DigitalNews Today: Volkswagen Damage Control Kicks Into High Gear Worldwide

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Volkswagen Damage Control Kicks Into High Gear Worldwide

Tuesday, September 29, 2015

Even as Volkswagen’s board and remaining top managers scurried over the weekend to get to the bottom of Dieselgate, send more executives packing, reassure dealers and customers, and otherwise cope with immediate fallout from the crisis, a deeper realization began to set in: Volkswagen as a company and a brand is in huge trouble worldwide, and the extent of the damage is still unfolding.

And there may be no way to restore it to its former luster—ever.

Market by market, VW’s brand family is trying to comprehend what has happened. In Ireland, for instance, up to 80,000 vehicles may be affected by Dieselgate, as the country’s Minister for the Environment seeks an urgent meeting with Ireland’s head of the Volkswagen Group to discuss the situation. But even worse, the Irish Times reports that countrymen are “backing away from the brand.”

Some industry observers are sizing up the magnitude of the crisis for VW. The company “has been rattled to the core by a scandal that threatens to batter the VW brand around the world, hand a golden opportunity to its main rivals in Europe—Ford and Opel—and all but destroy a long, hard and so far fruitless effort to become a major player in the US,” opined Automotive News.

Others describe the iceberg of a challenge that Volkswagen and new CEO Matthias Mueller face going forward. “If your focus is on the brand, the issue comes down to trust,” Andrew Gilman, president of CommCore Consulting Group, told the New York Times. “How much damage has been done to trust that existing consumers, dealers, shareholders have in the company? How long will the trust issues fester? What can they do to prevent further trust erosion?”

And for those who have been trying to figure out what seems to make Dieselgate more insidious than the 2010 unintended-acceleration debacle at Toyota or last year’s ignition-switch recall fiasco at General Motors—both of which involved either loss of human life or grave safety concerns—a Detroit Free Press commentator seemed to put his finger on the offense.

“Premeditation,” wrote Mark Phelan. “That’s the difference between Volkswagen’s faked diesel emission tests and earlier auto scandals … Volkswagen set out to cheat emissions tests and sell cars that would damage human health and the environment. The other automakers seemed legitimately baffled and eager to address their crises.”

But while the long-term future of VW will take time to sort itself out, there’s plenty of action as Dieselgate lurches from one phase to the next.

Mueller wasted no time asserting the authority that he was given on Friday by the VW board to attempt to right the ship. The new boss and board reportedly ousted several top executives including the R&D chiefs of VW, Audi and Porsche.

He also has promised investors and customers a thorough investigation into Dieselgate, according to the Wall Street Journal, and in a letter to employees, vowed to ensure that such misconduct “never happens again.” He also closed ranks with Bernd Osterloh, head of VW’s powerful labor council and a board member, promising, “We will be relentless in getting to the bottom of this—fast, open and as decisive as possible.”

Meanwhile, German prosecutors launched an investigation into Mueller’s predecessor, Martin Winterkorn, who resigned last week amid his own promises that he had nothing to do with any misdeeds regarding Dieselgate. There also are reports that Robert Bosch GmbH, a major German-based supplier of engine components to Volkswagen and many other automakers worldwide, had warned VW reps as long ago as 2007 that its plan to doctor emissions test would be illegal.

Also, Audi, the VW-owned luxury brand, admitted that 2.1 million of its A3 clean-diesel cars worldwide—including 13,000 in the US—had been fitted with the emissions-rigging software that is at the heart of the crisis. It’s likely Volkswagen will do everything possible to protect its hot-selling luxury brand from being tarnished by Dieselgate. And Skoda, VW’s low-end brand, said that 1.2 million of its cars were involved.

American owners of VW diesel-powered cars are still waiting to find out how the company is going to take care of their substantial concerns in the wake of Dieselgate. For now, VW pulled all marketing related to its diesel-powered cars, which also affected other campaigns such as the ad blitz with spots starring actors Adam Scott and Michael Pena for VW’s App Connect infotainment platform debuting on its 2016 model-year lineup, according to Advertising Age.

“Ongoing press coverage and negative consumer social sentiment in the marketplace has effectively drowned out any positive messaging from our national App Connect campaign,” Vinah Shahani, VW’s US marketing chief, said in a memo obtained by Automotive News.

However, Volkswagen will maintain some of its branding properties including its sponsorship of post-game coverage on NBC’s Sunday Night Football—as it did last evening. After all, some things are even bigger than Dieselgate.

Source: brandchannel

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