VW – Can This Brand Be Saved?

Photo of red VW 1960 Vanagon, with Michael Kieran and friend.My first car was a red 1960 VW Vanagon camper with well over 100,000 miles on it. It was beautifully engineered, though admittedly rather slow going in the mountains.

Today I drive a Volkswagen Jetta – the seventh VW I’ve bought – which is among the 600,000 VWs in the US containing diesel engines that were designed to cheat on emissions testing in order to maintain performance while exceeding federal pollution standards.

Volkswagen America recently proposed to Congress a $14.7-billion settlement that includes repairing or buying back the affected cars and compensating owners for their loss, with $2.7-billion allocated to remediate the environmental impact of the cars, and $2-billion on other cleaner-vehicle initiatives. (VW faces much smaller penalties for the seven million non-compliant vehicles it sold elsewhere in the world, as Europe has less stringent regulations than the US on nitrogen oxide emissions.)

But as VW and its customers, dealers, and regulatory agencies grapple over the settlement’s details, my question is for Volkswagen’s senior execs: even if I like your cars, can I ever again trust your company?

Brand marketing experts emphasize that trust is the foundation for a company’s relationship with their customers, whether dealing directly with consumers or with other businesses. When customers are aligned with a brand, they give it twice as much share of wallet as those not aligned with that same brand. But more than 40% of the people responding to a December 2015 Gallup poll said the news of VW’s deception made them less likely to purchase a Volkswagen.

To make matter worse, New York State filed a civil suit against Volkswagen last month, saying it has evidence that senior VW execs were aware of the scheme, and that the company initially tried to cover its tracks when confronted by regulators. This is a company that needs to take drastic action to earn the trust of current and future customers.

I remember taking that 1960 Vanagon on some terrific adventures, with the added excitement of wondering whether it would be able to huff and puff its way to the top of the next big hill. Volkswagen now faces a similar climb, the steepest in its history; it will be interesting to see whether or not it makes it.

 

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