What US laws were broken by VW? How were consumers harmed by VW's actions? What were the positives and negatives to VW by defrauding consumers and regulators? Why is this issue important to businesses, people and the planet?

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Discussion Case: Volkswagen's "Clean Diesel" Campaign

Owners of Volkswagen, Audi, and Porsche diesel cars were shocked to learn in September

2015 that their "clean diesel" vehicles were not so clean after all. Under pressure from

U.S. regulators, Volkswagen admitted it had fraudulently equipped certain VW, Audi, and

Porsche diesel models with so-called "defeat devices," software designed to cheat on gov-

ernment emissions tests. Cars marketed as environmentally friendly were in fact, unknown

to their owners or the public, fouling the air with dangerous pollutants.

Said one owner of a diesel Jetta wagon, "I was very interested in fuel economy and

low emissions, and power, but I remember thinking when I bought the car that it almost

seemed too good to be true. Now it turns out that is really was too good to be true. I feel

completely duped."

In 2007, Martin Winterkorn, the newly appointed CEO of Volkswagen, announced an

ambitious goal: to become the world's leading carmaker, pulling ahead of both Toyota and

General Motors. A key element of the strategy was the rollout of a new generation of die-

sels in the United States. This would require the development of a new diesel engine that

could deliver lively performance and good gas mileage, while also complying with tough

U.S. limits on emissions of nitrogen oxides (a toxic pollutant that causes health problems

and contributes to smog). The company's engineers struggled to meet this challenge within

tight budgetary and time constraints.

Finally, under increasing pressure, the engineers hit on a solution: software that could

detect when the vehicle was undergoing emissions testing. When the vehicle was on

rollers and its steering wheel immobilized, the emissions control equipment would be

switched on, reducing pollution to permitted levels. At other timesthat is, during normal

drivingthe emissions control equipment would be dialed down, allowing the car to

achieve better mileage and sportier performance. Such defeat devices were explicitly pro-

hibited under U.S. environmental law.

To promote its new models, Volkswagen launched a major marketing campaign for its

"Clean Diesel" TDI (turbocharged direct injection) technology. The campaign's purpose

Internet

was to counteract the stigma associated with diesel engines and convince car buyers that VW

diesels were fun to drive, economical, and environmentally responsible. One ad proclaimed:

This ain't your daddy's diesel. Stinky, smoky, and sluggish. Those old diesel reali-

ties no longer apply. Enter TDI "clean" diesel. Ultra-low sulfur fuel, direct injection

technology, and extreme efficiency. We've ushered in a new era of diesel.

Other print ad tag lines included: "Diesel is no longer a dirty word," "Diesel has really

cleaned up its act," and "Protect the environment and look good doing it."

A series of humorous TV spots, dubbed "Old Wives' Tales," depicted three older

women in a diesel VW Passat, arguing about its characteristics. In one, "Old Wives Talk

Dirty," the passengers agree the car is beautiful, but insist that it's dirty. To prove it's not,

the driver gets out and holds her white scarf against the tailpipe. It comes away pristine.

Another ad, aired during the 2010 Super Bowl, featured the "Green Police" arresting

citizens for various environmental transgressions, such as drinking from plastic water bot-

tles, failing to compost orange peels, and using incandescent light bulbs. Then, at a road

block set up to catch polluting vehicles, the Green Police allow a diesel-powered Audi A3

to skip the line, saying, "You're good to go, sir." The pleased driver zips off, under the tag

line "green car of the year."

The marketing campaign was a great success. From 2009 to 2015, VW sold around

580,000 vehicles with the defeat device in the United States, including VW, Audi, and

Porsche-branded TDI (diesel) models. Consumers paid a premium for these cars: a VW

diesel cost on average $5,755 more than a comparably equipped gasoline version. (Some

operating costs were lower, however, since diesels got better gas mileage.)

Volkswagen's deception began to unravel in 2013, when researchers from West Virginia

University set out to study how much various cars polluted on the road, rather than in the

lab. They were startled to discover that a VW Jetta and a VW Passat, both with diesel

engines, emitted as much as 40 times the nitrogen oxides allowed under federal rules.

California air regulators, alerted to these findings, began an investigation that led eventu-

ally to Volkswagen's admission of fraud.

Owners of the tainted vehicles suddenly faced difficult choices. They could continue

driving their cars, knowing they were emitting dangerous pollutants way over the legal

limit. They could attempt to sell their vehicles, but their value had dropped precipitously.

Drivers with leases found themselves suddenly "upside down," owing more on their con-

tracts than their cars were worth.

Hundreds of owners chose to sue Volkswagen. In 2016, these cases were consolidated

in a single class action in federal court, representing all owners of the affected vehicles.

Separately, the U.S. Justice Department and the Federal Trade Commission also sued

Volkswagen. In a series of negotiated settlements, Volkswagen agreed to buy back the

tainted vehicles (for what the cars were worth before the scandal broke) or to terminate

their leases without penalty. If the customer preferred, the company would repair the

vehicle's emissions controls (although experts predicted that doing so would reduce per-

formance and fuel economy). In the either case, customers would receive additional resti-

tution of five to ten thousand dollars. The total cost to Volkswagen was estimated at more

than $15 billion?

What US laws were broken by VW? How were consumers harmed by VW's actions? What were the positives and negatives to VW by defrauding consumers and regulators? Why is this issue important to businesses, people and the planet?

provide 3 in-text citation

Answer rating: 100% (QA)

ANSWER US Laws Broken by VW Clean Air Act Violations Volkswagens installation of defeat devices in its diesel vehicles violated the Clean Air Act which prohibits the manufacture sale or installation o... View the full answer