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Good OM Reading: Faster, Higher, Farther–The Volkswagen Scandal

August 4, 2017

Two years ago, Volkswagen proudly reached its goal of surpassing Toyota as the world’s largest automaker. But in Fall 2015, the EPA disclosed that VW had installed software in 11 million cars that deceived emissions-testing mechanisms. By early 2017, VW had settled with U.S. regulators and car owners for $22 billion, with additional lawsuits still looming. In Faster, Higher, Farther, New York Times reporter Jack Ewing details the conspiracy. He describes VW’s rise from “the people’s car” during the Nazi era to one of Germany’s most prestigious and important global brands, touted for being “green.” The first half of the book is the story of VW, the legendary creation of the Beetle by the Nazis, and the car’s role as a counterculture icon during the 1960s.

Ewing then portrays VW chairman Ferdinand Piëch and CEO Martin Winterkorn. The author argues that the corporate culture they fostered drove employees, working feverishly in pursuit of impossible sales targets, to illegal methods. Within a year of taking over, Winterkorn had announced a plan for VW to attain “world domination.” His diesel fuel and a “clean diesel” marketing campaign became vital components of this strategy. Although diesel leads to fuel efficiency, it also leads to high toxic emissions. Unable to build cars that could meet emissions standards honestly, engineers were left with no choice but to cheat. VW then compounded the fraud by spending millions marketing this clean diesel.

In 2013, the lie was first exposed by a handful of student researchers on a shoestring budget at West Virginia University who tested the fuel emissions of a diesel Passat, a diesel Jetta and a diesel BMW. The vehicles passed EPA standards when tested in a controlled lab-setting. But when the cars were tested in a non-lab setting, the Passat and Jetta exhibited nitrogen oxide emissions that were off the charts. As we know, this led eventually to the guilty plea to criminal charges in a landmark Department of Justice case.

In dealing with ethics of OM, here is a global company whose deceit half destroyed it–and the story is not finished.

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