Brief Summary
Volkswagen’s acclaimed “Clean Diesel” marketing campaign backfired disastrously when it was revealed in 2015 that the company had deliberately cheated on emissions tests.
The German automaker had promoted its diesel cars as low-emission, eco-friendly vehicles only for regulators to discover a hidden software “defeat device” that made them appear clean in tests while they actually emitted up to 40 times the legal pollution on the road.
The ensuing scandal (dubbed “Dieselgate”) led to a global outcry, billions in fines and recall costs, and a crisis of trust that tarnished Volkswagen’s reputation as an industry leader in innovation and sustainability.
Company Involved
Volkswagen is the company at the center of this story. A leading German automaker – at one point the world’s second-largest car manufacturer – Volkswagen (VW) had built its brand on engineering prowess and even owned luxury marques like Audi (also implicated in the diesel saga). VW’s ambitious “Clean Diesel” initiative was intended to showcase its technological leadership and commitment to environmental innovation, until it unraveled in scandal.
Marketing Topic
- Advertising
- Branding
- Honesty
Public Reaction or Consequences
The public and media response to Volkswagen’s deception was swift and severe. The scandal dominated headlines worldwide as “Dieselgate,” and customers felt deeply betrayed by a brand that had marketed itself as eco-conscious. Volkswagen’s stock price plunged almost 20% in the first trading day after the news broke, and the company’s market value and goodwill evaporated virtually overnight. Consumers and commentators openly mocked VW’s prior advertising: the company’s proud slogan “Das Auto” (“The Car”) was derisively twisted into “Das Cheater,” and Audi’s tagline “Truth in Engineering” was parodied as “Engineering the Truth” by disillusioned customers. This popular outrage reflected how severely Volkswagen’s actions violated public trust.
Beyond reputational damage, the concrete consequences were immense. Governments around the globe launched investigations, and regulators in the U.S. and Europe ordered massive recalls of VW and Audi diesel models. In the United States, Volkswagen’s sales nosedived – in November 2015 (not long after the revelations) VW’s U.S. sales fell 25% compared to the previous year. The company soon faced a cascade of lawsuits and record-breaking fines. Top executives resigned under pressure, including VW’s longtime CEO Martin Winterkorn. Within months, Volkswagen agreed to settlements totaling over $15 billion in the U.S. alone to buy back or fix nearly half a million affected cars and compensate owners. Worldwide, about 11 million diesel vehicles were ultimately identified as having the cheating software. The scandal triggered broader scrutiny of the auto industry’s environmental claims, with many observers likening its impact on corporate credibility to a corporate earthquake.
Why It Matters Today
Greenwashing and Authenticity: Volkswagen’s case is a cautionary tale about “green” marketing gone wrong. In today’s era of climate awareness and ESG (Environmental, Social, and Governance) accountability, consumers and regulators are quicker than ever to call out false environmental claims. VW’s downfall heightened skepticism toward corporate sustainability messaging – brands now must back up eco-friendly promises with genuine action, or risk severe backlash.
Trust in the Age of Transparency: The Dieselgate saga underscored that trust is a marketer’s most precious asset. In the age of social media and instant information, any deception can be exposed and go viral overnight, inflicting lasting damage. Volkswagen’s collapse in credibility showed that once customer trust is broken, it’s extraordinarily hard to rebuild, no matter how big your advertising budget. Modern audiences reward transparency and punish dishonesty, making ethical marketing an imperative.
The Cost of Ethical Lapses: This case remains relevant as a dramatic example of how ethical lapses can carry massive financial and legal consequences. Today’s marketers operate in a landscape of stricter regulations (such as tougher emissions standards and advertising guidelines) inspired in part by scandals like Volkswagen’s. The case reinforces that unethical marketing or product claims can lead to multi-billion dollar penalties and criminal investigations – a sobering reminder in an era of heightened corporate accountability.
3 Takeaways
1. Never make promises you can’t keep. A bold unique selling proposition (USP) means nothing if the product itself doesn’t deliver. Volkswagen’s “clean diesel” pitch was compelling, but it proved to be a disingenuous promise built on cheating. The company’s collapse shows that no amount of slick marketing can save a false claim. It will eventually crumble and take your brand’s credibility with it.
2. Trust is hard to win and easy to lose. Volkswagen learned the hard way that decades of brand loyalty can be destroyed in an instant by a breach of integrity. Once customers feel deceived, winning them back is an uphill battle. No campaign or PR effort can quickly undo the damage of lost trust. Marketers must treat honesty and consumer trust as sacred, because a reputation shattered by scandal may take years (and enormous resources) to rebuild – if it can be rebuilt at all.
3. “Green” marketing must be genuine (avoid greenwashing). Touting environmental benefits is powerful, but only if they’re true. Misleading the public about eco-friendly qualities is a recipe for disaster in the long run. Volkswagen’s ads claimed its diesels dramatically cut emissions, yet in reality the cars emitted far above legal limits. The backlash from this deceit shows that today’s savvy consumers (and regulators) will ferret out the truth. The lesson: align your marketing with actual product performance and values, especially when positioning something as environmentally beneficial – otherwise expect severe fallout.
Notable Quotes and Data
“Our company was dishonest with the EPA, and the California Air Resources Board and with all of you, and in my German words: we have totally screwed up.” – Michael Horn, Volkswagen America CEO (admitting the scandal)
“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our atmosphere.” – Sally Yates, U.S. Deputy Attorney General (condemning VW’s actions)
11 million – The number of Volkswagen and Audi diesel vehicles worldwide that were equipped with the emissions-cheating software. (Volkswagen ultimately paid over $25 billion in fines, settlements, and buybacks in the years following the scandal.)
Full Case Narrative
Background: By the late 2000s, Volkswagen was eager to shake up the automotive market with its diesel technology. Diesel engines, long popular in Europe, had a tarnished reputation in the U.S. for being noisy and dirty. VW saw an opportunity: if Americans could be convinced that clean diesel was real, the company could carve out a larger U.S. market share and meet tightening environmental regulations, all while offering drivers high fuel efficiency and performance. In 2009, Volkswagen launched a massive marketing offensive to rebrand diesel. It rolled out a campaign called TDI Truth & Dare, complete with a dedicated website and Super Bowl commercials, aiming to educate consumers that VW’s new TDI diesel cars were eco friendly without sacrificing power. The company’s ads were clever and upbeat, for example, one TV spot featured three elderly ladies, the Golden Sisters, giddily talking about dirty topics, only to reveal they were playfully referring to low emissions and clean diesel technology. Volkswagen even enlisted its rally driver Tanner Foust to showcase diesel’s pep, and boasted of a Guinness World Record 58 mpg achievement in a VW Jetta TDI.
These marketing efforts painted a picture of a revolution in car fuel, diesel, but clean and fun. And initially, the strategy seemed to work brilliantly. Over the next several years, VW’s diesel models garnered critical praise and even environmental awards. The Clean Diesel vehicles were marketed as meeting the strictest emissions standards in all 50 states, reducing harmful pollutants by 90 percent, and giving consumers guilt free driving with great mileage. Volkswagen’s green branding grew so strong that the company, traditionally known for iconic gas models like the Beetle, won accolades for sustainability. In fact, VW had burnished its image by adopting rigorous environmental goals early on; it was the first automaker to commit to the ISO 14001 environmental standard and even won an international sustainability award in 2014. By 2015, Volkswagen was on the verge of becoming the world’s largest automaker, and its diesel cars were selling in record numbers, with over 550,000 clean diesel VWs and Audis sold to American consumers since 2008.
The Deception Uncovered: Behind the scenes, however, the reality was very different. Unknown to car buyers and most VW employees, Volkswagen’s engineering and management had made a fateful decision back in 2006 to 2007: when they realized their new diesel engines could not meet U.S. emissions standards and satisfy cost and performance goals, they chose to cheat rather than come clean. VW had secretly installed sophisticated software in its diesel cars’ engine control units. This defeat device could detect when a vehicle was undergoing an official emissions test, for example, sensing the car was on a lab dynamometer. During tests, the software would put the engine in a special low emission mode to ensure it passed regulations. But once the car returned to normal driving on the road, the emissions controls were virtually turned off to restore full power and fuel economy, causing the vehicle to emit far more pollutants than allowed. This duplicitous software tweak meant VW could advertise the best of both worlds, great mileage, peppy performance, and clean emissions, when in truth the cars only ran clean in lab conditions.
From 2009 to 2015, Volkswagen managed to keep this deception under wraps. The ruse started to unravel thanks to independent researchers and regulators. In early 2014, a small non profit group, the International Council on Clean Transportation, commissioned West Virginia University to test real world emissions of diesel cars. The WVU researchers found startling discrepancies: on the road, VW’s clean diesel Jetta and Passat were belching out nitrogen oxide pollutants at levels 30 to 40 times higher than regulatory limits, even though they passed lab tests. This anomaly raised red flags at the California Air Resources Board and the U.S. Environmental Protection Agency. Over more than a year, CARB and EPA pressed Volkswagen for an explanation. VW engineers allegedly feigned ignorance and even performed a limited recall claiming to fix the issue in late 2014, but the problem persisted. Finally, under threat that EPA would withhold approval for its 2016 models, Volkswagen leadership admitted in early September 2015 that it had installed defeat devices in its diesel cars.
The Scandal Erupts: On September 18, 2015, U.S. regulators publicly announced that Volkswagen had violated the Clean Air Act by rigging emissions tests. The news exploded across global media. Within days, VW went from hero to pariah in the court of public opinion. The company issued a blanket apology and halted sales of new diesel models. Volkswagen’s U.S. CEO, Michael Horn, candidly stated, we have totally screwed up, during an event that week, and Volkswagen AG’s CEO Martin Winterkorn declared he was endlessly sorry for the betrayal, he resigned shortly thereafter. The scandal broadened as other countries began examining VW diesels; authorities in Europe and Asia initiated their own probes, and the term Dieselgate caught on to describe the fiasco.
Customers who had bought into VW’s green promises felt cheated. Clean diesel owners suddenly learned their cars were emitting smog forming pollutants at astonishing levels, up to 4,000 percent the legal limit of nitrogen oxides in real driving. Environmental groups pointed out the public health implications: these excess emissions contributed to respiratory problems and smog, undercutting VW’s eco friendly claims. The media and late night comedians skewered Volkswagen’s hypocrisy, turning the company into a punchline. In one striking example, Time magazine’s cover replaced VW’s logo with a toxic cloud. Social media lit up with outrage, as well as support for regulators to punish the wrongdoing.
Immediate Fallout: The impact on Volkswagen was dramatic. In the week after the story broke, VW’s stock price in Frankfurt plummeted roughly 30 percent, erasing tens of billions of dollars in market capitalization. Consumers started shunning the brand, Volkswagen’s U.S. sales for the month of November 2015 dropped 25 percent year over year, and in some European markets, VW’s sales stalled as well. Volkswagen swiftly set aside €6.7 billion, about $7.3 billion, to cover potential costs, but many analysts suspected the final bill would be much higher. The scandal also sent shockwaves through the broader auto industry. Other manufacturers’ stocks fell in sympathy, and there were widespread calls for more rigorous emissions testing across the board. It became clear that VW’s deception had not only damaged its own brand, but also undermined trust in diesel technology and corporate environmental claims generally.
Regulatory and legal consequences mounted quickly. In the U.S., the Department of Justice launched a criminal investigation, and the Federal Trade Commission filed a lawsuit accusing Volkswagen of false advertising for its Clean Diesel campaign. By early 2016, Volkswagen was negotiating one of the largest consumer class action settlements in automotive history. Meanwhile, environmental regulators in Europe ordered Volkswagen to recall millions of vehicles to remove or update the software. Some countries temporarily banned the sale of affected VW models until fixes were in place. Top executives faced personal accountability: several Volkswagen engineers and managers were indicted or arrested in the U.S. and Germany. This included an American based VW compliance manager who was sentenced to seven years in prison for his role in the cover up. Perhaps most notably, long serving CEO Martin Winterkorn resigned in disgrace in September 2015, and later he, along with other VW leaders, was charged by German authorities with fraud for failing to stop the scheme.
Crisis Management and Response: Volkswagen’s initial response to the crisis was widely criticized as slow and evasive. In the first days, the company issued generic apologies but provided little detail, fueling public frustration. However, as the pressure intensified, VW attempted to course correct its PR strategy. In November 2015, about two months into the scandal, Volkswagen’s U.S. division took out full page ads in dozens of American newspapers to say sorry directly to customers. The plain text ads bore the headline We are working to make things right, acknowledging the company’s failure and asking for patience as they developed a fix. In these open letters, VW promised to regain customer trust and announced a goodwill package for owners of affected cars, including $500 Visa gift cards, an additional dealership credit, and free roadside assistance. This gesture, while small relative to the scale of the damage, was aimed at staunching customer anger and preventing defection to other brands.
At the same time, Volkswagen began the technical work of remedying the cars. The company’s engineers scrambled to engineer software updates or modifications to bring the cars into compliance, though this proved challenging without harming performance. In the U.S., regulators eventually approved fixes for some models, but many owners opted for buybacks instead, taking Volkswagen’s offer to repurchase the cars at pre scandal market value. By mid 2016, a U.S. federal court approved a civil settlement in which Volkswagen agreed to spend up to $14.7 billion to buy back or repair around 475,000 2.0L VW and Audi diesel cars and to compensate owners and invest in environmental mitigation. This unprecedented settlement included $10 billion for consumer buybacks and repairs and an additional $4.7 billion earmarked for environmental initiatives, such as promoting zero emission vehicles and pollution remediation. In a separate agreement, VW later pleaded guilty to criminal charges in the U.S. and paid a $2.8 billion criminal fine in 2017, underscoring the severity of the fraud. All told, when including Canada and the rest of the world, Volkswagen’s financial penalties and remediation costs have exceeded $30 billion over the years, a staggering sum even for a giant automaker.
Throughout 2016 and 2017, Volkswagen worked to rebuild its reputation under new leadership. The new CEO, Matthias Müller, vowed to instill a more ethical culture and cooperate fully with authorities. VW’s marketing communications shifted tone as well. The company abandoned its long time global slogan Das Auto, judging it too arrogant for a firm trying to show contrition. Instead, Volkswagen’s branding became more modest and customer focused. Internal communications from late 2015 show VW’s leaders emphasizing humility and the need to listen to customers and regulators in a way the company had not before.
Reflection, Why It Failed: In hindsight, Volkswagen’s Clean Diesel campaign was doomed because it was built on a lie. The marketing itself was highly effective, maybe too effective, as it convinced not only consumers but also many within the company that VW was a champion of eco friendly innovation. This created a dangerous echo chamber. By prioritizing image over honesty, Volkswagen set itself up for catastrophe the moment the truth emerged. The case illustrates a fundamental principle in marketing ethics: a great campaign cannot compensate for a bad product or bad behavior. Eventually, reality catches up. In VW’s case, the disconnect between the promise, low emissions, high trust, and the reality, willful emissions cheating, was so stark that it not only destroyed an entire marketing initiative, but also severely damaged the company’s overall credibility. The scandal also highlighted issues in VW’s corporate culture, an environment that some reports described as pressuring employees to achieve ambitious targets at all costs, perhaps contributing to the rationalization of unethical decisions.
For marketers, Dieselgate underscores the potential unintended consequences when a campaign crosses ethical lines. Volkswagen had sought to position itself as a forward thinking, trustworthy brand for the environmentally conscious consumer. Ironically, their fraudulent actions produced the opposite effect, a collapse of trust that became a textbook example of corporate greenwashing. In marketing textbooks and business schools, the VW case is now studied alongside infamous failures like New Coke or Enron’s misrepresentations, except Volkswagen’s tale is one of deliberately misleading on environmental integrity, which strikes a particularly sensitive chord in an era of climate change awareness.
Timeline
2009: Volkswagen launches its “Clean Diesel” TDI models in the U.S., backed by the extensive “TDI Truth & Dare” marketing campaign to convince American consumers that diesel can be clean and efficient.
May 2014: Researchers from West Virginia University publish a study finding that VW’s diesel cars emit far more NOx in real driving than in lab tests.
September 18, 2015: U.S. EPA publicly accuses Volkswagen of installing defeat devices to cheat emissions tests in about 482,000 diesel cars. The scandal erupts globally.
September 21–23, 2015: Volkswagen’s stock price plunges nearly one-third in two days as investors react to the crisis. CEO Martin Winterkorn resigns.
October–November 2015: Investigations expand. VW runs its first apology ads and offers a $1,000 goodwill package to affected U.S. owners.
June 28, 2016: Volkswagen agrees to a historic civil settlement in the U.S., including up to $14.7 billion to buy back or fix 2.0L diesel cars and compensate owners, plus investments in environmental mitigation.
January 2017: Volkswagen pleads guilty to fraud and obstruction of justice and agrees to pay $2.8 billion in criminal fines.
2018–2019: Legal fallout continues. VW pivots to electric vehicles and undertakes marketing reforms to rehabilitate its image. By 2019, VW’s global sales have bounced back to record levels.
What Happened Next?
After the initial crisis, Volkswagen undertook a long journey to rebuild trust and transform its business. Key changes started at the top: new CEO Matthias Müller, and later Herbert Diess, reorganized VW’s management, bringing in new compliance officers and emphasizing an open, values driven culture to prevent future ethical breaches. The company implemented stricter internal controls and gave its ethics and legal teams more clout. As noted, Volkswagen also made a symbolic break from the past by dropping its tagline Das Auto, which company leaders felt implied an arrogance that was no longer tenable. In its advertising and public statements, VW adopted a tone of humility and responsibility, focusing on winning back customers one step at a time.
Crucially, Volkswagen pivoted its business strategy toward electric vehicles in a bid to redeem its environmental credibility. In the years following Dieselgate, the company announced massive investments in electric mobility and set ambitious targets for new EV models. It launched an initiative called Electric for All, signaling a commitment to make electric cars mainstream. As part of this campaign, Volkswagen revealed plans to roll out 70 new electric models by 2028 and poured resources into developing its ID series of electric cars. The automaker even invested about $800 million to build a new EV production plant in Chattanooga, Tennessee, a tangible move to show it was serious about zero emission vehicles. VW’s marketing now highlights these electric models, like the ID.4 SUV and ID.Buzz van, and positions the company as forward looking and sustainability focused. This dramatic strategic shift from clean diesel to electric is often seen as Volkswagen’s effort to turn its darkest crisis into an impetus for positive change.
In terms of performance, Volkswagen gradually recovered in many markets. By 2018 and 2019, the company actually achieved record global sales volumes, thanks to growth in China and a strong overall product lineup, including SUVs and new generations of vehicles. This indicated that the scandal, while devastating, was not fatal, Volkswagen remained a dominant player in the auto industry. However, the comeback was not uniform: in the U.S., VW’s market share took years to rebound, and diesel passenger cars essentially disappeared from its American showrooms, Volkswagen agreed to a ban on selling diesels in the U.S. for a period as part of its settlements. The company decided that regaining consumer confidence was more important than trying to push diesel in skeptical markets, so it doubled down on electrification and on polishing its once blemished image.
Volkswagen’s efforts to rehabilitate itself have included continued apologies and outreach. The company has run marketing campaigns highlighting its heritage and commitment to making things right, and it frequently references its shift to cleaner technology as evidence of lessons learned. On social media and in public forums, VW has been markedly more transparent about its progress and setbacks. For example, the company’s officials regularly publish updates on compliance measures and environmental goals, acknowledging the Dieselgate episode as a turning point. This transparency is aimed at rebuilding trust through accountability.
From a corporate responsibility standpoint, Volkswagen has also funded environmental programs beyond what was legally required, such as initiatives to promote electric charging infrastructure and investments in renewable energy projects, partly to atone for the pollution caused by its cheating. These actions, along with the mandated mitigation funds, are gradually helping to offset the environmental damage of the excess emissions.
As of today, Volkswagen appears to have stabilized and learned some hard lessons. Its current marketing emphasizes reliability, innovation, and responsibility. The automaker still faces skepticism from some quarters, and occasional reminders of the scandal in press or court proceedings, but it has largely moved forward, focusing on becoming a leader in the electric vehicle transition. The company has publicly stated goals to achieve significant EV sales targets and carbon neutrality in the coming decades. In a sense, Volkswagen is attempting one of the biggest image overhauls in automotive history, from the company that synonymously cheated on emissions to a company that wants to define the future of clean transportation. Only time will tell if these efforts fully restore the trust it lost, but the early signs, strong sales of new models, positive reception to its electric ID lineup, and the absence of any further major scandals, suggest that VW is on a better path.
In sum, Volkswagen did recover financially and continues to be a global industry force, but the Dieselgate case remains a permanent cautionary chapter in its legacy. The company’s leaders have often stated that they will never forget the lessons of this crisis. The real measure of VW’s rehabilitation may lie in whether it can indeed avoid such ethical lapses going forward and live up to the sustainable, honest image it now strives to project. The industry at large, meanwhile, has been put on notice by this saga: in the digital age, deception can be ruinous, and authenticity is the currency that truly drives long term brand success.
One Sentence Takeaway
Even the most brilliant marketing campaign cannot cover up a lie. Volkswagen’s downfall shows that authenticity and trust are irreplaceable in marketing, and any short-term victory gained through deception will ultimately lead to a long-term disaster.
Sources and Citations
FTC Press Release – Volkswagen Deceived Consumers with Its ‘Clean Diesel’ Campaign
FTC Press Release – Volkswagen to Spend up to $14.7 Billion to Settle Allegations
The Guardian – Volkswagen Scandal: US Chief Says Carmaker ‘Totally Screwed Up’
The Guardian – Volkswagen Sees 25% US Sales Drop After Scandal
The Verge – Volkswagen Apologizes with Full-Page Ads
IMPACT Marketing Blog – The VW Diesel Scandal: Why It Matters to Marketers
Harbert College of Business – Case Study: Volkswagen Cleans Up Reputation After Emissions Scandal