Fine tuning the dinosaur? Environmental product innovation and strategic threat in the automotive industry: A case study of the Volkswagen Audi Group

Abstract The environmental impacts associated with the life cycle of the automobile are pronounced. Indeed, many environmentalists suggest that through its lifetime the core product of the automotive industry is the most polluting product on earth. This paper analyses the response to such criticism from one particular automotive manufacturer, the Volkswagen Audi Group. The paper charts the improvements that are being realised by VW throughout the life cycle of the car, particularly in relation to product use and disposal. It is suggests that the efforts of the automotive industry to reduce its environmental impact through incremental improvements in the environmental efficiency of each car are continually undermined by an overall increase in the level of transport. Thus, it is concluded that the ability of the automotive industry to manage the life cycle impact of its product is severely constrained unless it can dramatically influence the demands of its customers, and that potentially this is an issue of fundamental strategic importance for the industry as a whole.