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Will Volkswagen Survive?

By Dr. Robert L. Gordon | 11/16/2015 | 7:07 AM | Categories: Current Affairs

When the news broke that Volkswagen had installed cheat devices to attain reduced emissions on their diesel engines, fewer than a million cars were initially affected.  However, as the investigation progressed, additional vehicles and brands were impacted. 

As the situation unfolds, the resale price of these vehicles has dropped dramatically. The stock price of Volkswagen has also dropped by a third. Given all the uncertainty about what will happen no one wants to risk buying one of these vehicles. Will Volkswagen survive?

Shortly after the situation was revealed, CEO Martin Winterkorn stepped down, claiming he had no knowledge of the situation. The new CEO, Matthias Mueller, was appointed and soon cheat devices were found in over eight million cars worldwide (mostly in the U.S. and Europe).

Though Volkswagen initially resisted, overwhelming pressure from many governments and organizations led it  to announce a recall. It will be the largest ever and how and when the repairs will take place has yet to be announced. The company is working with authorities to engineer a solution that will meet the requirements of regulating agencies.

While a fix is possible, any change will certainly affect the performance of these vehicles. How much of an impact it will have, and when the solution will be implemented, are also unknown. 

Volkswagen has gone from the world’s largest car producer to a company whose existence and fate are unknown.  As Germany’s largest employer, it wields both economic and political power in that country.  There will also be an impact on the global marketplace as consumers seek alternative vehicles. 

How Volkswagen will engineer and implement this massive recall will be a milestone for the organization if it survives the process. If so, it will represent one of the most instructive recalls and comebacks in history, rivalling the turnaround at Chrysler.

The estimated cost of the recall will easily be in the billions. CEO Matthias Mueller will need to build a team of the best to pull off this miracle. A likely course of action will be to sell off some assets. 

We will need to wait to see if Volkswagen will manage to navigate the rocky road ahead. Either way, the event is likely to become a valued case study for global businesses in the years to come.

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About Dr. Robert Lee Gordon

Dr. Robert Lee Gordon

Dr. Robert Lee Gordon is program director of the Reverse Logistics department at American Public University. Dr. Gordon has over twenty-five years of professional experience in supply chain management and human resources. He holds a Doctorate of Management and Organizational Leadership and a Masters of Business Administration from the University of Phoenix, as well earning a Bachelor of Arts degree in History from UCLA. Dr. Gordon has spent more than 14 years teaching reverse logistics, transportation, project management, and human resources. He has published articles on reverse logistics; supply chain management; project management; human resources; education, and complexity. He has also published four books on Reverse Logistics Management; Complexity and Project Management; Virtual Project Management Organizations, and Successful Program Management..



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