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Introduction to Business

Ethics Activity

Introduction to BusinessEthics Activity

Ethics Activity

Historically, diesel cars have not been big sellers in the U.S. auto market, mainly because their engines couldn’t pass the strict emissions standards set up by the Environmental Protection Agency and the California Air Resources Board. But that all changed in 2005, when German automaker Volkswagen made a decided push to develop “clean diesel” engines, specifically manufactured to meet strict U.S. emissions standards.

By 2010, VW had introduced several models of diesel cars in the United States, and their sales helped propel Volkswagen to the number-two slot in global auto sales, after Toyota and ahead of GM. While VW was receiving major media attention for its clean diesel models, researchers from West Virginia University discovered that these so-called clean engines had been constructed with a “defeat device”—software that could actually tell when the car was being tested off road for emissions and lower the level of emissions that harm the environment.

By December 2014, Volkswagen agreed to voluntarily recall more than a half-million clean diesel cars in the United States to address the emissions issues. But the scandal continued to escalate, with accusations that senior management knew about the rigged engines, and VW’s CEO resigned and several other executives were fired.

Class-action lawsuits and other litigation followed, and in April 2017, VW agreed to a $4.3 billion settlement, which included a criminal fine of $2.8 billion, as well as various buyback plans for the affected diesel cars. In addition, over the last several years, VW has experienced a significant decline in U.S. sales and is now trying to win back customers.

Using a web search tool, locate information about this topic, and then write responses to the following questions. Be sure to support your arguments and cite your sources.

Ethical Dilemma: How can VW ensure that its diesel cars now comply with U.S. emissions standards? What can VW do to regain consumers’ confidence after this worldwide scandal? Do you agree with the billions of dollars in fines that VW will have to pay to move beyond the emissions debacle?

Sources: “VW Diesel Crisis: Timeline of Events,” https://www.cars.com, May 19, 2017; Jack Ewing, “Inside VW’s Campaign of Trickery,” The New York Times, http://www.nytimes.com, May 7, 2017; Christoph Rauwald, “How a Top-Secret Deal Could Have Stopped VW’s Diesel Scandal,” Bloomberg, http://www.bloomberg.com, January 12, 2017; “6 VW Execs Indicted as Carmaker Agrees to $4.3 Billion Diesel Cheat Settlement,” Fortune, http://fortune.com, January 12, 2017; Geoffrey Smith and Roger Parloff, “Hoaxwagen: Inside Volkswagen’s Diesel Fraud,” Fortune, http://fortune.com, March 7, 2016.

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