Analysis of Volkswagen’s Diesel Performance Scandal

The research aim of this study is to investigate the reputation risk of the Volkswagen’s diesel performance scandal. Many Volkswagen cars being sold in America were found to have a “defeat device”—or software—in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. This diesel performance scandal is a deliberate fraud on customers with the purpose of improving sales volumes, which brings reputation risk for Volkswagen. This study uses case study method to make analysis of this event and reputation risk. It is structured as the following: firstly, background and Volkswagen’s fraud scandal event is described. Then, the concept of reputation risk is introduced. Next, Volkswagen’s case is relevant to reputation risk, why the scandal happens, why Volkswagen’s fraud is hidden and solutions that Volkswagen provides for the fraud event are discussed. Finally, several recommendations are provided for Volkswagen’s fraud event.