Impact of the VW Scandal on the Brand & Beyond

I drive a mini, it fits the four of us nicely, and is fun to drive. But things are starting to happen to my son and soon my daughter, and I know with longer legs it won’t be long before we will need a new car. That’s fine, we’d already planned to buy a Volkswagen Golf, it is the right balance of safety, reliability, performance and cool, so that our son can buy it off us when he is old enough to drive and we can be confident he has a good first car, and he can have a first car that isn’t really embarrassing. But why do we feel that? Because of the VW brand.

A brand is a promise, and the promise of VW has been ‘innovative, offering enduring value and responsible. Customers worldwide associate quality, reliability and German engineering skill with Volkswagen Passenger Cars.[1]’ The brand profile creates trust.

So why, when at your core is German engineering skill, do you put software into 11 million diesel vehicles worldwide to sense when emissions testing is in progress to drive in test mode and the rest of the time produce nitrogen oxide pollutants that are 10 to 40 times the legal amount?

The software isn’t a design flaw, that would dint the brand, this is a deliberate manipulation, and as such is a breakdown of trust that will make customer’s wonder what else they cannot trust about VW? Brands are built over many years on trust, every positive experience puts a penny in the brand jar, every negative takes a dollar out of the jar, in this case it could be a lot more than a dollar.

The cost to VW is pinned at $18 billion, ($37,500 per vehicle, 482,000 vehicles sold between 2008-2015, this is in the US alone, there’s 10,518,000 cars that have yet to be factored in)[2]. But the cost to the brand and the trust of current and potential customers is far greater.

The impact will be felt wider than just VW. When you hang your brand on German Engineering, then this scandal also impacts the reputation of Germany. VW is the fifth largest brand in Germany[3] and 45% of the total value of the Interbrand ranking is from the German car industry. To this end, it is likely that it will impact other German car manufacturers such as Mercedes & BMW and those in the VW group including Porsche and Audi. Will the trust in other German engineering brands, such as BASF, Siemens and Bayer, be challenged? Customers today value honest, authentic communication and so it is likely that this scandal will spread. 

One cannot forget that this is currently diesel car specific; diesel car fuel performance had driven sales of this alternative fuel, but with diesel car sales already declining is this the final nail in the coffin for diesel? Let’s add into the mix that the world’s largest brand, Apple, are increasing the number of engineers on their car project, Project Titan. Apple are targeting a 2019 launch date for a clean electric as opposed to a clean diesel car, and from a company that has much greater brand trust and promise.

When VW talk about themselves they say; ”How do you describe Volkswagen? At Volkswagen, we don’t need to make outrageous claims about our cars. They speak for themselves.” The damage to the brand has been done, how deep and widespread that damage impacts will depend how VW responds over the next few weeks and if the customer likes and believes what Volkswagen is saying!

Victoria Bennett is a strategic marketing consultant who feels passionately about creating and building brands through consistent, authentic communication and brand interactions.

[1] Volkswagen website https://www.volkswagenag.com/content/vwcorp/content/en/investor_relations/Warum_Volkswagen/Portfolio.html

[2] https://www.bbc.com/news/business-34325005

[3] https://www.interbrand.com/en/newsroom/101/best-german-brands-