The Volkswagen emmissions scandal is one of the major corporate scandals of present days that has tainted the image of the company across the globe. VW admitted having equipped more than 11 million of its diesel vehicles with particular software that would enable the cars to cheat on emission tests (Ewing). The diesel emissions cheating scandal has the potential to destroy the firm’s reputation completely, besides it costs the company billions of dollars to enhance compliance with pollution standards. The automaker should, therefore, consider buying back or overhauling the vehicles fitted with diesel-emissions cheating software. Moreover, VW should also consider offering substantial compensation to the owners of these diesel cars that fail to meet the diesel emissions standards. These recommendations are beneficial for VW, as they would enable the automaker reduce any potential negative impact on the environment resulting from the excess diesel emissions.
The buyback option would enable customers to return their cars that are fitted with defective devices in exchange for substantial compensations according to the value of the cars returned. The vehicle recall program, if it is properly implemented, will enable VW to lower the costs associated with the diesel cheating scandal. Moreover, this strategy will also enhance environmental soundness, as it would eradicate the vehicles fitted wih the cheating devices from the roads. The impact of such measures will be the lowering of the amount of nitrogen oxide emitted to the atmosphere that is associated with widespread respiratory issues including asthma, emphysema, and bronchitis (Ewing). The buyback option will, hence, enable the automaker to produce a lot of clean diesel vehicles that would offset any potential harm done to the environment.
The repair or overhaul of the returned VW vehicles is beneficial, as it would enhance the automaker’s corporate image across Europe and North America. While this strategy would enable the company to reduce the negative environmental impact of the excess diesel emissions, it would significantly enhance VW’s ability to redeem its image and recapture the trust of its customers, dealers, regulators, and the general public (Meier). The overhaul of the defective vehicles should include fixing the emissions cheating software that enables the company’s brands to sidestep the stringent nitrogen oxide emissions checks. Subsequently, it would boost the company’s revenues due to the improving corporate image and increased regulatory compliance.
There are some potential difficulties that are associated with the implementation of the recall/buy back, repair, and compensation strategy. The option to buy back around 11 million VW brands, involved in the emissions cheating test, is extremely expensive for the automaker. The repairs must be done by VW free of charge, and its contracted dealerships and the whole program is estimated to cost over $7.3 billion, which is the equivalent of VW’s half a year’s profits (Ewing). Apart from this, the implementation of the overhaul program will conceivably result in a decline in the value of the VW vehicles that are already in the market. Deactivating the emissions of defective devices can result in poor performance cars due to the decline in fuel economy as a result of tighter restrictions on the car’s emissions (Yeomans and Bradshaw). The decline in the vehicle’s resale value can, therefore, negatively impact on the customers’ preference for the VW brand.
In conclusion, the implementation of the vehicle buy back, repair, and compensation strategies have far-reaching positive implications for Volkswagen. Firstly, the recommendations will enable VW to recover its corporate image as the leading producer of clean diesel vehicles in the market. Consequently, it will enhance its appeal to customers, regulators, dealers, and the general public. Secondly, successful implementation of these recommendations will improve the safety of the environment as a result of increased regulatory compliance. The automaker will be forced to produce vehicles that adhere to the environmentally safe and allowable levels of nitrogen oxide emissions.