In the following post, D’Amore-McKim School of Business Associate Professor Bruce Clark discusses the future of Volkswagen after the announcement of a civil settlement in response to their emissions deception.
On June 28, 2016, Volkswagen submitted a plan to a federal judge compensating VW owners for its malfeasance in selling them diesel cars erroneously described as “clean.”
Unfortunately, this is unlikely to be the end of pain for Volkswagen.
Their stock price remains well below where it was last summer, and in the U.S., YTD 2016 sales were down 13 percent from last year at this time. One estimate in the fall concluded that the scandal had trimmed a full $10 billion off VW’s brand value. There are a number of remaining financial uncertainties hanging over the company in the form of potential fines and lawsuits.
In terms of product, the company is attempting to pivot to an aggressive new strategy around electric vehicles, but it’s not clear to me how well consumers will react to this. First, the electric vehicle market globally remains a niche market. Second, Volkswagen is well behind other manufacturers who have been working with electric vehicles for years. Third, given VW engineering turned out to play false in diesels, one may wonder if consumers will believe that VW engineering can now make good electric cars.
Hear more from Bruce Clark on Volkswagen in a recent New York Times article: