With the recent scandal committed by Volkswagen of cheating their emission tests on an estimated 11 million diesel vehicles worldwide, it created an enormous issue for the company of how to steer the formerly reputable company in the right direction. The first step taken was that of having the CEO Martin Winterkorn step down and be replaced by former Porsche Chief Matthias Mueller. Mueller has been with the Volkswagen family since his apprenticeship days as a toolmaker with Audi.
Mueller's claim for the future of Volkswagen was that they would survive, but the time associated with that as well as the road to future success will be long and rocky. In order to recuperate the losses associated with this dilemma, the notion of massive job cuts has been circulating around the company in order to make massive savings. Volkswagen has stated that they have set aside approximately $7 billion in order to remedy the situation with a technical fix; however, the potential total cost could reach a number several times higher than that. VW will be coming out with a technical fix in the nest few days in order to try and create a quick fix to the situation.
Credit Suisse stated that in the worst case scenario for Volkswagen, they could end up paying out upwards of $87 billion due to the cost of recalls, legal actions by authorities, customers, dealers, shareholders, and also the future loss of business. It will be interesting to see how VW responds to this crisis and also how long it takes them to restore their image and regain the trust from their cult like following of customers.
http://money.cnn.com/2015/10/06/news/companies/volkswagen-crisis-ceo-savings/index.html?iid=hp-stack-dom
3 comments:
I'm not sure VW can survive this scandal. They lost all credibility with consumers (or at least they should) and foreign governments might be more wary about importing their vehicles. They will also suffer a huge financial penalty for lying, which could leave them in financial ruins.
You bring up an interesting point about their cult following. Will those loyal customers be able to forgive this company? Or will they desert them? I know I would stop buying their vehicles, but I'm curious to see what their consistent customers will do.
This scandal will be one that will be very hard to VW to recover from. A lot of the people who drove VW vehicles bought into their claim that they were an environmentally friendly option. These customers which were a large customer base for VW I do not think they will be able to get back as they have lost all trust in the VW products. While VW says they will be able to find a solution relatively soon is a bold statement as no one else has been able to come up with a solution to these problems either and are beginning to ask for more lenient restrictions on emissions. The future does not look bright for VW and I am not sure that they will survive this.
I agree with Ashley and Emily above. I honestly feel that VW has lived it's day and will not be able to recover from this infraction. To then go and ask for more lenient restrictions on emissions is absolutely absurd and will continue to hurt VW sales and commission.
On the flip side, I do feel that loyal VW customers will fall back in line and continue to purchase their products; but I do not feel it will be enough. For the time being, VW will stay afloat, but soon they will sink under the competition and be forced out of the market. Due to this, I think the question now becomes, "how long will it take exactly for VW to be forced out of the automobile market?"
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