It has been quite a week for German car manufacturer Volkwagen, having admitted it has distorted the results of emissions tests for many of their diesel cars in the US. When their car was put under emissions testing in a laboratory environment it set off a device in the car which lowered the pollution levels – a ‘defeat device’ – software which was turned on during testing.
The defeat devices were built into diesel vehicles manufactured between 2009 and 2015. Volkswagen seriously compromised its integrity – as a global brand it has been severely hit by the scandal. It is facing huge fines in the USA as well as in Europe, as offending vehicles emit pollutants up to 40 times standard levels.
How are Volkswagen managing the PR crisis?
There have been swift moves this week in order to try and manage the PR crisis. This includes the CEO Martin Winterkorn resigning and a several statements from the company admitting the deception, as well as steps to let the public know that they will recall all cars affected and reupdate the software in the car which will eliminate the device.
However, is this enough? The public perception of this global brand has no doubt been changed forever. It will take a lengthy amount of time to restore the reputation of Volkswagen, and it may never be quite the same again. In the US there is likely to be a class action against the company which could bring further financial damage to the company and extend the negative press exposure for some time. Whilst they have taken the appropriate steps by admitting blame and apologising, the negative association with Volkswagen will linger. It is not only the VW cars that are affected but also other car brands owned by the company:
•5 million VW cars
• 2.1 million Audi
•1.2 million Skoda
•700,000 Seat
• 1.8 million commercial vehicles, such as vans
What does the future hold for Volkswagen and their reputation?
Additionally, criminal lawsuits may also be on the horizon. As a brand Volkswagen need to tread carefully during this time. It is a huge deception by the company and as a well known brand it has come as quite a shock to not only customers but the general public. It takes many years to craft and build a positive reputation and it has been brought down in day. As consumers we associate different feelings with different brands- and these can be hard to change. The negative connotations with Volkswagen may never fully subside- we will only know how damaging this will be when considering the sales figures for these cars in the coming months.
What can we learn from the crisis at Volkswagen?
Firstly we can learn that deceiving your shareholders, customers and employees is never a good idea! Unfortunately however, mistakes do happen and how you handle those errors is crucial.
Managing a crisis is essential – do you speak to the press? Do you seek legal advice? Do you issue a statement admitting blame or do you handle internal affairs first?
Getting these things wrong can futher damage your reputation and make the situation worse. It is wise to be speak to a reputation management specialist who can help steer you in the right direction, provide suitable solutions to the problem and manage the ongoing crisis. Find out more about how we can manage your business reputation here.
As a business it is important to remember who is at the heart of it – and that should be not only your employees but your customers. Everything you do as a business should keep those demographics in mind. The scandal at Volkswagen appears to be endemic and seems unlikely that only a few employees knew about the defeat devices. The company lost their way and betrayed their customers and shareholders. It will be interesting to see how this crisis develops and whether or not Volkswagen can repair their reputation and rebuild their brand.
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