Automotive manufacturing company, the Volkswagen Group will have to recall about 227,000 VW and Porsche cars.
Reasons explained: The German Company gave this order after citing possible problems with seatbelt pre-tensioners and airbags in some of them, adding that new software needed to be installed. The supposed cars with these problems were reportedly in need of an update to the software of the airbag control units.
The car models affected are the Tiguan, Sharan and CC models built-in 2015 as well as Porsche 911, Boxter, Cayman and Panamera models from 2015 and 2016.
How this development may affect Volkswagen: It is arguable that if Volkswagen recalls its already circulated cars, it might incur some short term losses.
The seatbelt pre-tensioner helps pull the bodies of the driver and front-seat passenger firmly to their seats in case of accidents. Therefore, if Volkswagen does not recall the cars, it could lead to severe injuries on the customers which is not a good image for the company.
Volkswagen is a multinational company that has been on for years and so can survive the short term loses that come with product recalls as the company can easily compensate customers by replacing the defective auto parts. Nevertheless, the real problem comes when shareholders and customers begin to lose confidence in what the company delivers.
About the Company: Volkswagen AG, known internationally as the Volkswagen Group, is a German multinational automotive manufacturing company headquartered in Lower Saxony, Germany. It sells passenger cars under the Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda and other Volkswagen Commercial Vehicles.
Volkswagen Group is divided into two primary divisions, the Automotive Division and the Financial Services Division, and as of 2008 had approximately 342 subsidiary companies. The company has two major joint-ventures in China and operations in approximately 150 countries and operates 100 production facilities across 27 countries.