VW: the self-inflicted scandal of the century

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This is an article by Robert Minton-Taylor 

The global banking meltdown of 2008, the scandals affecting politicians’ expenses, directors’ bonuses and the illegal hacking of people’s mobile phones have meant that public confidence in politicians, bankers and big corporations is at an all-time low.

VolkswagenThe debacle engulfing the mighty Volkswagen Group (VW) is a case in point. How a company with such a legendary heritage as VW has got into such a pickle is unfathomable.

How could a company be so brazen and so disrespectful to the regulatory authorities to lie about its diesel emissions in order to gain pecuniary advantage in the marketplace?

Deception

The deception by VW on its customers is breathtaking in its arrogance. Like the banks it is now paying a high price for its global deceit.

The automaker’s share price has taken a nosedive and the Eurozone central bank is reputedly refusing to buy the loans that finance the sales of VW vehicles. Since 80% of new cars are bought on finance, usually through a subsidiary of the car maker, this really is bad news for the firm.

VW has been setting the standard for innovation and engineering excellence in the automotive industry for forty years, with rival car makers consistently benchmarking their models against Volkswagen. But today VW’s brand reputation, so carefully nurtured over the years – from its iconic 1950s and 1960s advertising created for the VW Beetle by Doyle Dane Bernbach (DDB) to the seventh generation of its Golf model – is in freefall.

Inevitably the toxicity of the crisis is now affecting VW group’s premium brands like Audi and its Czech and Spanish affiliated brands Skoda and SEAT.

A synonym for scandal

The late advertising guru Bill Bernbach, along with his colleagues Ned Doyle and Maxwell Dane are probably turning in their graves right now at the current state of VW’s image or relishing the opportunity in heaven of re-establishing the brand globally.

Crises tend not be nicely containable. The questioning of VW has moved off into other areas. Like the fact those carmakers’ miles to the gallon performance figures bear little relation to reality.

Even back in the late 1960s as a leisure and motoring journalist you ignored the mpg figures issued for a particular brand or model you were testing because they were, to put it politely, economical with the truth.

As a journalist there’s nothing better for a great story than kicking a big corporation when it’s down – on the basis that big=bad and small=good. Journalists are having a field day over this debacle. It’s great copy with headlines like “Aside from any emissions problem does your car really go the distance?”

If I were sitting in the comms chair of a non-VW group brand I would not be feeling smug about the fact that a competitor of ours was taking a publicity tsunami, but rather nervous about the fact that my own company could be the next one to go down in the popularity stakes because I would know that engines tend to be jointly developed across automakers. I would also be checking at first hand – and not relying on management spin – that we were squeaky clean on the engineering side of our business and up to speed on all our health and safety measures and, if not, I would be preparing our team for the inevitable inquisition from journalists.

So where are we now? VW has a new CEO at the helm from Porsche and Matthias Müller has every opportunity to begin to put matters right. But there is even a problem in his former company’s back yard. While most of us would think that Porsche only use petrol engines their most profitable model is a diesel Cayenne 4×4 running on a VW engine.

VW needs to be transparent about any other skeletons that may be lurking in its back cupboard before the media catch on to them.

It is always better to put your hands up and say ‘we screwed up’ which VW bosses have done on both sides of the Atlantic, but you then need to quickly move on to say how you are going to deal with the issues rather than attempt to micro manage each issue as it arises.

Saying sorry

It’s not a good sign though that VW appears in print on its own website to have difficulty in saying sorry.

When I checked on Thursday, 1 October 2015 there was no apology nor any contriteness about what it has inflicted on tens of thousands of its customers on the opening page of its UK website save for a bland statement about “Volkswagen UK announces action plan to modify diesel vehicles with EA 189 EU5 engines.” Wow and I bet we all know about the EA 189 EU5 engines, don’t we? I frankly haven’t a clue what the engine is fitted to my car. Come on guys and girls in comms, you can do better than this!

However, it’s all too easy now to say sorry without at the same time coming out with a range of measures which will demonstrably show that the organisation is going to do something about it.

As a comms director, in days gone by, you could buy some time by getting a senior management executive to say sorry. This would then give you time to strategically think through what should be done next to right the wrongs.

The trouble is that the instantaneous nature of social media means that, rightly or wrongly, the public expect instant decision making. So the sorry needs to be combined with the “we will implement the following” statements simultaneously.

While the CEO has announced an investigation into the matter, there needs to be a thorough independent investigation with a panel of experts drawn from engineering and environmental backgrounds. Self-policing is unacceptable to the public these days and will not be believed.

Preemptive actions

To reinforce the sincerity of its actions VW should announce that an impartial laboratory, like the Consumers’ Association in the UK, will implement regular and unannounced inspections to ensure that the emission statistics are true.

The long held practice of delivering for road test to consumer motoring publications of specially prepared cars also needs to cease. I know that’s the case because I worked for a logistics firm that helped prepare those cars all neatly prepped for motoring journalists so much so that you could eat your breakfast off the engine casing. They were like custom-built cars. That’s a con – not only on journalists, but also on readers of the road test articles.

There certainly needs to be a clean sweep of all those involved in the emissions scandal and I suspect that as this is a German firm, it’s not just the engineers who knew about the altered the software that gave the false emissions readings but the management too. No-one working for a German company would do something without conferring with their manager and that manager conferring upwards to his/her director and so on right to the very top. There are a lot more people to be fingered.

Crises are like a box of bad apples. The more you dig into the box the more rotten and unsavory the fruit becomes. Whistleblowers within VW will see to it that this crisis runs and runs as the individual reputations of engineers and managers are called into question and they try to save their jobs and stature within the automotive industry.

It could also be that the righting of the software wrongs will alter the fuel consumption and performance of the cars let alone the fact that in some countries the emission statistics from a certain brand and model dictates what road tax to pay. Who is going to pick up the bill for this – not the customer I hope.

I suspect that individual customer sales of its cars may not be affected, but I can see company fleet managers demurring on VW supplying their cars, vans and trucks until such time that this mess is sorted out, or taking the VW brand off their preferred list of vehicle suppliers. Why, because the brand is toxic right now? Think about it would your commit to your firm buying goods and services from a company that had deliberately gone out of its way to lie to you?

VW needs to move the debate on. The company needs to talk openly about how it will ensure that its emissions’ statistics and fuel consumption are not just figures that work in the controlled clinical conditions of a road research test centre but in the day-to-day stop and start driving conditions in town and on the open road. In other words VW needs to be upfront about the ‘real’ driver experience on fuel consumption and emissions.

In short the car maker needs to demonstrate that it is putting matters right, that it is making amends and that it is putting procedures in place to ensure it never happens again. It also needs to demonstrate that those people involved in this fiasco aren’t going to just go into retirement with a golden handshake or pension package. They need to be seen to be prosecuted by the relevant authorities and that justice is being seen to be done.

If it’s smart VW could take a lead on the diesel emissions front and come out the other side of this crisis with some of its dignity intact by setting the agenda on emission and fuel consumption statistics and be the first car maker to do so.

If this crisis is left to drift the company will be consigned to years of being in the doldrums. It will take a long time to rebuild its broken reputation and to extricate itself from a morass of legal actions against the firm and the billons of Euros that will need to be spent on recalling millions of vehicles from around the globe.

One final word.

As someone who has had to endure the ignominy of working for an organisation that pulled the wool over so many eyes, I genuinely feel sorry for all those graduates who have joined the comms teams of auto makers. They are faced with having to clean up this almighty mess in brand trashing.

It’s going to be a long and painstaking road for them to regain the trust and positive attention of all those motoring journalists and others they have so long nurtured.

That’s the real shame. So many innocent VW Group employees in this saga will have to endure the ridicule that they will receive in their private lives for working for a disreputable brand, while at the same time wondering if the words VW Group on their CVs are a future employment disincentive rather than a bonus. Bad images tend to have a nasty habit of sticking.

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