The days of Herbie, the VW Love Bug, are long gone; and, since mid-September of last year, so is much of the positive image of Volkswagen as a quality car manufacturer and progressive organization. VW first denied the charges brought by the Environmental Protection Agency, then acknowledged the EPS’s findings. Having admitted that the company cheated on emissions tests, lied to U.S. regulators, and rigged software for the readings of over 11 million diesel engine cars in America (and understated the greenhouse gas emissions of another million vehicles in Europe), Volkswagen of America is now left with a broad array of public concerns which will take a long, long time to get past. More importantly, especially as regards its viability as an enterprise, little of what VW has done since the floodgate of bad news first broke – including the recall, vehicle fixes, management suspensions and replacements, customer incentives, public relations response, etc – has helped repair the company’s severely damaged reputation.
Senior VW executives have warned employees of significant financial cutbacks through internal meetings, and the scandal has crushed the trust of investors and consumers. In addition, the company announced it would spend more than $7 billion to address and fix emissions issues, reflecting the severity of their situation. Michael Horn, the VW of America CEO, publicly stated that it would take more than a year to rectify the key issues, he apologized to dealers at a meeting in Brooklyn several months ago, and he also testified on Capitol Hill.
Because of the lie and cover-up, with resultant financial and public perception challenges, it was recognized that the entire VW brand is now threatened. Kelly Blue Book, the research group that tracks vehicle values, has reported that VW models impacted by the emissions scandal have declined an average of 16%, with some down as much as 30%
This, as noted, was all several months ago. After many apologies, what initiatives is the company now taking to get past the emissions-cheating scandal, and to repair and rebuild trust? Very little, it appears. VW has hired four PR firms to work on three fronts, a) a new green initiative to reduce carbon emissions, b) more corporate oversight, and c) a campaign to demonstrate how it will become a more responsible enterprise citizen.
In November, VW dispatched an army of field reps, who are the company’s direct point of contact with dealers, to announce that it will issue two debit cards to the U.S. owners of diesel-powered VW vehicles affected by the emissions crisis. The first card is a straight cash gift that impacted owners will be able to use at their discretion, and the second card is linked to purchases at a VW dealership. There was also a sales initiative, deeply discounting new VW vehicles and assuring dealers of financial support (such as a $2,000 bonus to owners who purchased or leased a new VW as a replacement for the TDI diesel that couldn’t be delivered because of the sales cut-off.
And…..that’s it!?! Clearly, VW is seeking to rebuild trust by, essentially, throwing money at dealers and customers. Much of the rest of what the company has begun is passive and superficial, where they are applying a new coat of paint to the decaying corporate mansion walls. The VW execs and PR operatives could take a page from the GM image recovery playbook. For Volkswagen of America to have a shot at regaining trust, more objective, open, emotionally-driven communication and engagement initiatives are needed here, and with all key stakeholder groups.