5 Brand Lessons from the VW scandal

They say no press is bad press but VW are putting this theory to the test with their recent emission scandal, which has seen the brand plastered over every major news network around the world.

To bring you up to speed, VW admitted to installing devices on 11 million vehicles housing their Diesel engines of the future in order to cheat road emission tests. In reality, without these devices fitted, the tests reveal these cars emit over 40 times the US road worthy standards. The CEO stepped down, the company’s market value dropped 40% and $7 billion was placed aside to clean things up (pun intended).

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So yeah…I guess you could say it’s a pretty bad month for the brand. What is worth considering is the catastrophic impact to the industry that this event might have.

Five brand lessons

It may be easy to read a textbook and come back with an analysis on loss to brand loyalty but what does it really mean for VW and what will happen next? Here are my thoughts on the challenges and brand lessons from the VW scandal:

1. In the short term, it’ll cost money and attention

The problem right now is focus and money. In the short term, VW will have to turn their attention away from growth and put the brakes on activity in order to fix this mess and save face. This changes the entire direction for the company and will cost time, money and attention. You can expect this to stunt growth for the brand in the interim.

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2. The currency of integrity

Mistakes are forgive-able but dishonesty is more difficult to recover from. When there is a perceived culture of ‘turning a blind eye’, it makes people angry. Not disappointed, but angry, because there has been trust broken. Angry people act differently and repairing this takes time. VW will need to rebrand.

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3. The need to rebrand

I don’t mean a new logo because it goes deeper than that – Just changing aesthetic will seem empty and desperate. What I mean is a realisation that they have built their global brand on a relationship of trust between the buyer and brand. The VW brand is friendly, approachable, fun and, environmentally conscious.

People buy from VW because they trust the brand and because of the statement it makes when you drive their cars. You might say that statement has now changed and the trust cannot be repaired without a drastic change. For those reasons, a new brand foundation must be built. When all the dust settles and it’s time to move forward, Volkswagen will need to rebuild their brand on a new message. Whilst clean and green may have worked in the past, I think it’s safe to say it won’t work in the future.

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4. Their audience

The problem goes even deeper when you consider who the Volkswagen audience is. The brand has spent immeasurable dollars advertising to a core audience who are savvy, environmentally conscious and driven by a desire for authenticity. This same audience is educated on issues like global warming and corporate pollution and we live in a world with an unprecedented focus on corporate responsibility. Can the VW brand survive such a major breach in confidence with this audience?

 

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5. Beyond VW

Beyond the VW lie, the industry may in fact suffer if consumers begin doubting other manufacturers. If one of the most trusted brands in the industry did this, have others as well? If one of the most innovative brands could not commercially meet standards, how can others?

Business Insider Australia put it well when in their article on Volkswagen they wrote:

“For decades cars polluted freely, until the smog in Los Angeles became blinding, at which point car makers were compelled to reduce emissions. But it was always only going to be a partial fix. And although modern automobiles emit far less carbon or NOx than they once did, they still emit. We’d made a sort of peace with this, but then along comes the VW scandal, which destroys that tenuous balance between knowing that emissions are still bad but trusting that the car makers are doing everything they can to mitigate them.”

If consumers begin doubting car brands, they’ll put pressure on governments and watchdogs to tighten standards and this will have an impact on traditional manufacturers when forced to make widespread changes to their processes. Forward looking brands investing into alternative fuel like Tesla will win but they are far from ready to scale and the technology is still in its infancy.

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Concluding thoughts

Trust is so important and your actions must align to your brand promise. This may seem like just another news story but it may just be more significant than we realise in the coming years. Watch this space for VW and the automotive industry.

Want to read a little bit more? This HBR article is excellent and concise.

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