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Volkswagen in reputational car crash

September, 2015

A good reputation is vital when it comes to business. Andrew Metcalf, director of Kent PR and marketing agency Maxim, considers the challenges now faced by Volkswagen’s PR team.

The emissions scandal that has embroiled Volkswagen following its dirty tricks over clean diesel has cost it billions and seriously damaged the reputation of one of the most trusted global brands and companies.

Despite tracing its lineage to Hitler’s people’s car, Volkswagen Group has become the world’s largest car manufacturer and the owner of such iconic brands as Bugatti, Bentley and Lamborgini.

However in the space of 48 hours its share price has crashed with an estimated £60bn wiped off its market value after the car giant admitted selling 11 million cars fitted with software to enable them to cheat emissions tests in the US. This emphasises the negative impact the crisis is having on Volkswagen’s brand image

The fact it’s appointed the same US law firm that sought to protect BP after the Deepwater Horizon disaster shows the scale of the challenge Volkswagen is facing – and the scale of the PR crisis.

The PR dimension

The question for the PR practitioner is how well has Volkswagen handled the scandal? Volkswagen’s top man in the US, Michael Horn, admitted the firm “totally screwed up”, and an apology is always the first action undertaken by any firm finding itself having done wrong. However, the group’s US and global management remain in post, and firmly in the media spotlight.

The firm seemed slow to inform the media of the fine detail – not surprising given it involved 11 million cars – but they struggled to answer the obvious question: where were those cars sold? Were any sold in the UK?

As a result of the admission of cheating, 500,000 cars have been recalled in the US, and now former European chief Martin Winkelhorn announced Volkswagen will put £4.7 billion aside to handle the crisis and “win back the trust of its customers”.

After the apology is the need for total transparency in terms of showing the scale of the problem and demonstrating contrition. Getting all the bad news out as soon as possible will ultimately present the best opportunity to shorten the period the story stays on the front page, rather than endure ongoing pain with daily revelations.

What next?

Some may be advising Volkswagen to market itself through the crisis in order to reassure customers and stakeholders. From a PR perspective, it is necessary to continue to proactively respond until the storm has abated.

However, once the news story dies down, there’s the need to go silent: dropping advertising campaigns and sponsorship to allow the general public to – for want of a better word – forget the crisis. That may sound naive given the scale of the global challenge Volkswagen is facing and the ubiquitous Internet, but that’s what is required.   

Winning back trust will take much more than an apology, it’ll take a very personal approach, as the majority of VW owners will feel they’ve been cheated and lied to – and we all know what that does to trust, a major part of any car buying process.

Being a VW dealer today will be a difficult job, and those people, who meet customers on a regular basis, are also going to need marketing and reputational support.

Handling such a crisis on a global scale requires global management and PR. It needs clear and consistent messages and solid spokespersons able to handle highly charged press conferences.

The resignation of Martin Winkelhorn is an attempt to steady the ship by reassuring shareholders, government departments, the media, employees and customers. However, there will inevitably be pressure for other heads to roll at a senior board level, and there’s even the prospect of criminal investigation in various countries and possible charges.
And with the chief executive having now gone there’s effectively a managerial vacuum and the group must move quickly to reorganise and ensure it has a strong spokesperson.

Reputational ripples

The other big question is: will the scandal ripple out and tarnish Volkswagen Group’s other marques using diesel engines, including Audi, Skoda and Seat, or even other diesel car manufacturers?

With the scandal moving at such a fast pace, and on a global stage, Volkswagen Group’s PR team will need to be fleet of foot, and respond quickly. It will also need to ensure its opposite numbers in their sister companies are fully prepared.

There will also be in-house PR teams, and agencies, in all the major motor manufacturers considering how they would handle the situation were any of their vehicles fitted with similar software.

A car giant has been brought to its knees by a small piece of malevolent computer coding, the next few weeks and months will be challenging for everybody in Volkswagen Group, not least the PR team.

Andrew Metcalf - Director

Andrew Metcalf

Maxim / Managing Director

posted in: public relations, reputation management,

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