Can Volkswagen’s brand withstand the emission testing scandal?
Published 07/07/2016
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To put it mildly, the last fortnight has hardly been a good time to be a boss of German carmaker Volkswagen.

The news that the company had used ‘defeat devices’ to disguise emission levels during US lab testing has precipitated the resignation of top VW executives, caused the company’s share price to freefall (down 40% to date, equivalent to $30 billion of market value), and could result in fines, recalls and lawsuits costing tens of billions of dollars. And that’s before you factor in any damage to VW’s sales and brand.

The VW empire, of course, embraces makes such as Audi, Seat, Škoda and Porsche, as well as the eponymous brand, making the impact on this portfolio of marques – each with its own distinctive values and positioning – more complex to unpack.

Crucially, though, messages about sustainability have been core to VW Group as a whole – and are placed under severe pressure by current events.

So, VW’s aspiration to be “responsible, environmentally compatible and beneficial for everyone” suddenly prompts a raised eyebrow. Its aim to be “the world’s most successful, fascinating and sustainable automobile manufacturer” can no longer be read with a straight face. Certainly, you suspect this isn’t quite the fascination they had in mind.

That said, we’ve been in a similar position before, with Toyota. Between 2009 and 2010, the company had to issue three separate recalls affecting eight million vehicles globally, due to problems with brake pedals. As with VW, the Toyota brand took an initial hammering, but subsequent research pointed to strong loyalty among Toyota owners. Since then, Toyota’s European sales have somewhat lagged behind the rest of the world, but the company remains the biggest vehicle seller globally, with VW Group close behind.

Volkswagen’s problem is that, unlike Toyota, it’s not just about a faulty product – it’s about trust, and the company deliberately misleading its customers.

VW will therefore hope that drivers who love its cars stick with the company regardless – or, as may yet happen, wait for some of the pressure to be taken off if other vehicle manufacturers are implicated in similar tricks.

In this unfolding saga, it seems the one thing we can be sure of is more shocks and surprises.

Written by Graham Soult

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