Volkswagen Emission Scandal: Reputation Recovery and Recall Strategy
(6 pages of text)
Case (Pub Mat)
In September 2015, the Volkswagen Group (VW) was in a state of flux. Its reputation was taking a severe beating in the auto industry and among consumers. The United States Environmental Protection Agency had accused the company of tampering with its EA 189 diesel engines to clear emissions tests. The engines, fitted with a “defeat device,” met the stringent emission levels and higher fuel efficiency standards set in the United States. The defeat device controlled emissions during laboratory testing and driving so that they remained within permissible limits; however, during actual on-the-road driving, the nitrogen oxide emissions were up to 40 times higher. VW’s admission of the intentional manipulation severely dented its value chain, affecting market share, brand image, internal/external stakeholders trust, and supply chain operations. In the wake of the scandal, the company faced the challenge of organizing a product recall and reconceptualizing the VW brand identity.
This case is designed for use in a graduate-level course that covers marketing strategies related to product recalls. It can also be used in a product and brand management course that addresses brand equity, the brand identity matrix, and product recall strategies. The case gives students insight into the management challenges of product recalls. Students have an opportunity to
- understand the various phases in drafting recall strategy;
- reconceptualize the brand identity of a recalled product;
- understand the role of product and plant variety in preventing future recalls; and
- analyze business strategies to regain consumer trust after a product recall.
United States, Large, 2015
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