Volkswagen Emission CrisisJacqueline Feldman, Christina Ciccone, Frankie Petts, Natalie Singleton, & Katie Thompson

General Overview● September 18: the US Environmental Protection Agency (EPA) exposed that

Volkswagen (VW) illegally encoded its diesel engines to bypass emissions

standards (Tuttle, 2015)

● Volkswagen confessed to installing the software, referred to as a “defeat

device,” which could detect if a car was being tested and activate full

emissions control to appear with regulations

● EPA’s findings cover 482,000 cars in the U.S. and 11 million cars worldwide

What to expect during this presentation● What can Professionals & Academics learn from this case?

● Volkswagen’s Response

● SMART Objectives & PR model

● Our Research

● Why is this case relevant?

● What Volkswagen & other companies can learn

● Personal Assessment

What can be learned● This case is a great example of ethics and crisis management, both of which

are great themes that professionals and academics can learn from

● What to do and what not to do

● Impact of Volkswagen’s image

● How important it is to communicate

What can be learned: Ethics● “Negative incidents brought to light by the national media have dealt largely with the ethics of

organizations covertly influencing public opinion through public relations programs” (Swann)

● Volkswagen had admitted to cheating emissions tests in America, the public has questioned the

company’s ethics

● Important to see the consequences of ethical mistakes

○ Shares fell 37%

○ Lost trust from public

● Important to have formal compliance & ethics programs to prevent issues

● PRSA has a code of ethics that embodies professional values

○ Professionals & students should be aware of these values and incorporate them into their

work

What can be learned: Crisis Management

● As soon as the EPA brought the Volkswagen emission scandal to the

public, Volkswagen became a crisis management case.

● Crisis Management is important to study to learn what to do and what not

to do

● Academics can use the Volkswagen emission scandal as an example to

see what tactics the public relation professionals used to reduce the

conflict. “By learning from others’ mistakes, organizations can potentially

reduce their own risks” (Swann, 155).

What can be learned: Crisis Management ● WHAT THEY DID DO:

○ responded, took public action and have pledged to comply with any

investigations.

● WHAT THEY DID NOT DO:

○ reach out to the stakeholders, communicate clearly with those

affected by this conflict, and ensure there were open channels of

communication

○ Took two weeks to reach out to stakeholders

● COMMUNICATION IS KEY

Volkswagen’s Response● Worked to regain customers trust back and brand image

● Admitted they were wrong 6 days after being accused

● Publicly apologized: ○ including public videos, press releases, and media statements

● Pledge to fix the vehicles affected

● Directly contacted customers to apologize

● Customers angered, wanted VW to listen to their demands

Volkswagen’s Response ● VW responded with a chance to apply for a $500 prepaid Visa card and a

dealership card of the same amount

● Customers globally upset

● VW focused on relationships in US

● Customers still upset with VW for not listening to demands

● April 21 (8 months later) listen to demands

● Rumored to offer individual owners $5,000 a piece as compensation for

having been sold cars that pollute more than is legally allowed

SMART Objectives● Specific

○ limit brand damage in the United States as a result of this discovery, and to reassure their customers and potential customers that Volkswagen is doing everything in their power to fix the emissions

● Measurable○ looking over their social media accounts, viewing responses and comments throughout this crisis

● Achievable ○ because they clearly broke laws and regulations in the United States, it was their priority to do right by

their customers and react to their annoyance by taking those steps listed above to regain trust and a positive brand image

● Realistic○ Focused on brand image and customer relations based in US

● Timescale○ Has taken over 8 months and counting to respond to the emission crisis

PR Model● First: Two-way asymmetrical

○ Did not listen to customer demands

○ Implementing plans that they thought were beneficial and were not listening to

customer’s feedback indicating they were unhappy

● Second: Two-way symmetrical

○ After months of ignoring customer’s remarks they decided to listen and implement a new

way to compensate customers.

○ They went from two-way asymmetrical to two-way symmetrical. Listening to the public's

demands and responded with a way to compensate the customers affected.

Original Research• Questionnaire Survey

- 20 students, all VW owners, 7 questions via SurveyMonkey • Tried to gauge:

(1) public knowledge/awareness (2) public concern (3) perceived impact on VW brand (4) success of/preferred compensation strategies

• Reached out to Greensboro VW Dealer to see effects on sales/customer satisfaction (if any change), but declined

What We Gained from Research• Not all VW owners are aware of crisis details (lack of global communication w/ stakeholders)

• Most VW owners concerned by crisis, but still see VW in positive light (not a massive detriment to brand reputation)

• VW could have eliminated compensation gaffes w/ simple survey- most all respondents would have preferred pay-out or buy-back- focus group, survey, anything would have tipped VW off that $500 Visa

GC was a bad move

Why is this case relevant?● Social Media Usage

○ social media is vital to many companies and their success○ After VW was accused, customers were turning to social media to demand answers○ Other companies can learn and grow, use social media to their advantage

● Global Companies with many markets○ companies and organizations can learn from and improve when handling a crisis that

affects multiple markets

● This case is relevant because mistakes are made and companies have to work to rebuild their image and restore their customers trust. Looking at VW and how they responded or lack of, it is necessary companies learn to get ahead and respond when needed

VW and Other Case Studies - Toyota Brake Crisis

- What happened?

- Family died due to faulty brake system

- 9 other cases

- What did they do wrong?

- Gave wrong information, CEO was uninformed

- Volkswagen similarities

- Uninformed CEO

VW and other Case Studies● Tylenol Crisis of 1982

○ What happened?

○ What did they do right?

■ Immediately took responsibility for something that was out of

their control

■ Had a campaign that informed the public about the issue

○ Volkswagen differences

■ Volkswagen CEO should not have shifted blame

■ He should have taken the blame right away like Tylenol did

Personal Assessment● VW took awhile to respond & apologize

● Did not listen to their customer demands

● Still today paying fines and attending court dates

● VW has taken around 8 months to come up with a plan to compensate its

customers

Personal Assessment ● According to Swan, the actions to take during a crisis are: “put the public

first, take responsibility, be honest don’t speculate, be accessible and

accommodate the media (communicate frequently), designate a single

spokesperson/create message points, monitor news coverage,

communicate with key publics, consult crisis communication experts” (p.

158-159)

● If VW had taken those steps, it would be safe to say they would potentially

be in a completely different position than they are now.