Volkswagen Emission Scandal: A Great Brand Gone Bad

By Mamie Patton | October 9, 2015

The Volkswagen emission scandal is the latest example of a company that seriously damaged its brand credibility. Can Volkswagen ever recover its customers’ trust?

Volkswagen managed to seriously damage over 50 years of brand credibility with their stupid “diesel dupe” software scandal. Share value has fallen over 30% since news of the debacle broke. Trust will take years to rebuild. And who knows how many missed sales are out there. The Volkswagen emission scandal is a prime example of a brand that spent years building customer trust, only to throw it all away.

The first rule of branding: Do no harm.

A quick perusal of the VW corporate site reveals no brand purpose, mission or vision statement. The only overarching corporate mission is growth. That’s not to say the brand elements don’t exist. But when an organization does not clearly proclaim them internally and externally, it suggests they don’t take them too seriously.

When your business focus lacks the foundational grounding of purpose, mission, values and character, employees will take the short, easy route. They won’t focus on what’s good for the long-term prosperity of the brand.

As Berthold Huber, Deputy Chairman of the Volkswagen Supervisory Board, said: “The test manipulations are a moral and political disaster for Volkswagen. We can only apologize and ask our customers, the public…our investors to give us a chance to make amends.” Unfortunately, that chance he’s asking for is going to be very, very expensive.

As a result, poor brand management has cost the company billions. “We will review all planned investments, and what isn’t absolutely vital will be canceled or delayed,” Volkswagen CEO Matthias Mueller told workers at Volkswagen’s headquarters in Wolfsburg, Germany. “And that’s why we will readjust our efficiency program. I will be completely clear: this won’t be painless.”

The Bottom Line:

Branding is first and foremost a risk management tool. VW’s emissions-cheating software should have gotten no further than a tasteless joke in a lower-management meeting. Due to poor branding ethics, it cheated thousands of its customers, and seriously weakened an asset decades in the making. Branding is serious risk management for your business. Ignore it at your own peril.

Interested in learning more about brand strategy as a risk management tool? Give us a call.