To put it lightly, the fallout from Volkswagen’s recent diesel emissions scandal has been rather eyebrow raising. Eleven million VWs, Audis, SEATs and Skodas worldwide may have to be recalled; Martin Winterkorn resigned after eight years as CEO; a wave of internal investigations are disrupting operations; some very expensive advertising has had to be pulled; and, most eyebrow raising of all, nearly one million tonnes of extra pollution has been emitted into the atmosphere. All things considered, they really dropped the ball on this one.
Earning as much brand clout as VW…couldn’t have been done without establishing strong consumer trust
But what really makes the whole episode so damaging to Volkswagen is the fact that it appears to be the result of dastardly and deceitful diesel-emission trickery. Those crafty car manufacturers did it on purpose. They saw an opportunity to pull the wool over our eyes and took it with both hands. Plus they were laughing and smoking cigars and drinking expensive scotch in a mahogany-lined boardroom while they did it, probably.
A reliable brand story
For a brand like VW, which for years has been synonymous with reliability and safety, this is a kick in the chops. Putting a cash figure on it, valuation consultancy Brand Finance has estimated VW’s brand value to take a $10 billion hit. Ten. Billion. Perhaps it’s not so much a kick in the chops as a volley of flying knees to the groin. Brand Finance CEO David Haigh said, “The very future of the VW brand is in doubt,” and I’m inclined to agree.
The chap in charge of recovering this loss of consumer trust is VW’s Teutonic new CEO, Matthias Müller. If I was to make a snap judgement about his personality, he seems the sort of hard-nosed businessman that’s taken a few flying knees over the course of his career and as such has a groin of granite. Which is all very handy as his task is a tall one.
YouGov BrandIndex, an authority on consumer perception, found that VW’s score in the US market dropped from 12 just before the scandal to -24 just after. I don’t exactly understand what those figures mean, but apparently this is their lowest level of consumer perception in the US for more than six years. I’m guessing that across Europe and elsewhere the story isn’t too dissimilar.
In recent years Volkswagen has poured heaps of money and energy into environmentally led advertising campaigns; campaigns in which ‘clean-diesel technology’ has been a message one VW Vice President wanted to hammer home.
These marketing efforts include a global programme named ‘Think Blue’, a riff on the brand’s classic ‘Think Small’ tagline. We’re led to believe that the programme’s aim is to support projects around the world that illustrate how much fun it can be to live a little bit more eco-consciously. The first line on the website reads, “Ecological sustainability at Volkswagen is a major corporate objective.”
Eroding trust
Naturally, the public took to social media. Negative tweets about the brand rocketed from 1,187 in the seven days before the news broke to 99,900 in the week after. Facebook also proved a popular platform for people to vent. As Audi (owned by VW) continued to air TV adverts that include its ‘Truth in Engineering’ slogan, one user left the comment ‘Engineering the Truth’ on VW’s Facebook page. I know, right?
The take-home message is you cannot play fast and loose with public trust these days. We’re in an age where only complete transparency is currency, so when you tell your brand story, you better tell the truth.
It was Volkswagen’s disregard of that integrity that has brought about almost irreversible ramifications
What’s the point in having a brand if you’re not going to remain true to the values behind it? With something as globally recognised as Volkswagen’s, its longstanding brand image is all but erased. If you publish marketing materials that harp on about how wonderfully eco-conscious you are then turn around and release a million tonnes of pollution into the air while no one’s looking, you shouldn’t be surprised when it comes back to bite you.
Earning as much brand clout as VW did over the years prior to this crisis couldn’t have been done without establishing strong consumer trust. When that trust is flouted (brazenly flouted in VW’s case) it can result in severe implications that impact the entire business. It was Volkswagen’s integrity that earned them such a widely appreciated brand, and it was Volkswagen’s disregard of that integrity that has brought about almost irreversible ramifications.
This goes for all brands, regardless of the values it champions. I haven’t got a VW or an Audi or a SEAT or a Skoda or any car for that matter, so I don’t know what it feels like to be deceived by a brand that I’d been so loyal to and spent so much money on. It must really sting. So for businesses creating their brand, the lesson here is to choose your values wisely and be true to them, as well as your customers, no matter what.
