Monday, November 23, 2015

How the Mighty Fall


 
 
Volkswagen prided itself on its quality by using the tagline “Das Auto.” In a span of just three months, the auto maker has been forced to admit that millions of its diesel cars were equipped with software that was used to cheat on emission tests.

Researchers at West Virginia University conducted on-road tests on Volkswagen cars and determined that when tested on the road some cars emitted 40 times the permitted levels of nitrogen oxide – a pollutant that can cause emphysema, bronchitis, and respiratory diseases.

 
The “cheating” comprised a software that sensed when the car was being tested and activated equipment that reduced emissions. The software turned the equipment off during regular driving, emitting pollutants far above the legally permissible limits, possibly to improve performance or to reduce fuel consumption.
 
Globally, more than ten million vehicles (Golf, Jetta, Beetle, Passat, A3, and Porsche) are alleged to have been affected. The company, under pressure from regulators, has stated that it will recall over eight million diesel-powered vehicles in Europe starting in 2016. In the United States, users may have to wait more than a year. Vehicles may require both a hardware and a software change. The company has offered up to $1,000 to owners of diesel cars in the United States.

The costs have been enormous. The company reported its first quarterly loss in 15 years. It has halted the sale of affected cars. The share price has plummeted. The CEO has had to step down and several key executives have been suspended.

Volkswagen has admitted that it has understated the emission of carbon dioxide in about 800,000 vehicles.

All this could potentially mean over $10 billion in costs and penalties.
 
Why do organisations resort to such practices? Don’t we ever want to learn from recent history? Do you have to be No.1 at any cost?

 

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