A dark time for Volkswagen
Volkswagen’s reputation lies in tatters after it emerged that the German car manufacturer fixed tests to give the appearance of reduced diesel emissions. As stocks plummet, the brand’s communications team have a big job on their hands.
The company intentionally misled its stakeholders worldwide by illegally using software to manipulate exhaust emissions results on an engine that it held up as a low emissions product. The company’s misconduct has led to a drop in shares of more than 30% since the crisis broke. It has seen tens of billions of dollars slashed from its market value and, with recalls and court costs, it’s likely to get worse before it gets better. The brand is going to have to demonstrate change on a huge scale if it stands any chance of winning back the public’s trust after such a seemingly duplicitous scandal.
On the plus side, the Volkswagen brand has weight. It is a historic brand and owns some of the world’s best-loved car brands. The company has already taken steps to move past the crisis; apologising sincerely and shedding its staff.
Martin Winterkorn, Volkswagen’s CEO, stepped down on 23 September after a meeting with the executive committee. He said, "Volkswagen needs a fresh start - also in terms of personnel. I am clearing the way for this fresh start with my resignation." Winterkorn has accepted responsibility for the problem, and that may take some pressure off the company. Matthias Mueller, the CEO at Porsche, is tipped to takeover the role.
However, there are audiences that Volkswagen still needs to address, and it will be years before it is able to move past this crisis altogether. As Kamal Ahmed, business editor of the BBC, said at the PRCA National Conference 2015 this morning (25 September), Volkswagen hasn't done enough to reassure its customers in the UK, it hasn't yet told them how the crisis affects them. Ahmed said that, above all else, "honesty, transparency and information" are all that matters in a crisis.
The crisis is all the more damaging because it began internally and deliberately. Volkswagen will face the wrath of governments and individuals in court, the scrutiny of the world’s media and huge financial damage to its business. The chances of it surviving in the long term are improved by its existing brand equity and its ongoing communications strategy. However, crucially, Volkswagen will need to genuinely change its company culture and the way that it operates. This is a crisis situation where more than a fresh coat of paint is in order.
Beyond the damage to the Volkswagen brand itself, the company also has a unique role in that it is somewhat representative of perceived ‘German engineering’. If the world’s public turn away from German auto makers, the country’s, and perhaps even Europe’s, economies will suffer; one in seven jobs in Germany are tied either directly or indirectly to the automotive industry. It could also be that a crisis like this will turn a microscope onto an industry which, with Toyota’s rapid acceleration issues, has already been the subject of recent unwanted attention. This crisis has the potential to have wide-reaching consequences.