David Diaz, Manager, Davenport Laroche

The CEO of Audi, Rupert Stadler has been arrested following an investigation into an issue with the company's behavior regarding diesel emissions. A spokesperson for Audi's parent company, Volkswagen, noted that Stadler is currently being held by the authorities, with Munich prosecutors saying that the have arrested the CEO in an effort to stop him from hiding or destroying evidence. 

The Audi diesel emissions scandal first came to light a few years ago, when the media discovered that the cars produced by the German manufacturer are fitted with special devices designed to help them cheat emission tests. The devices were first found in Volkswagen vehicles; however, Audi is also connected with the scandal. Not too long ago, Audi admitted that it had at least another 60,000 A7 and A6 model cars associated with the issue. This new 60,000 comes on top of more than 850,000 cars recalled in 2017 by Audi. Prosecutors say that Stadler will undergo questioning after he's had a chance to speak with his lawyers.

How Audi Is Responding to the Crisis

Though much of the story around Audi and Rupert Stadler remains under wraps for now, the VW supervisory board has nominated a new interim chief executive while the investigation is taking place. The interim chief executive is Bram Schot, though Audi's supervisory board haven't signed off on the nomination just yet. Despite the complexity of the scandal, the company remains highly loyal to its CEO. Unfortunately, if it turns out that Stadler was responsible for the diesel emissions problem, then the outcome for the reputation of Audi could be significant. Though the Audi board didn't agree to Bram Schot's acting as the interim CEO, Stadler made his own request to step down during the investigation. Obviously, he seems to understand how damaging the arrest can be for the reputation of the company. 

Adam Jiwan noted, “The fact that the company couldn't bring themselves to dismiss their chief executive even though he was taken into custody for possible involvement in a scandal responsible for $26 billion in damages may have harmed their reputation further. Some governance experts has seen this refusal as a sign that directors are unable to make bold changes.”

What's Next for Audi?

Audi share prices are dropping and have been doing so ever since the CEO was arrested. At the same time, the general attitude that the public has towards the company has been one of concern and uncertainty. Though the company themselves seems to remain loyal to Stadler, the public feels otherwise, after lies have swam through the industry for a number of years. 

Though it remains to be seen whether or not the CEO of Audi will be convicted of anything, the company itself isn't in great standing as far as reputation and brand presence goes. Even though many organizations do prefer to focus on innocence until proven guilty, it's worth noting that the damage has already been done to some extent. 

According to some experts, it's not great to have this issue hanging over Audi's heads as they attempt to rebuild their reputation as a trustworthy car manufacturer.