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Impact of the Emission Scandal on the Volkswagen Group 

  • November 2015
  • -
  • Frost & Sullivan
  • -
  • 71 pages


Impact of the Emission Scandal on the Volkswagen Group : Volkswagen to Focus on Alternate Powertrains and Emerging Markets to Regain Market Leadership
Volkswagen's (VW) concession of corporate malfeasance in circumventing Environmental Protection Agency (EPA) testing in the US has sent the global automotive industry into a tailspin. This research service examines the fallout from the emission scandal and its impact on the Volkswagen group, as well as the wider automotive ecosystem.

Executive Summary—Key Findings

Impact of Volkswagen Emission Scandal: Key Takeaways, Global, 2015 – 2020

An estimated 11Mn Volkswagen vehicles globally are equipped with illegal software code that lets these vehicles to pass the NOx testing cycle of various testing regimes. The affected vehicles are spread across Europe ( Mn), UK ( Mn), USA ( Mn) and rest of the world ( Mn).

Frost & Sullivan analysis estimates the immediate to medium term (2016–2020) economic impact of the diesel emission scandal on VW group will add up to $ Bn in fines from different regulatory authorities, lawsuits, recall cost and losses from underutilization of production facilities. Frost & Sullivan have readjusted 2020 Global Volkswagen sales forecasts to drop by %.

Volkswagen Group’s existing centralized and highly rigid corporate hierarchy to undergo drastic reformation into a more streamlined, de-centralized structure with increased autonomy for the group’s various brands and increased regional autonomy.

Immediate focus of Volkswagen management would be to schedule recalls and fix the 11Mn affected vehicles. A dedicated platform for electrified vehicles (MEB) and increased investments in developing SUVs are indicators of a major product portfolio restructuring.

Immediate focus of Volkswagen management would be to schedule recalls and fix the 11Mn affected vehicles. A dedicated platform for electrified vehicles (MEB) and increased investments in developing SUVs are indicators of a major product portfolio restructuring.

Frost & Sullivan predicts increased collaboration between OEMs in powertrain R&D to minimize the expected rising cost of compliance.



Table Of Contents

Impact of the Emission Scandal on the Volkswagen Group 
1 EXECUTIVE SUMMARY

Executive Summary
1. Executive Summary—Key Findings
2. Executive Summary—Short to Medium term Impact on VW
3. Executive Summary—Beyond VW's Strategy 2018
4. Executive Summary—Volkswagen Group: Total Economic Impact
5. Executive Summary—Volkswagen Group: Avenues for raising cash
6. Executive Summary—Pillars of Volkswagen Group New Organizational Structure
7. Executive Summary—Scenario Analysis on Electric Vehicle Adoption
8. Executive Summary—Conquest Potential
9. Executive Summary—Cultural and Organizational Shift at Volkswagen
10. Executive Summary—Frost and Sullivan Recommendations to Volkswagen

2 VOLKSWAGEN DIESEL EMISSIONS SCANDAL—OVERVIEW

Volkswagen Diesel Emissions Scandal—Overview
1. Frost and Sullivan's Assessment of the Diesel Fiasco and the Magnitude of its Impact—The Scandal Explained
2. Frost and Sullivan's Assessment of the Diesel Fiasco and the Magnitude of its Impact
3. Frost and Sullivan's Assessment of the Diesel Fiasco and the Magnitude of its Impact
4. Frost and Sullivan's Assessment of the Diesel Fiasco and the Magnitude of its Impact
5. Volkswagen SWOT Analysis
6. Volkswagen SWOT Analysis

3 FINANCIAL IMPACT OF THE EMISSION SCANDAL ON VOLKSWAGEN

Financial Impact of the Emission Scandal on Volkswagen
1. Executive Summary—Volkswagen Group: Total Economic Impact
2. Volkswagen Group—Impact to Share Price
3. Volkswagen Group—Additional Financial Implications
4. Volkswagen Group—Regulatory Action Taken by Key Markets
5. Executive Summary—Volkswagen Group: Avenues for Raising Cash

4 FINANCIAL IMPACT OF THE EMISSION SCANDAL ON VOLKSWAGEN—RECALL AND FIX COSTS

Financial Impact of the Emission Scandal on Volkswagen—Recall and Fix Costs
1. Recall Strategy and Solutions for Effected Engines
2. Financial Analysis of Available Fixes
3. Total Financial Implication of Recall by Region

5 FINANCIAL IMPACT OF THE EMISSION SCANDAL ON VOLKSWAGEN—FINES AND LEGAL LIABILITIES

Financial Impact of the Emission Scandal on Volkswagen—Fines and Legal Liabilities
1. Estimated Fines and Legal Liabilities from Dieselgate
2. Estimated Fines and Legal Liabilities from Diselgate

6 FINANCIAL IMPACT OF THE EMISSION SCANDAL ON VOLKSWAGEN—COSTS ASSOCIATED WITH UNDERUTILIZATION OF PRODUCTION FACILITIES

Financial Impact of the Emission Scandal on Volkswagen—Costs Associated with Underutilization of Production Facilities
1. VW Engine Production Plan, 2013-2022
2. VW Engine Production Plan, 2013-2022
3. VW Emission Scandal Diesel—Production Scenario #1: Fall by 7%
4. VW Emission Scandal Diesel—Production Scenario #2: Fall by 15%

7 VOLKSWAGEN GROUP—STRATEGY 2018 RECALIBRATED(CURRENT SCENARIO and FUTURE OUTLOOK)ORGANIZATIONAL RESTRUCTURING

Volkswagen Group—Strategy 2018 Recalibrated(Current Scenario and Future Outlook)Organizational Restructuring
1. Volkswagen Group New Organizational Structure
2. Pillars of Volkswagen Group New Organizational Structure

8 VOLKSWAGEN GROUP—STRATEGY 2018 RECALIBRATED(CURRENT SCENARIO and FUTURE OUTLOOK)PRODUCT PORTFOLIO RESTRUCTURING

Volkswagen Group—Strategy 2018 Recalibrated(Current Scenario and Future Outlook)Product Portfolio Restructuring
1. Volkswagen GroupCurrent Product Portfolio and Why Restructuring is the Need of the Hour
2. Volkswagen Group - Factors to consider for Product Portfolio Restructuring
3. Volkswagen Group—Product Portfolio Recalibrated for 2022
4. Global Powertrain Market—Unit Shipment, Diesel vs. Gasoline Trend
5. Volkswagen Group—Sales by Region split by brands
6. Volkswagen Group—Engine Family Portfolio
7. Volkswagen Group Electric Vehicle Launches
8. Product/Powertrain Portfolio
9. VW Emission Test Results and EPA Testing Norms

9 IMPACT TO THE AUTOMOTIVE INDUSTRY

Impact to the Automotive Industry
1. Global Powertrain Mix—Production by Region (Pre and Post VW Crisis)
2. Impact to Regulatory Framework
3. Regional Strategy for Testing Procedures
4. Regional Strategy for Testing Procedures
5. A Three Pronged Push Towards Electric Vehicles
6. Scenario Analysis on Electric Vehicle Adoption
7. Electric Vehicle OEM Level Analysis
8. Conquest Potential Calculation Explained
9. Executive Summary—Conquest Potential
10. Conquest Potential
11. Select Suppliers to Volkswagen and Their Market Performance

10 CONCLUSION—KEY FINDINGS and RECOMMENDATIONS

Conclusion—Key Findings and Recommendations
1. Key Findings
2. Frost and Sullivan Recommendations to the Automotive Industry
3. Frost and Sullivan Recommendations to Volkswagen
4. Legal Disclaimer

11 APPENDIX

Appendix
1. Learn More—Next Steps
2. Methodology

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