in a purely reactive manner. In this instance, it was unfortunate that
Volkswagen had to publish another correction to their first statement, and their credibility would
have been more positively influenced had the first statement been complete and correct.

News Article Titles Generated for Week 7
Car and Driver Online

(Atiyeh, “Porsche Halts Cayenne”) (Atiyeh, “Audi Joins”)

Süddeutsche Zeitung Online

(SZ.de, “VW-Kunden müssen”) (SZ.de, “VW schockt)

(Slavik, “VW kämpft)

54
Chapter 11: Crisis Week 8 à 6 - 12 November 2015
On November 9, Horn sent another letter to American customers to announce the
goodwill package that affected customers are entitled to. Horn also asked customers for their
“continued patience” while the company works on resolving the issue and developing a
“remedy” (Horn in Volkswagen Group of America, Inc. “Letter to 2.0L TDI owners”).

While this form of communication may seem effective, as it demonstrates a certain level
of dedication towards providing a more individual solution, the information given in this letter
adds little new information that customers are likely craving and just repeats content from many
previous statements.
The website linked to the goodwill package allowed Volkswagen to collect more
information about the affected customers, yet it only offered them an online solution, thereby
denying other customers the chance to access this information. Although this was likely

55
implemented as a call to action so that customers could visit the website and benefit from the
given information, it would also have been of use to give some of this information physically,
e.g. in the form of a booklet, accompanying the letters.
News Article Titles Generated for Week 8
Auto, Motor und Sport Online

(auto-motor-und-sport.de)

Süddeutsche Zeitung Online

(Hägler and Bauchmüller)

56
Chapter 12: Crisis Week 9 à 13-19 November 2015
On November 13, 2015, the German Süddeutsche Zeitung published an interview with
Osterloh. Osterloh has worked with Volkswagen for almost 40 years, 26 of which he has been a
member of the VW works council and 10 of which has been head of the works council. Osterloh
said that the manipulative software would not be tolerated by Volkswagen, but that this
discretion did not mean that the other unaffected cars should be seen in a negative light (Osterloh
qtd. in Fromm and Slavik). The journalists Fromm and Slavik addressed the fact that many
voices were talking about the “Klima der Angst” or the climate of fear that Volkswagen
employees were allegedly operating under, to which Osterloh replied that no one in the company
had to fear any discussion with their superior; on the contrary, he argued that Volkswagen had
recently submitted hundreds of ideas from employees. Osterloh continued to explain that the
actions of a limited number of employees was in no way reflective of the corporate culture, but
that perhaps employees in this specific domain felt an increased pressure (Fromm and Slavik).
However, the journalists remembered statements made by Osterloh in the beginning of
the crisis, in which he explained that Volkswagen was in need of serious restructuring to
encourage a more open and comfortable employee communications system (Fromm and Slavik).
Osterloh still agreed to this, stating that the company needed to listen more actively to employee
considerations (Fromm and Slavik). Furthermore, the article discusses if CEO Müller’s
credibility is in danger, as more information revealed that not only Audi, but also Porsche
engines were equipped with the manipulative software, and Müller’s prior role as the CEO of
Porsche AG could mean that he was equally as discredited as his predecessor Winterkorn.
Osterloh’s interview highlighted many discrepancies in his and the corporation’s
messaging. Saying that employees’ inputs were valued but simultaneously saying that the

57
corporation had to listen to employees more is a contradiction that Osterloh could not explain
and leaves outsiders worrying about the authenticity of such statements.
In the meantime, the corporation also provided further clarification about the issue
revolving around the possible CO2 infringement, after the company was able to identify that
430,000 vehicles are affected models from the recent 2016 production year, although this
included vehicles from the whole Volkswagen Group and not just the VW brand. Investigations
into older models were still underway, but customers were encouraged to check if their vehicle
was affected using the country-specific websites (Volkswagen AG, “Next step in clarifying”).
The Volkswagen Group of America officially announced on November 15, 2015 the
goodwill package from the Volkswagen website “as a step toward restoring trust among its
valued customers” (Volkswagen Group of America, Inc. “Volkswagen to provide”).
Like previously mentioned, this step enabled Volkswagen to control the first point of
contact for customers and helped to take some of the pressure off the dealerships and it also
allowed Volkswagen and dealerships to know how many customers were in fact more likely to
seek assistance. However, it also meant that customers without easy access to online tools would
struggle with this.
Nevertheless, the requirement that customers would have to go to a dealership had both
advantages and disadvantages. Customers would have to seek out the dealerships at their own
convenience. This could be bothersome for some customers, but it does facilitate another
meeting between dealers and customers and aids in strengthening the possibly weakened
relationship between Volkswagen representative and customer. It is important that Volkswagen
prepare dealers for the upcoming visits so as not to further strain the relationship between two of
the most important stakeholders.

58
News Article Titles Generated for Week 9
Car and Driver Online

(Stoklosa, “VW Offering “Goodwill” Visa”)

59
Chapter 13: Crisis Week 10 + 11 à 20-26 November 2015 until 3 December, 2015
Following the press release from November 2, in which Volkswagen denied having used
further devices that were not sufficiently declared under the U.S. system, Audi and Volkswagen
confirmed than in fact three Auxiliary Emission Control Devices AECDs had been used in V6
TDI 3 liter diesel engines in Volkswagen, Audi and Porsche models, and that one of these
devices was seen as a defeat device under American law (Volkswagen AG, “Statement on
Audi’s discussion”). Discussions with the EPA and the CARB resulted in Audi agreeing to
update the software as well as agreeing to a voluntary sales stop of models equipped with the
affected engines, similarly to the updates required for the other diesel engines.
On Friday, 25 November 2015, the Volkswagen Group presented the first technical
solutions to the German Federal Motor Transport Authority in an effort to achieve customer-
friendly legal NOx emissions. The technical measures concern 1.6 and 2.0 liter EA 189 engines,
whilst solutions for 1.2-liter engines will be presented at a later point. Both engine types require
a software update, and the 1.6-liter engine also requires the installment of a “flow transformer,”
and Volkswagen explained that both measures would require an installation time of up to one
hour. The corporation also said that all customers would be contacted and free replacement
vehicles would be offered where appropriate (Volkswagen AG, “Technical measures”).
While Volkswagen made progress in their trust regeneration process by openly claiming
another emissions violation, this was overshadowed by the fact that they denied the allegations
surrounding the V6 TDI diesel engines, only to be forced, merely three weeks later, to admit that
they were affected. Volkswagen’s messaging surrounding their willingness to create
transparency and regain trust has meanwhile become nothing more than overabundance of

60
words. It also goes to show that while Volkswagen can continuously state their commitment to
transparency, only their actions can prove their worth.

News Article Titles Generated for Week 10
Car and Driver Online

(Atiyeh, “Volkswagen Details Fix)

Auto, Motor und Sport Online

(Wittich, “Audi ändert Software”))

Süddeutsche Zeitung Online

(Hulverscheidt)

61
Chapter 14: Crisis Week 12 à 4-10 December 2015
The Volkswagen Group issued the following statement on December 9, 2015
(Volkswagen AG, “CO2 issue largely”):

Furthermore, the corporation was not able to confirm the initial number of 800,000
affected vehicles, nor were they able to confirm the financial impact of EUR 2 billion;
expectations were corrected to be lower than the initial suggestions (Volkswagen AG, “CO2
issue largely”). Therefore, Volkswagen was able to regain some control of their messaging.
Alongside this news, American customers owning 3.0L TDI VW Tourareg models were sent a
letter from Horn, similar to the previous ones, asking them to register on the Diesel Info website
(Volkswagen of North America, Inc., “Letter to Tourareg owners”).
The next day, the corporation published updates about the investigation’s progress and
the progress in regards to the five-point plan presented at the press conference in October.
Volkswagen presented technical solutions to authorities in Europe and it was expected that
European customers would begin to receive updates by January 2016. Pötsch said that “the
Volkswagen Group is fully functional in every respect, even during these eventful days (…) In
order to pass this test, we must make an enormous, common effort – and we are all ready to do
so.” Müller also said that the Volkswagen Group will not be “paralyzed,” but rather the
corporation will use the crisis as “a catalyst to make the changes Volkswagen needs”
(Volkswagen AG, “Volkswagen making good progress”).

62
Additionally, specific details about the internal investigation were disclosed, e.g. that an
approximate total of 450 internal and external specialists are conducting a two-phased
investigation. For one, this includes an internal group audit review by employees across the
Volkswagen Group, as well as the external review by the Dow Jones firm. The internal audit
group found the following (Volkswagen AG, “Volkswagen making good progress”):

As a result, Volkswagen has suggested and partially implemented structural changes that
will be abler to prevent such issues in the future (Volkswagen AG, “Volkswagen making good
progress”). Most importantly, Volkswagen announced that “in the future emissions test will be
evaluated externally and independently” in an effort to regain stakeholders’ trust (Volkswagen
AG, “Volkswagen making good progress”). The direct engine development program, announced
Müller, will be under the scrutiny of the “four-eye-principle” as a measure to discourage
manipulations of individuals (faz.net, “Abgasskandal”). This means that many operational steps
that were previously controlled by one person, will now require a second person to monitor the
steps.
Although the external investigation has not yet been concluded due to the sheer volume
of information gathered, Volkswagen did explain the following:

63

Albeit the technical advancements for European customers, Volkswagen stressed that
stricter American regulations were at the root of the delay for local customers, but that a solution
would be offered soon (Volkswagen AG, “Volkswagen making good progress”). The German
auto manufacturer demonstrated a high level of authenticity through this statement. The origins
and the development of the diesel issue were clearly explained, though it still withheld specific
information about the individuals involved, the process and the reasoning behind the software.
Although some may have expected this information to be disclosed earlier, revealing it later was
in line with Volkswagen’s determination to gather information first in order to guarantee more
complete answers.
Not only did the corporation present technical solutions to the software problem, but they
also addressed structural issues within the company. According to Müller, a new way of thinking
is required at Volkswagen and encourages open discussions “and a willingness to allow mistakes
if they are understood as an opportunity to learn.” Pötsch added that “no business transaction
justifies overstepping legal and ethical bounds.” Pötsch concluded his statement with the
following (Volkswagen AG, “Volkswagen making good progress”):

64
We don’t need yes-men, but managers and engineers who make good arguments
in support of their convictions and projects, who think and act like entrepreneurs.
I am calling for people who are curious, independent, and pioneering. People
who follow their instincts and are not merely guided by the possible
consequences of impending failure. In short: the future at Volkswagen belongs to
the bold. We need a little more Silicon Valley, coupled with the competence
from Wolfsburg, Ingolstadt, Stuttgart, and the other Group Locations.

Volkswagen’s mission is now to “create a new, better and stronger Volkswagen”
(Volkswagen AG, “Volkswagen making good progress”). These statements, however, are in
direct opposition to what Osterloh talked about in his newspaper interview, during which he
denied any corporate governance issues. The issues are clearly addressed in the above
statements, though, and must have been different before, otherwise they would not place so
much emphasis on this subject matter. This inconsistency goes to show the importance of
spokespeople conveying the same message and tonality in order to ensure the company’s
credibility and avoid misunderstandings and suspicions among stakeholders.

News Article Titles Generated for Week 12
Car and Driver Online

(Meiners, “VW Updates Diesel Progress”)

LA Times Online

(Hirsch and Masunaga)

65
Auto, Motor und Sport

(Wittich, “Weniger Autos”)

Süddeutsche Zeitung Online

(Fromm, “Hypersensibel”) (Fromm, “VW darf keinen Befreiungsschlag feiern”)

66
Chapter 15: Crisis Week 13 à 11-17 December 2015
The corporation also announced the launch of a new internal employee magazine that
was published on December 14, 2015. The online and print magazine called inside will be
distributed to employees across international Volkswagen Group locations and is thus available
in English and German for the time being (Volkswagen AG, “Inside”). Nina Böttger, Head of
Internal Communications, said that Volkswagen is encouraging open communication in order to
create a more confidant team (Volkswagen Ag, “Inside”). Although it is unclear if this magazine
had been planned prior to the crisis, it is encouraging to see that the corporation is dedicated to a
more international informational exchange among employees; hopefully it will be well received,
in which case it could develop into a vital tool for employees that could encourage them to speak
more openly about topics of concern.
During this week, Volkswagen was finally able to confirm the previously presented
technical updates for the affected EA 189 engines with the German Federal Motor Transport
Authority on December 16, 2015:

Customers could expect to be contacted by Volkswagen in two letters, the first
announcing the measures, the second asking customers to make an appointment with a

67
Volkswagen partner business to rectify the issues. Those with 2.0-liter engines would be the first
to receive the updates, followed by 1.2-liter engine customers, and finally customers with 1.6-
liter engines can expect to have rectified the technical issues in the third financial quarter of
2016. Volkswagen made it clear through their messaging that they had taken into account the
time it would take for a customer vehicle to undergo the repairs so as to assure these clients that
the impact had been minimized as best as possible (Volkswagen AG, “NOx issue”).
On the next day Kenneth R. Feinberg, managing partner at the Law Offices of Kenneth
R. Feinberg, was announced as designer and administrator of “an independent claims resolution
program to address claims related to the 2.0L and 3.0L TDI vehicles,” as it is expected by the
corporation that Feinberg’s process will be “independent, fair and swift” (Volkswagen AG,
“Volkswagen announces engagement”). The use of an external auditor is vital at this point, and
will hopefully be one of the most successful ways for Volkswagen to prove its dedication to
transparency. With time, stakeholders will see if the information published through this
investigation will be fruitful.

News Article Titles Generated for Week 13
Auto, Motor und Sport Online

(Schulte)

68
Chapter 16: Crisis Week 17 à 8-14 January 2016
Over the Christmas break and New Year’s Eve, Volkswagen remained fairly quiet, but
picked up communications in January. Previously, there had been speculation about CEO
Müller’s travel plans to the United States in November, but due to the possible legal
ramifications, this trip was postponed until the North American International Auto Show in
Detroit in mid January (FAZ.net, “Konzernskandal”). During an official appearance there, he
said in an official statement, “We all know that we have let down customers, authorities,
regulators and the general public here in America, too,” for which he apologized again (Müller
qtd. in Glinton).
Müller also gave a short interview for the radio channel NPR on Sunday, January 10,
2016, with the intention of airing it a day later on Morning Edition. After being asked by NPR if
the scandal was a result of an ethical problem, Müller denied this and said “frankly spoken, it
was a technical problem” that emerged as a result of a misguided interpretation of what
American law required of the automaker. Müller also said that he could not understand why the
radio journalist asked this question relating to ethics. “We didn’t lie,” argued Müller, “we didn’t
understand the question first.” The CEO also did not feel that the perception of Americans has to
be changed, but rather that Volkswagen needs to make decisions and to change the way the
company thinks instead (Glinton).
On Monday, January 11, a section of this interview aired as planned. The radio outlet
reports that “Volkswagen approached NPR, asking for a do-over of sorts, another conversation
with the CEO,” to which they agreed. Müller started the conversation saying: “I have to
apologize for yesterday evening because the situation was a little bit difficult for me to handle in
front of all of these colleagues of yours and everybody shouting.” He was then confronted with

69
his statements from the previous day, as the journalist noted that his denial of any ethical
wrongdoing sounded “in English, like, ‘Oops’,” but that such a level of deception wasn’t just a
mistake. Müller responded with an acceptance of the violation and an apology to customers,
dealers and authorities for the way the company reacted when they were first contacted by the
EPA and the California Air Resources Board. To the journalists’ question about a solution to
climb over the hurdles that Volkswagen now has to overcome, Müller explained that
Volkswagen is doing their “utmost” to find solutions (Glinton).
In addition, Volkswagen was forced to announce on January 12, that CARB “has rejected
VW’s initial recall plans that were submitted for 2.0L diesel passenger vehicles sold in
California.” Yet, the announcement was meant to reassure customers that there is an ongoing
conversation between Volkswagen and CARB so that other solutions could be presented swiftly
(Volkswagen Group of America, Inc., “Statement by Volkswagen Group”).
This week was likely one of the most challenging ones since the beginning of the crisis.
Müller’s interview with NPR was problematic and contained many unnecessary communications
errors. It is safe to say that it was a humiliation not only for Volkswagen but also for Müller in
his new role. In a time when the company needed strong leadership, this interview signaled to
audiences that the CEO was struggling to control the situation, but rather than admitting to these
difficulties, his initial interview responses sounded almost delusional and arrogant, especially in
regards to the direct response in which he questioned the journalists’ motives. After months of
apologetic messaging, Müller’s communication in no way correlated with previous statements.
It’s hard to imagine why Müller would react in such a way, especially as this trip to the U.S. was
the result of a lengthy deliberation in which the opportunities to improve Volkswagen’s
reputation must have outweighed the possible risks of worsening the crisis. Nevertheless, this is

70
exactly what Müller and this interview will have caused. The interview went so poorly that it is
hard to tell if the request for a revised interview caused any more damage than was already done
in the first interview. The rejection of Volkswagen’s solutions by CARB only added to this
setback and demonstrated the many obstacles that are still in the path of recovery.

71
Chapter 17: Market Analysis
The Volkswagen AG Shares
Volkswagen AG shares are structured in two different categories. The ordinary VW share
(ISIN: DE0007664005) allows shareholders the right the vote in the general assembly, whereas
the preference shares (ISIN: DE0007664039) pay a higher dividend but remove the shareholder’s
right to vote.
The ordinary VW share price reached an all-time high of 249.790 EUR (closing) on
March 16, 2015. However, the company’s success was somewhat tainted after the tension
between Piech and Winterkorn, and the share price continuously dropped between March and
September 17, 2015, to a share price of EUR 167.60 (closing price). After the news release on
September 19, 2015, the VW ordinary share price dropped to a daily low of EUR 105.419
(closing EUR 114.590). The market’s response was to be expected given the uncertainty of the
issue that was unfolding. Following the announcement of Winterkorn’s resignation on September
23, 2015, the share price rose to an intermediate peak to EUR 122.370 (closing EUR 122.749).
His resignation resonated positively with the market, hinting at the shareholders’ perception of
his involvement with a crisis and that a change in leadership could be positive for the
corporation. However, this announcement was followed by the Supervisory Board’s statement
that 5 million cars were expected to be affected initially, causing a further decline in share price.
Interestingly, the market did not respond positively to VW’s announcement of Matthias Müller
as the new CEO of the Volkswagen AG. The share price dropped from EUR 115.943 (closing)
on September 25, 2015, to EUR 107.100 (closing) on September 28, 2015. This may have
reflected the shareholders’ concerns with appointing an internal candidate as the new CEO.

72
By September 29, when the first plan of action was announced, another low was reached.
However, only a day later, most likely in response to the announcement, the share price rose by
1.5 percent. Following the news that Volkswagen would postpone the General Meeting for
shareholders, the stock price once again dropped.
The decline of the share price continued, hitting an all-time low of EUR 100.050 (closing
EUR 102.500) on October 2, 2015, even after Müller wrote his first open letter to shareholders
on October 1. The drop was likely a result of the announcement on October 2, stating that Audi
engines were also affected. However, Müller’s speech to employees and his first public interview
with the German FAZ showed no negative impact on the stock price—quite the contrary, as the
share price increased after these two communication measures. Following the October low, the
share price continued to increase, reaching a peak on October 12, 2015, with a high of EUR
135.00 (closing EUR 133.500). After the announcement on October 15 that three million
additional vehicles were affected in Europe, the share price fell by almost 2 percent over the
course of the day.
Volkswagen published its Q3 earnings on October 28, 2015; surprisingly, the stock price
remained relatively constant, reflecting that the communication measures before the earnings call
gave enough supporting context so as not to negatively surprise shareholders, one of those
measures being the previous announcement that 6.5 billion Euros would be set aside for crisis
purposes. However, the reported earnings were also not yet reflective of any possible drop in
sales that would result from the crisis, and thus shareholders may not yet have felt a significant
negative impact.
A further peak was recorded on November 30, 2015 with a high of EUR 141.80 (closing
EUR 141.80), followed by a more significant drop by November 4, 2015. In this time,

73
Volkswagen made public their investigation into the “unexplained inconsistencies” of CO2
levels, an announcement that likely caused the drop of approximately 7 percent. Interestingly, the
market did not react negatively to the declaration that in fact V6 liter TDI engines of Porsche,
Audi and Volkswagen were affected, and the share price actually rose after that announcement
from November 23, 2015.
Although a drop in share prices could have been expected due to the fact that the
Volkswagen AG had previously denied that these engines had been fitted with the manipulated
software, shareholders may have been somewhat impassive by this announcement. Possibly,
shareholders might have been reassured by Volkswagen’s commitment to finding a solution after
the corporation announced that suggestions had been made to the German Federal Motor
Transportation Authority. The announcement from December 9, 2015, explained that in fact the
CO2 complications had not been as wide-ranging as initially declared, caused further reassurance
in the market. Nevertheless, positive corporate perception could not be maintained, even after the
corporation published the progress update on December 10, 2015. The share price dropped
almost 6 percent from EUR 140.00 to 131.750 on December 14, 2015, reflecting that perhaps the
efforts to clarify the situation were not as effective as the corporation had intended and that the
measures taken were not sufficient to increase trust among shareholders.

74
Chapter 18: Analysis
“A positive brand image can boost consumer confidence in a company, affect decision
making and build loyalty.” - (Smith, Smith and Wang 1)
Volkswagen’s crisis communication left much to be desired over the course of the last six
months. Overall, their tactics lacked creativity and they lacked a connection to their stakeholders,
primarily their shareholders and their customers. The distrust portrayed primarily by
shareholders and American government agencies confirms Coombs’ theory of crisis co-creation
based on the perception of stakeholders. It thus becomes even more valuable to develop
strategies that minimize the negative perceptions held by these audiences. Below are a number of
proposed alternatives that may have helped Volkswagen gain control of the situation.
1. Unified Corporate Messaging
In their messaging, Volkswagen lacked authenticity and finesse. Most importantly,
Volkswagen should have acknowledged the emissions problems much earlier on; they were
given several opportunities to take the lead and craft their own story, which they failed to do.
This set a very negative scene for any tactics that were to come. An example of this was
Winterkorn’s video interview, as it was one of most flawed tactics and showed poor execution
and planning. A more interactive, contemporary and dynamic interview would have benefitted
the company and the messaging. Rather than depicting a tired-looking Winterkorn in front of a
drab backdrop, Winterkorn could have spoken from the factory floor to show his engagement
with employees. Perhaps Volkswagen could have created a series of FAQ videos as a means to
disseminate information in a more visual way. Furthermore, it was not acceptable for Müller to
deny Volkswagen’s responsibility in the crisis during the NPR radio interview. A script should
have been created and in depth media training should have been prepared for Müller and other

75
managers so that unnecessary situations in the press, such as these, can be prevented. The
questions asked by the journalist should not have been a surprise, and thus Müller’s answers
should have been prepared accordingly.
2. Review the Role of Key Spokesperson in the US
Horn’s testimony in the U.S. was more successful, as it demonstrated his and the
company’s dedication to working with U.S. authorities. On March 9, 2016, Horn unexpectedly
quit his position at Volkswagen “by mutual agreement” (Beene). Given this current situation,
and Müller’s failed trip to the United States, it will be crucial for Volkswagen to reassess how
they will face the American public in the future. This is especially important if Volkswagen
wants to prove to stakeholders that they are not hiding from the current scrutiny. Without a key
leader in the United States, Volkswagen will continue to look destabilized. As well as
designating a new official spokesperson for the company, Volkswagen should have focused on
content that was more visually stimulating and not only reliant on online channels like the
website, as some customers may not have access to these outlets. Furthermore, it could have
been beneficial to organize an internal event that would allow employees to directly
communicate with the management level as they are likely to have many unanswered questions.
3. Develop a National Campaign
It would have been important for Volkswagen to issue a similar apology campaign in the
U.S. as they did in Germany. A national campaign through paid channels such as print media or
television could have greatly influenced the perceived authenticity of Volkswagen’s apology.
Volkswagen is renowned for its advertising campaigns, which were often humorous and witty,
and such a national campaign would be a chance to prove Volkswagen’s creativity in this area.
Rather than just repeating the same messaging as in previous letters and press releases, this

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campaign would be an opportunity to think outside of the box and create messaging that is
humble, but also gives customers hope that Volkswagen has learned from its mistake and will
move on from this crisis and use a certain level of self-deprecation to work through this process.
4. Engage External Management Teams
Although Volkswagen made a step in the right direction by engaging external audit
companies such as Deloitte, these companies will not compensate for the fact that Volkswagen
has made internal management promotions rather than hiring externally. When a corporation is
under scrutiny internationally, it may be more beneficial to create a team of external board
members that will observe and manage the situation in the long run (Manager, “Telephone
interview”), and clearly the reaction of shareholders reflected that the internal promotions made
so far have not raised trust levels among this group. Large institutional shareholders have
continuously demanded that Volkswagen hire an external CEO in order to increase the
accountability of the company. More specifically, this would involve the implementation of an
Issue Management Council, a measure that works towards “closing the gap between what your
stakeholders expect and what you as a company are actually doing” (Manager, “follow-up”).
This senior group of experts would work towards creating an “early warning system” that would
help the company “prevent issues from escalating into debilitating crisis” (Manager, “follow-
up”). Such a process would manage any future issues through a system of 1. Monitoring, 2.
Identification, 3. Prioritization, 4. Analysis, 5. Strategy Decision, 6. Implementation, 7.
Evaluation, which then concludes in a review that leads to a continuous repetition of this process.

77

Figure 10
5. Create a Shareholder Informational Package
Similar to employees, shareholders are another audience that received little attention from
the corporation amidst the crisis and thus reacted accordingly in the stock markets. On the one
hand, institutional shareholders felt excluded after voicing concerns about certain managerial
decisions. On the other hand, smaller, individual shareholders were left to witness the crumbling
stocks without much forward facing support.
Beyond this, Volkswagen has to prove their commitment to transparency, and not cover
up issues as was seen with their initial reaction in the V6 TDI engine case. Volkswagen should
not have released partial information in reaction to new details that had been discovered, and
should rather offer all details right away in the future. Granted, this may be difficult in some
cases, as corporations such as Volkswagen fear legal consequences from offering too much
information, but such an effort would garner trust from stakeholders. A short, descriptive booklet
can offer written information as well as diagrams that will support the visualization of the

78
manipulative software. If it is visually enticing, recipients may also be more willing to look at the
booklet than a plain letter.
6. Uphold the Value of the Diesel Technology
Volkswagen is now heavily pushing electronic technologies, which were never a focus in
the past. It is important that Volkswagen does not lose the company’s trust in the diesel
technology, as this could leave affected customers with even more insecurities about the product.
Volkswagen’s messaging about electric technologies should not have replaced the company’s
messaging about diesel technology. Customers should not feel like Volkswagen has forgotten
about the diesel technology; thus, it is vital that Volkswagen communicate the future of this
technology. At the moment, Volkswagen is likely trying to burry negative news about the diesel
technologies by presenting positive news about their electric technologies, but this is not
effective as long as the issue has not been resolved, as customers will still feel betrayed that
Volkswagen no longer has any interest in the diesel affair.
7. Hold a Dealership Conference in the U.S./Intensify Training
Dealerships are under tremendous pressure, as they are the initial human point of contact
affected customers have with Volkswagen representatives. If dealers lose confidence in
Volkswagen and the company’s authenticity and quality, these insecurities will likely be
transferred to customers. Thus, it would be of great importance to initiate an intensified training
program for dealerships and their employees, as they are the brand’s representatives. Dealers
should not feel like the Volkswagen corporation has abandoned them and left them to fend off
angry customers by themselves. This will only lead to frustration, and it is now more important
than ever that Volkswagen representatives have the utmost confidence in the products.
Dealership conferences, possibly also on a local level, could give dealerships the opportunities to

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ask questions to senior management and to receive answers relatively directly. Furthermore,
dealerships could exchange information and mechanisms for dealing with concerned customers.

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Chapter 19. Conclusion
Although Volkswagen AG led the automobile industry as one of the biggest car
manufacturers in the world, the company’s fate changed after their software manipulation was
uncovered. All eyes were on Volkswagen as the company faced the scrutiny of the media all
over the world. The turbulences that plague the company since September 2015 have caused
insecurities internally and externally, and is struggling to demonstrate control over the situation.
As a result, Volkswagen’s reputation, which relied so heavily on being seen as the brand that
made a reliable, fuel-efficient and well-engineered car Made in Germany, demonstrated to the
world that they were not prepared to defend their corporate reputation using crisis
communication.
Corporate reputation management is a key driver in a company’s success and a key
component of a company’s brand equity. Corporate reputation, according to Fombrun (72) is “a
perceptual representation of a company’s past actions and future prospects that describe the
firm’s overall appeal to all its key constituents when compared to other leading rivals.” At the
center of corporate reputation lies trust—that which employees have in a corporation and thereby
influences their performance, that investors have in a company and thereby influence a
corporation’s capital, and that customers have in a product. More so than ever, trust is important
for the millennial generation to see a reputable corporation that operates within certain ethical
and moral standards.
Trust then may translate into the economic performance of a corporation, as suggested by
Smith, Smith and Wang. In fact, their research concluded that “positive-image firms benefit from
an average market-value premium of 1.3 billion” in addition to firms experiencing “superior
financial performance and a lower cost of capital (lower risk)” (Smith, Smith and Wang 2).

81
“Reputable firm behavior,” so the authors write, “creates a valuable intangible asset that is
distinct from industry peers…those businesses, which can effectively direct reputation
management activities, will receive tangible economic and other benefits” (17). Many theories
support the notion that reputation management is an essential tool for a company’s success. On
the other hand, a company in turmoil like Volkswagen, which was unable to gain control of its
diminishing corporate reputation, saw a rapid and detrimental drop in trust when shares
plummeted.
However, other components of corporate reputation management that can counteract
other negative impact might contain a strong corporate social responsibility (CSR) program,
ethical operational practices and honest communication with stakeholders, including investors,
employees, consumers and government agencies. Particularly, shareholders are looking for
ethical practices in a corporation, and contrary to earlier beliefs that the financial performance of
companies may be wounded through reputation preservation strategies, it is now concluded by
experts that in fact, quite the opposite seems to be true (Harrington in Smith, Smith and Wang 4).
The top management groups, or TMG as named by Carter (1146), are the “guardians” of a
corporation’s reputation and are in charge of creating materials, such as press releases, that are
key influencers that shape the perception stakeholders have of a company (1146). Volkswagen’s
diesel efforts were considered to be a strong component of the company’s managerial CSR
program, showing efforts to minimize the negative externalities created by the VW vehicles.
Given that the company took so much pride in the diesel technology, their deliberate
deception has caused stakeholders to lose trust in Volkswagen’s communication and their
corporate authenticity is tainted. Volkswagen’s main efforts now should revolve around
rebuilding the company’s brand equity, especially in the United States. Given Volkswagen’s

82
success prior to the crisis, Volkswagen products were trusted and known for the quality,
durability and performance and were a classic example of products ‘Made in Germany.’
The brand equity of Volkswagen has suffered over the course of the crisis. In an
interview, Manager explains that “when you have developed, over time, so much trust capital
and bran equity, and superior quality and superior performance, and that equity is disappointed
or rendered under false pretenses, (…) there was more brand equity and further to fall.” What is
more, “the point is that the issue was not perceived to be a human error or mistake, but a
deliberate perception or fraud, people don’t like to be deceived, especially not the government or
regulators,” but this is precisely what Volkswagen did (“Telephone interview).
It remains questionable whether or not brand equity can help to combat a company in
crisis and can minimize the negative impact of a crisis. “You build up a corporate reputation
through CSR and ongoing good works, and you demonstrate value and performance” states
Manager, “so that when you do have a crisis, you can draw up on the reservoir of trust capital.”
However, this only applies when the crisis is a result of human error or a mistake that could not
be foreseen by the corporation, but when there was “willful deception and consumer fraud.” If
the company, like Volkswagen, achieved profits from “ill-gotten gains,” they can no longer rely
on their brand equity, and it becomes more difficult for a company to recover from a crisis
(Manager). Volkswagen’s decision to appoint a CEO internally further enforced this, especially
after it was announced that Audi was also affected. It is common for CEOs to be promoted from
within (approximately 67% are), as they are often familiar to shareholders and employees and
have proven some level of quality internal performance (Manager, “Telephone interview”).
Volkswagen’s main fault was apathy towards their own message creation, which leads
stakeholders to see Volkswagen as a weak character in this story. Rather than using the

83
numerous opportunities given to the corporation prior to the crisis, Volkswagen’s lethargic
efforts simply did not match the image of a multinational corporation that dominates a world
market.
Although it can be assumed that Volkswagen had some level of crisis management in
place, likely revolving around vehicle safety given the nature of the industry, the issue that
unfolded was perhaps not anticipated. A crisis of this nature is hard to foresee (Feldman), and
Volkswagen experienced this first hand. While crisis communication is valuable to a company,
as it shapes stakeholders’ perception if it is not handled correctly, an “improper crisis responses
make the situation worse” (Coombs 4). Volkswagen may have steered clear of worsening the
crisis with a poor crisis response in the initial phase. As Feldman says, “most companies enhance
or diminish their reputation not by crisis itself, but by how they respond to it,” and in this regard,
Volkswagen “responded okay,” but was not able to demonstrate a “brilliant” crisis response.
Yet, as the crisis progressed, it became more apparent that Volkswagen was, in fact, likely
damaging their reputation heavily in the United States.
According to Miller (qtd. in Broom and Sha 178), companies are part of “living systems”
that “engage in exchanges with their environments, producing changes in both the systems and
their environment.” Public relations as a function of a corporation is therefore essential in a
company’s adaptive subsystem, as it enables the company to monitor, process and adapt to
changes accordingly (178). Depending on how willing a company is to exchange information
with its environment, a company can be classified as open or closed. While an open system
enables a company to “exchange inputs and outputs with environments through boundaries that
are permeable,” closed system companies have “impermeable boundaries,” leaving the exchange
of information and knowledge to remain purely internal (179).

84
In an open system, companies can “adjust and adapt to counteract or accommodate
environmental variations,” but closed systems fail to recognize changes and they fail to respond
to them appropriately and in a timely manner, and as a result these closed systems are not able to
survive. They operate in an isolated state, as they are unable to adjust to and combat external
pressures that may affect the company’s objectives (Broom and Sha 179). Volkswagen has
proven to be a classic example of a closed system, as the company demonstrated a surprising
ignorance towards the outside information that was shared with them and a deliberate
unwillingness to change internal behavior.
Moreover, their reactive responses to the this crisis strengthen the argument that the
communications program in place “activates only when disturbed” and Broom and Sha (183)
compare this behavior to a cuttlefish that squirts ink when it is irritated by an outside force.
When Volkswagen was initially confronted about the emissions issue, the company denied the
accusations and returned to “ink squirting,” and this conduct of “defensive tactics and resistance
to structural change represent a system slow to adjust to environmental change” (183). For a
multinational company such as Volkswagen, it seems almost unthinkable that this type of
behavior could be successful, and it clearly demonstrated that Volkswagen lacked any depth of
knowledge and intuition of their environment. Volkswagen’s actions were malapropos, in that
they denied any necessity for or openness to change. The corporation was so focused on their
goal to become the largest automobile manufacturer in the world that they became negligent of
their stakeholders’ expectations.
The causes for the failed communication attempts displayed by Volkswagen can be
attributed to an exhausted, archaic managerial system that could no longer uphold its practices
from the scrutiny of the world. If Volkswagen wants to emerge from this crisis and regain the

85
trust stakeholders have lost, it is then of great importance for the company to reevaluate their
closed system approach and to transition to an open system in which they enable the company to
prosper through continuous adaption in accordance with changing environments.
Volkswagen has a long way to go before this crisis can be concluded and before the
company can demonstrate to stakeholders that sufficient changes have been made in order to
prevent similar occurrences, and this includes transitioning to a more relatively open system. It is
difficult to estimate when this crisis will come to an end, especially after Volkswagen was hit by
a 10 billion USD lawsuit in the United States, the company’s proposed solutions for the U.S.
market were denied, and 680,000 further VW vehicles are being recalled for possible safety
issues with driver-side airbags. Volkswagen now has to prepare not to react in such a way that
“could potentially create a narrative that would really be negative and that would be
unsustainable” (Feldman). The international market, specifically the US market, now becomes
even more of a focal point for the German manufacturer. “Consumers are interested in buying
products from companies that they can trust and have integrity,” says Feldman, “so that they can
have confidence in the product” and Volkswagen has failed to create these products. The
company must also come to understand that setbacks like the California Air Resources Board are
likely to happen again, and this means that Volkswagen will continuously be forced to manage
negative news that emerges.
Most importantly, Volkswagen must back up their communications with appropriate
actions, as otherwise any previous communication is rendered worthless. Companies of caliber
“have to fix the problem and demonstrate that they are meeting or exceeding the requirement in
places that [they] operate, they have to prove and communicate that [they] are ready to do
business ethically again” (Manager, “Telephone interview”). Only by changing the dynamic of

86
the company can Volkswagen regain its status among its stakeholders in an effort to become a
company that not only has a rich and turbulent history, but also has the opportunity to have an
exciting future.

87
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Asset Metadata

Creator Bez, Anne (author)

Core Title Volkswagen Dieselgate: an analysis of Volkswagen AG's crisis communication as a response to the emissions scandal from 2015

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/19/2016

Defense Date 04/18/2016

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Automobile,Communication,Crisis,crisis response,emission,OAI-PMH Harvest,scandal,Volkswagen

Format application/pdf (imt)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Brabham, Daren C. (committee chair), Floto, Jennifer (committee member), Tenderich, Burghardt (committee member)

Creator Email annebez@hotmail.com,bez@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c40-231935

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Legacy Identifier etd-BezAnne-4284.pdf

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Document Type Thesis

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Rights Bez, Anne

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Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

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