How did Volkswagen fail to see this coming? Asks Igniyte’s Caroline Skipsey
28th September 2015
Last week was not good for Volkswagen; an $18 billion fine, executives potentially facing criminal charges, a 20% drop in share price and a shattered reputation with customers, shareholders, employees and the media.
The news that Volkswagen has been cheating diesel-vehicle emissions test dominated all the headlines.
In terms of brand reputation, Volkswagen had it all. Generations around the world have made an emotional connection with the German brand. There are fan websites dedicated to its Beetle model through the ages and international events celebrating the VW campervan. So how could Volkswagen be so reckless with its reputation?
Since the 1990’s, Volkswagen has been instrumental in leading the way for clean diesel and a revival in the sale of diesel cars. In today’s green-friendly and health conscious world, low-emission cars are increasing in popularity and Volkswagen’s apparent readiness to lead the automotive industry into eco-friendliness has boosted its reputation as a considerate, moral-standing brand.
Volkswagen’s ability to adapt to changing consumer concerns and priorities has meant that it has retained lifelong customers, customers who trust the company and have invested time, money and memories with Volkswagen cars.
Volkswagen customers are now divided; there are those who will continue to stick by the company, acting as brand advocates defending it on social media and in forums; and those who feel cheated, lied to and let down by a brand which seemed to hold the same values as them.
But how did this all come about? How was this scandal actually allowed to happen in the first place? At some point, there must have been a decision made at board-level to cheat the tests – not only does this throw questions about the company’s morality, but it appears to show that there was zero consideration to the threat this posed to the company’s reputation and indeed, its future.
For a Fortune 100 company with millions of shareholders, surely an error as big as this one would be picked up in regular due diligence?
Putting the fact that this deliberate deception was ever approved aside; how was the crisis communication strategy not more considered? Knowing that it had cheated on such a massive scale, you’d have expected the brand to have taken steps to mitigate the risk of this ever getting out, or have a slick operation in place ready to press ‘go’ when it did get out. Did it honestly expect to get away with it?
So far, the public has had personal apologies from the Volkswagen executives – but customers want answers. In the immediate term, customers want to know that their cars are safe, whether their cars are affected, and whether it affects their car tax.
You only have to look at the search results for Volkswagen and its social channels to see that customers are trying to find outlets to ask their questions – this outlet should be on the Volkswagen website, it obviously was not prepared for this.
In the coming months, Volkswagen needs to focus on honesty and complete transparency. It needs to make cultural changes and communicate this to the media, shareholders and customers and it needs to stick with the personal touch. It is, after all, the “people’s car”.
Article written by Caroline Skipsey, Managing Partner at Reputation Management Consultancy Igniyte.