Rebuilding Volkswagen's Reputation - Hard or Downright Impossible? An Expert Weighs In

Steph Willems
by Steph Willems
rebuilding volkswagen s reputation hard or downright impossible an expert weighs

Decades of feel-good corporate outreach and a hug-worthy relationships with buyers didn’t stop potential customers and veedub diehards from fleeing Volkswagen after the diesel stink bomb went off in Wolfsburg.

Like a husband of 50 years caught cheating with his wife’s sister, the intentional deception behind the diesel emissions scandal shattered the hard-earned trust between the company and its consumers. Thanks to that, Volkswagen’s sales trajectory now mimics that of a very leaky submarine.

Could Volkswagen have managed the scandal better, and can the company rebuild that lost trust?

According to the consumer opinion-tracking Reputation Institute, the answers to those questions are “you bet” and “yeah … it’s gonna take a loooong time.”

The Reputation Institute measures corporate reputations in the U.S. with its National Tracker service. It assesses a number of companies monthly by tracking the perception of the “informed” general public. To be a part of the study, a person must be familiar with (but not employed by) a particular company.

On any given year, the tracker gauges the monthly feelings of 2,000 individuals per company.

RI then takes the “pulse” of each company, assigning a ranking based on the public’s emotions (is the company a feel-good one or not?) and their opinion on a broad list of corporate governance values.

RI released a report on Volkswagen’s reputation today.

In the first quarter of 2015, Volkswagen enjoyed a good reputation worldwide, with a “RepTrak Pulse” figure of 70 to over 80 percent in surveyed countries. After the emissions cheating was laid bare, that reputation plunged by 23.5 points in Germany, 24.8 percent in France, and 29.9 percent in the UK.

The more distant U.S. recorded an 8.7 percent drop in the brand’s favorable opinion.

Consumer willingness to buy Volkswagen products dropped even further, with declines of 30 points or more recorded in some European countries.

According to Stephen Hahn-Griffiths, Reputation Institute’s vice president of U.S. strategy consulting, the “emotional crutch of a legacy of goodwill” doesn’t survive long when people start to take a hard look at a company’s actions, and begin asking questions.

In Volkswagen’s case, the damage is done, and the automaker faces a long, tough road ahead.

“Getting that emotional/feel-good back is going to take a long period of time,” said Hahn-Griffiths in a phone call with TTAC. “There’s no quick fix overnight. A lot of the love out of legacy was lost, and it’ll take a lot of effort to gain it it back … You can’t message your way out of the situation. You have to earn back reputation literally one potential member of the general public at a time.”

Even the company’s “loyal ambassadors” — those people who can be counted on to defend “their brand” in public no matter what the controversy — are nowhere to be seen in the wake of the scandal.

So, could Volkswagen have prevented some of the damage in the wake of the scandal? The company didn’t do a good job in the early days (or months) of the crisis, and that will hurt them.

“Right now, VW is stumbling and bumbling through a series of good intentions that are poorly executed,” said Hahn-Griffiths, adding that Volkswagen avoided culpability when the scandal broke, went through a period of denial, and generally acted very slowly to address the issue.

The closest (recent) parallel in the auto industry is Toyota’s unintended acceleration scandal, which didn’t damage Toyota’s reputation nearly as much as the diesel scandal has damaged Volkswagen.

After a slow start, Toyota did the right things, said Hahn-Griffiths. Thanks to public discourse, transparency, and cooperativeness, the hit to its reputation only lasted six to nine months.

Volkswagen’s multi-billion dollar deal with U.S. regulators and owners was the first major step to overcoming the legal issues surrounding the scandal, but all those buybacks and repair jobs likely won’t start for months. Even then, many former owners will walk out of dealerships, never to return.

Will smoking deals keep them there? Don’t count on it, says Hahn-Griffiths.

“Monetary incentives, and a focus on ‘Hey, we’ve got a great product’ is not going to be enough to win loyalty,” he said.

“We know, based on data, that only 40 percent of reputation can be attributed to the measures of products. Increasingly, the other 60 percent is based on the company that stands behind the products … (Volkswagen) has to take decisive action, not just on admitting the culpability of the cheat device, but treating customers with the utmost respect and appreciation through an unparalleled customer service experience. That’s the best chance VW has to retain those customers.”

The automaker’s buyback program is fraught with danger, due to the unprecedented scope of the program (coordinated through a stressed dealer network), and the complexity of coordinating the whole operation.

Get it wrong, and Volkswagen will have even more people cursing its name.

Tomorrow marks eight months since the Environmental Protection Agency leveled charges and blew the lid of the long-simmering emissions scandal. Has the automaker recovered any of its lost reputation since then?

Going by early second quarter results, the answer is a flat “no.”

“Volkswagen is still in the roots of recovery, and we’re not going to see any significant bounceback any time soon,” said Hahn-Griffiths.

[Image: Volkswagen Golf, Volkswagen of America]

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  • Jasper2 Jasper2 on May 19, 2016

    First Audi sells me a brand new 2011 Q5 with an engine that bleeds oil and has an exploding Takata Air Bag. Next they tell the world they are going to start building these Q5s in Mexico. Translation: pay German prices for the Q5 adobe. Now we have the diesel gate scandal and VW arrogance in it's resolution. Screw VW and all it's brands. Audi is just a goosed up fancy VW. VW: get the hell out of the United States before 2017 and take your f'ing southern factory with you.

  • Jasbro1 Jasbro1 on May 22, 2016

    Don't hold back Jasper, it's not good for your blood pressure:) Talk about a Sophie's choice- don't spin on your oil, or you'll get Claymored by the airbag...oh well, at least you'd get out of the vehicle!

  • Svenmeier Speedometer display in the center console screen? Why? This is a dealbreaker for me.
  • Alan I do believe that traffic infringements penalties based on income will affect those who are financial able to flout safety regulations.When I drive above the posted speed limit I assess my situation using probability. If I'm confronted with a situation where time is of more value to me than speed I will speed if I assess the probability of a fine to be quite low. I can afford the fine, what I can't afford is the loss of points on my drivers licence.In Australia (12 points in QLD and all States have a point system) we have a points system attached to your drivers licence. An open drivers licence is granted 12 points every 3 years. So, if you receive an infringement for exceeding the speed limit it takes 3 years for the points to be removed. I generally get caught once every 2 years.I think a points system would be a fairer system over a system based on income. Its about retaining your licence and safety, not financial gain by the government.As you can see below it wouldn't take long for many US drivers to lose their drivers licence.[h2]Current penalties for individuals caught speeding[/h2]InfringementPenalty amountDemerit pointsLess than 11km/h over the speed limit$287. 1 pointAt least 11km/h but not more than 20km/h over the speed limit$431. 3 pointsMore than 20km/h but not more than 30km/h over the speed limit$646. 4 pointsMore than 30km/h but not more than 40km/h over the speed limit$1,078. 6 pointsMore than 40km/h over the speed limit$1,653. 8 points and 6 month suspension
  • Wjtinfwb Instead of raising fines, why don't the authorities enforce the laws and write tickets, and have judges enforce the penalty or sentence of a crime. I live across the street from an Elementary School on a 4-lane divided state highway. every morning the cop sits in his car and when someone sails through the School Zone well above the 10 mph limit, he merely hits his siren to get their attention but that's it. I've never, in 5 years, seen them get out of the car and actually stop and driver and confront them about speeding. As a result, no one pays attention and when the School Zone light is not lit, traffic flies by at 50-60 mph in the 45 zone. Almost no enforcement occurs until the inevitable crash, last year some zoned out girl rolled her beater Elantra 3 times. On a dry, straight, 4 lane road with a 45 mph limit. I'm no Angel and have a heavy foot myself. I've received my share of speeding tickets, lots of them when younger. Traffic enforcement in most locales has become a joke these days, jacking prices because someone has a higher income in as asinine as our stupid tax policy and non-existent immigration enforcement.
  • Jeff S If AM went away I would listen to FM but since it is insignificant in the cost to the car and in an emergency broadcast it is good to have. I agree with some of the others its another way to collect money with a subscription. AM is most likely to go away in the future but I will use AM as long as its around.
  • BEPLA I think it's cool the way it is.If I had the money, time and space - I'd buy it, clean it up, and just do enough to get it running properly.Then take it to Cars and Coffee and park it next to all the newer Mustangs.