[1/2] Around the word: Scandal - When guilt fades: How consumers punished (and forgave) Volkswagen

In a mirror article exploring ideas around the notion of "Scandal" (2/2), Christophe Collard (EDHEC) dissects how the transgression of shared norms almost systematically translates into legal and reputational risk for firms - and why risk management must be understood as an anticipatory function. But how do consumers actually behave when a scandal hits? The following article by Giacomo Valletta (EDHEC) and his co-authors examines the real-world market impact of one of the biggest corporate crises in modern history: the Volkswagen emissions affair (1/2).

In 2015, one of the world’s largest carmakers, Volkswagen, was caught cheating (2). The company had equipped millions of diesel cars with software that allowed them to pass pollution tests while emitting up to forty times the legal limit of nitrogen oxides on the road. It was one of the biggest corporate scandals in modern history, a story of deception, environmental harm, and widespread public outrage. Some observers even wondered whether the company would survive (3).

A decade later, Volkswagen has not only survived but reinvented itself as a global player in the electric-vehicle industry, even outselling Tesla in Europe. How did consumers react to such a serious breach of trust? And what does this reveal about the nature of guilt - both corporate and collective - in shaping our choices?

These are the questions explored in a paper (1) by Giacomo Valletta (EDHEC, EDHEC Augmented Law Institute) his and co-authors*. Using data on new car registrations across 19 countries, they examined how buyers responded after the scandal, comparing the sales of affected Volkswagen models with other vehicles, both within the company’s group and among its competitors.

Guilt with an expiry date

The findings show that environmentally concerned consumers did punish Volkswagen - but only briefly. In markets where consumers showed higher environmental awareness, such as Canada, the UK, and several Northern European countries, the sales of the models directly implicated in the scandal dropped significantly more, by roughly 50–60 percentage points, than in markets with lower concern.

Yet the backlash faded quickly. Within a year, sales had largely recovered.

A more detailed look across car segments reveals an even more interesting pattern: consumers who abandoned the scandal-affected models did not automatically switch to rival brands. Instead, many remained within the Volkswagen universe. Some shifted to smaller VW models - choosing a Polo instead of a Golf. Others moved to different brands within the Volkswagen Group, such as replacing a Passat with a Škoda Octavia.

These internal shifts help explain why the group weathered the crisis better than expected: rather than losing customers altogether, the Volkswagen Group often kept them by redirecting demand toward other models in its own portfolio. Consumers’ guilt was tied to the specific vehicle associated with the scandal, not to the broader Volkswagen ecosystem.

Interestingly, the authors found no evidence that broader social norms (what researchers call cultural tightness) played a role. Whether a society strongly enforces rules or tolerates deviations did not significantly affect consumer reactions. The true driver was environmental awareness, not moral rigidity (4).

What can we learn from this episode of collective guilt?

First, moral emotions do influence market behavior. People do care about environmental responsibility, and many are willing - at least temporarily - to act on that concern.

Second, outrage fades quickly. Practical considerations, habit, price, and convenience, may soon override moral sentiment as time passes.

For firms, this duality offers both a warning and a lifeline. Corporate misconduct carries real reputational costs, but these can be mitigated through credible reform. Volkswagen’s aggressive pivot to electric mobility (5) likely helped them rebuild trust among the very consumers who had initially punished them.

For policymakers and educators, the lesson is more sobering: if we want guilt to drive lasting change, we cannot rely on emotion alone. We need consistent regulation, transparent information, and education that links individual choices to collective outcomes.

In markets as in life, guilt speaks loudly - but briefly. The challenge is to transform that fleeting moral impulse into lasting structural change.

* Marianna Marino (IMT–Lucca), Pierpaolo Parrotta (University of Siena), Davide Sala (University of Passau).

References

(1) Marino M., Parrotta P., Sala D., Valletta G. “The Volkswagen emissions scandal: Exploring the role of environmental concern and social norms,” Journal of Environmental Economics and Management, Volume 127, 2024 - https://www.sciencedirect.com/science/article/abs/pii/S0095069624000937

(2) Volkswagen: The scandal explained - https://www.bbc.com/news/business-34324772

(3) Why Volkswagen cannot survive the emissions scandal unscathed -  https://www.marketingweek.com/why-volkswagen-cannot-survive-the-emissions-scandal-unscathed/

(4) Two-thirds of Germans still trust Volkswagen after emissions scandal - https://www.theguardian.com/business/2015/oct/20/two-thirds-of-germans-still-trust-volkswagen-after-emissions-scandal

(5) From Emissions Cheater To Climate Leader: VW’s Journey From Dieselgate To Embracing E-Mobility - https://www.forbes.com/sites/georgkell/2022/12/05/from-emissions-cheater-to-climate-leader-vws-journey-from-dieselgate-to-embracing-e-mobility/

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