Volkswagen blunders through communications over emissions scandal

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. Careless talk costs lives” went the second world war slogan. At VW, it could cost a lot of money — and potentially the jobs of top executives.The pressure has been ratcheted up on the chief executives of VW group and Audi, a key subsidiary, after the latter was forced to admit a second illegal defect device had been deployed in emissions cheating after denying it initially.Far from being an isolated incident, this is just one in a series of communications errors during its near three-month-old emissions scandal that experts say has deeply hurt VW.“The mismanagement of the crisis will be a classic case study in business schools around the world,” says Professor Erik Gordon of the Ross School of Business at the University of Michigan.He adds: “VW is taking every opportunity to compound its troubles with US regulators and the damage to its image with US consumers.”Everyone from investors and analysts to consumers and dealers have bemoaned VW for what they see as the insufficient, and sometimes misleading, information the carmaker has given about its problems.“VW’s crisis communications to date have not left us with the feeling that the company has managed to get on top of things,” says Hans Hirt, head of responsible investment at activist investor Hermes Equity Ownership Services, which is a VW shareholder.

VW’s communications problems began even before the scandal became public. Engineers from the carmaker admitted to the US Environmental Protection Agency on September 3 that 480,000 diesel cars had been fitted with an illegal defeat device that served to understate emissions of nitrogen oxides in official tests. But the news only reached the wider world on September 18 when the regulator, not VW, disclosed it.VW is now under investigation by BaFin, the German financial regulator, over whether it should have disclosed its admission to the EPA sooner, while the carmaker is likely to face lawsuits from investors aggrieved at allegedly tardy disclosure. VW’s own supervisory board members are also angry about only finding out from the media about the engineers’ statements about defeat devices.


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