Jessica Matheson

Comms. 235, Section #1

May 25, 2016
Case Analysis
The Volkswagen TDI Recall: A PR Nightmare
In 2008, Martin Winterkorn, Chief Executive Officer of Volkswagen
Automotive, announced an aggressive plan that would put Volkswagen at the top of
the global auto industry by 2018. In 2015, the company was deemed the most
sustainable automaker among its indexed peers by the global Dow Jones
Sustainability Indices. Less than two weeks later, Volkswagen was accused of lying
about emissions reports for their 2.0L diesel engines, causing their shares to
plummet nearly 20 percent.
In 2014, the Environmental Protection Agency (EPA) and the California Air
Resources Board were tipped off about Volkswagen diesel engines using defeat
devices. These devices are used in the emissions tests to switch between two
operating modes. In test mode, the cars are fully compliant with all federal
emissions levels. But when driving normally, the computer switches to a separate
modeemitting 40 times the legal limit by significantly changing the fuel pressure,
injection timing, and exhaust-gas recirculation (Atiyeh). ConsumerReports said that
since 2009, 13 different models from Volkswagen, Audi, and Porsche have enabled
with defeat devices, estimating nearly 11 million cars were affected worldwide.
Martin Winterkorn, former CEO, stated that the incident was the mistakes of
a few people and before resigning said, I am not aware of any wrongdoing on my
part. Since then, the Volkswagen chairman, Hans-Dieter Ptsch, has released
internal documents suggesting that Winterkorn may have been aware and that the
decision by employees to cheat on emissions tests was made more than a decade
ago (Joshi and Hakim). Volkswagen then appointed a new CEO, Mattius Muller, who

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
was quickly criticized and forced to revise his statement, We didnt lie to NPR in
Jan. 2016. Muller has since implemented a newsroom consisting of about 20
employees with communications, sales, and technical expertise to provide
immediate feedback to inquiries regarding the scandal (Hakim). Volkswagen has
also started the Goodwill Program which offers $1,000 in incentives as well as free
24/hour roadside assistance for three years (Bartlett). The company has set aside
$7.3 billion dollars for compensation and buyback plans, but with current pending
lawsuits, it is estimated that the company may spend more than $18 billion in fines
(Voelker).
Objectives:
Volkswagen did not have a crisis plan set in action when this scandal broke.
Danny Hakim of the New York Times said, Someday, Volkswagens emissions
cheating scandal will be studied in crisis communications textbooks. And not in a
good way.
When the TDI software was discovered, Volkswagen had two main objectives.
The first objective was to inform the public, specifically current VW owners, that this
deceit was not intentional and that they wanted to regain the publics trust. The
former CEOs original statement to the press was an attempt toward achieving this
objective, I personally am deeply sorry that we have broken the trust of our
customers," and that the company, totally screwed up (Markortoff). However,
after his resignation, Volkswagen admitted that the use of the defeat devices
being installed in their diesel models was a conscious decision made nearly 10
years ago.

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
Volkswagen also started a campaign to reach out to current VW consumers.
This campaign would accomplish their motivational objective, which is to retain
current drivers and incentivize them to purchase another Volkswagen automobile.
They implemented the Goodwill Program which offers incentives, such as a $500
prepaid Visa card and a $500 Volkswagen gift card to current owners of TDI vehicles
produced between 2009 and 2015. The Goodwill Program also allows current
owners to participate in free 24 hour roadside assistance for three years. This
campaign is also allowing the affected vehicles to be taken to one of their
dealerships to have the necessary repairs done to make the cars EPA compliant
done for free. However, many owners are upset and refusing to have the repairs
done because their vehicles will lose power and increase fuel consumption.
However, some states, such as California, are denying owners the ability to
reregister their cars if the repairs have not been made.
Since this is still an ongoing issue it cant be said that they have fully
achieved either objective. Volkswagen is having a difficult time regaining the trust
of their current consumers due to their both their former and current CEO lying
about the scandal being an accident. In the most recent Harris Poll, Volkswagen was
ranked dead last, having a score of 54.75 which is categorized as very poor. Many
consumers in Europe are lashing out against Volkswagen for not allowing them the
same compensation as U.S. customers. Although Volkswagen currently owns 70
percent of the U.S. diesel passenger market, they need to treat all their customers
with the same amount of respect.
Key Publics:

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
Volkswagen has two key publics they need to reach. The first key public is
current owners of the affected diesel Volkswagen, Audi, and Porsche vehicles. These
owners need to be informed on the issues relating to their car and its effect on the
environment, as well as the compensation and repairs they may be eligible to
receive. Volkswagen has been very active through the mass media; multiple chief
executives have given official statements through press releases and the
implementation of the active newsroom is allowing the company to give immediate
responses to inquiries. The company also updated their website so owners can
receive daily updates on the TDI recall status, as well as progress reports and
information on whether or not their vehicle was affected. Volkswagens methods, as
well as the ongoing news coverage, have been able to reach the majority of VW
owners.
Another key public Volkswagen needs to reach is adults who are currently in
the market, or may soon be in the market, for a diesel passenger vehicle. In order
for Volkswagen to grow their business and get back on track they need to reach
potential buyers and show that they are a trustworthy company. Removing current
TDI models from the showroom floor was a good start, but they need to be more
transparent when talking about the situation and provide more sources outlining
updates to their vehicles ensuring they are EPA compliant. There is talk of VW
rebranding their company again as a top green automotive company by redesigning
future TDI models and some publics are demanding that the company start an
environmental cleanup program.
Messages:

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
Volkswagens messages to the public have been a complete disaster. Both its
current and former CEO were criticized for calling the scandal an accident when
Volkswagen later admitted that it was not. This forced Winterkorns resignation and
Muller to retract his statement to NPR (Hakim).
A few months after the scandal broke, VW executives claimed that the
defeat devices were not illegal in Europe. One month after this statement was
made, German regulators released a statement saying that they are illegal and
considered cheating. Volkswagen fought back by saying that its software was not
a forbidden defeat device when it was used in Europe (Joshi and Hakim). Also,
British executive Paul Willis announced that European owners would not be eligible
for the buyback or Goodwill programs, which sparked outrage and feelings of
betrayal. Since the announcement, Britain and France have called for a full
investigation throughout Europe (Thompson and Kottasova).
Volkswagen is currently trying to be more transparent about the issue. After
CEO Martin Winterkorn resigned, VW mixed around many executive management
positions. The company also recently hired a law firm to conduct an internal
investigation as well as three additional public relations firms based in three
different countries Kekst in the United States, Finsbury in Britain and Hering
Schuppener in Germany (Hakim). These firms will join Edelman, an American PR
firm already on retainer and the former communications chief of BMW, Richard
Gaul.
Strategies:

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
In an attempt to rebuild the Volkswagen brand, the four PR firms are quickly
scrambling to get a plan of action set up. Nothing has yet been solidified, and may
not be until the final plan of action is announced. For the time being, Volkswagen
has only one strategy currently being implemented, and that is to inform current
Volkswagen owners that they have a solution to repair the TDI vehicles and provide
incentives to those affected by means of mass media, and internal communication
channels.
Tactics:
The current executives have been very active in speaking with media outlets
such as The New York Times and NPR. They have also held press releases and
implemented the mock newsroom at VW headquarters, allowing journalists to
receive immediate information directly from the source.
The company has also used several of their own internal communications
methods to reach out to consumers. Current owners of VW vehicles were contacted
via mail, informing them of the ongoing processes to repair the cars and offer
incentives. Volkswagen has also been very active on their own website, keeping it
up to date and providing a location for drivers to receive additional information and
a source allowing consumers to see if their car was one affected.

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
Works Cited:
Atiyeh, C. (2016, May 11). Everything You Need to Know about the VW DieselEmissions Scandal. Retrieved May 23, 2016, from
http://blog.caranddriver.com/everything-you-need-to-know-about-the-vwdiesel-emissions-scandal/
Bartlett, J. S. (2016, April 28). Guide to the Volkswagen Emissions Recall. Retrieved
May 21, 2016, from http://www.consumerreports.org/cro/cars/guide-to-thevolkswagen-dieselgate-emissions-recallConsumer Reports. (2016, April 27). Volkswagen Diesel Emissions Scandal.
Retrieved May 24, 2016, from http://www.consumerreports.org/cars/vwdiesel-emissions-recall/
Hakim, D. (2016, February 26). VWs Crisis Strategy: Forward, Reverse, U-Turn. The
New York Times. Retrieved May 24, 2016, from
http://www.nytimes.com/2016/02/28/business/international/vws-crisisstrategy-forward-reverse-u-turn.html
Harris Poll. (2016, February 18). Retrieved May 25, 2016, from
http://www.theharrispoll.com/business/Auto-Industry-Reputation.html?
version=meter at 8
Joshi, P., & Hakim, D. (2016, February 26). VWs Public Relations Responses and
Flubs. The New York Times. Retrieved May 22, 2016, from
http://www.nytimes.com/interactive/2016/02/26/business/volkswagen-publicrelations-flubs.html

Jessica Matheson
Comms. 235, Section #1
May 25, 2016
Case Analysis
Meier, F. (2016, April 21). Volkswagen, Regulators Announce Diesel-Car Buyback
Plan. Retrieved May 23, 2016, from
https://www.cars.com/articles/volkswagen-regulators-announce-diesel-carbuyback-plan-1420684452969/
Perkins, C. (2016, April 06). VW's European Recall for Cheating Diesels Reportedly
Hurts Fuel Economy. Retrieved May 20, 2016, from
http://www.roadandtrack.com/new-cars/car-technology/news/a28735/vwgerman-diesel-fix-more-fuel-consumption/
Thompson, M., & Kottasova, I. (2015, September 25). Volkswagen scandal widens:
$7.3 billion cost, 11 million cars. Retrieved May 22, 2016, from
http://money.cnn.com/2015/09/22/news/vw-recall-diesel/
Voelcker, J. (2016, March 17). VW diesel emissions scandal: What you need to know
in 10 questions (updated). Retrieved May 24, 2016, from
http://www.greencarreports.com/news/1100125_vw-diesel-emissions-recallwhat-you-need-to-know-in-10-questions
VW Recalls | Service Campaigns | Volkswagen. (2016, May 23). Retrieved May 21,
2016, from http://www.vw.com/owners-recalls/