Volkswagen has been beset by turmoil since the company admitted to using illegal software to rig emissions tests for its diesel cars.
The company has lost more than a third of its market value, its CEO has resigned and its reputation has been shattered. Some have questioned whether the carmaker can survive the scandal, which affects 11 million of its vehicles.
Marketing asked PR experts about Volkswagen’s response to date and what it should be doing to deal with the crisis.
Carol Levine, CEO and co-founder, Energi PR
Volkswagen CEO Martin Winterkorn resigned last week after admitting the carmaker rigged emissions tests and so he should have, but it was a minor gesture when you look at the stakes. Who wants to put their kids in a vehicle produced by a company that lies, a company that could easily be seen to put profit way above safety? The intentional scheme to fool regulators and consumers has to be among the worst possible corporate blunders, and no air bag on earth will cushion the blow to Volkswagen’s trustworthiness.
Simply stated, when you mess up you need to fess up and show how you are going to clean up. Mr. Winterkorn may have taken the bullet for the dirty diesel plan, but we need to consider that the rigged cars date back to 2009. That’s a lot of cars and a lot of people that had to be complicit. Volkswagen needs to fix the mechanical side of the problem, as well as deal with the source of culpability. There is every indication that this was an elaborate scheme that involved many individuals and departments over more than 10 years. They need to explain how this happened and commit to better governance to regain credibility and trust.
Volkswagen seems to be a company of few words at a time when customers and stakeholders need to get a sense of their remorse in duping their customers. Matthias Mueller, newly appointed CEO is quoted as saying “we have a long road and a lot of work ahead of us.” While legal implications could be huge, I would have advised him to display greater empathy towards those affected – it would have helped soften the immediate dents to their reputation, which comes across as cold and unscrupulous. The longer they leave car owners in limbo the greater the risk of creating a community of angry, impatient VW owners and class action lawyers waiting at their door. Lawsuits will only perpetuate the negativity around the VW brand and not only those with diesel engines.
Time is of the essence. If VW is contrite and able to offer a reasonable timeline to fix the affected cars, rebates toward a new vehicle or to buy the car back, the impact may not be irreparable. Other car manufacturers have climbed out of the abyss before.
Daniel Torchia, managing director, Torchia Communications
It’s good to start off with a quick look at how the company has responded so far. We’ve seen statements from the board, basic regional releases and some very dry social media efforts. Nothing inspiring, but still an effort that’s worth mentioning. Most people will want to give them the benefit of the doubt so these basic reactionary efforts will go a long way. I tend to believe the sincerity of the board and the departing CEO who claims innocence and ignorance.
Of course they are in the “wrong,” but they’ve demonstrated what ordinary people all over the globe know: in any family or community there will always be a level of dubious or “bad” inclinations and similarly “bad” recommendations from people who let their guard down or who’ve lost their moral compass. Does that surprise readers? Of course not. That said, a solid company culture ought to stamp out this type of behaviour; nipping it in the bud before it goes to market either through compliance, governance, solid managers or wide-spread and deep-rooted adherence to a common set of values. Since that wasn’t done, we can wonder how seriously they take their core values, which includes words such as “Integrity,” “Trust,” “Excellence,” “Professionalism” and “Putting People First.” They have not walked the talk.
History tells us they can certainly rebuild. In my opinion they would need to surround themselves with solid advisors and, usually, that requires elevating the public relations profession to a higher role within the organization. During a listeriosis outbreak in 2008, Maple Leaf Foods CEO Michael McCain said, “Going through the crisis there are two advisors I’ve paid no attention to. The first are the lawyers, and the second are the accountants. It’s not about money or legal liability; this is about being accountable for providing consumers with safe food.” That statement may appear harsh to professionals from the accounting and legal services industries, but the point is that we must focus on the corporate behaviour and corporate communications or the relational aspects of the business. That’s how to build and rebuild trust to begin with. You can likely expect to see greater investment in their culture, internal communications, partner communications and direct-to-consumer communications in a way that conveys the organizational values that undergird the popular brand — and not so much about technical details of their models.
Martin Waxman, president, Martin Waxman Communications
We’ve just seen the tip of the Volkswagen crisis iceberg and, as the investigation unfolds, we’ll be presented with further evidence showing how deeply ingrained it was and who in leadership was implicated. What we do know is they lied, cheated and willfully broke the law in their quest to become the world’s number one car manufacturer. And when confronted with the truth, the organization’s first impulse was to aggressively deny. A common response in situations of guilt.
I’m not sure why, but I feel personally betrayed by VW’s actions — and it’s not because I own one of their cars. They certainly aren’t the first perpetrators of carmaker corporate conniving. Perhaps it was the company’s initial arrogant response. Sure the CEO apologized and resigned and they’ve appointed a new head. But, it feels like they’re still hiding something big and there will be more revelations and apologies. It doesn’t appear VW’s being proactive in getting ahead of the situation and telling the whole truth.
The new CEO announced they’re going to fix the 11 million cars and that’s a first step. But, VW needs to go much farther than that. They need to accept and own their corporate malfeasance, open up their culture and communications by being honest, forthcoming and transparent, replace some board members and hire a new leadership team, accept their punishment with humility, and start to rebuild the relationship they have with customers and the general public. And they need to show their apology means something. That won’t be easy to do. The company wasn’t making energy-efficient diesel engines, it was engineered to cheat. The question is: can they retool their business to earn people’s trust or is their reputation a total write-off?
