Just days after I had leased a new Volkswagen Passat (my second Passat lease), the news emerged that Volkswagen had intentionally programmed many of their diesel engines to comply with emissions standards only when tested. The rest of the time, these engines were found to be producing 10-40x the emissions limit. While it was initially thought that these indiscretions were limited to the US, the investigation uncovered that similar issues were abound in Europe. Experts estimate that it will likely cost $6-8 billion just to retrofit the impacted vehicles, and possibly more to handle what are likely to be numerous class action lawsuits. The VW CEO has since stepped down to be replaced by the Porsche CEO (one of the other brands in the world’s largest car manufacturer’s portfolio).
Hearing this news, and having just leased a new Passat, I was frustrated, disappointed, and wished that I could return my car. The response from the dealership was that my car was safe, compliant and “as advertised” (translation: we’re not going to do anything). As a VW leaser (fortunately not an owner), I’m waiting to see what, if any, concessions VW will make to appease not just drivers of the polluting diesel vehicles, but to all customers. However, as a brand builder and marketer, I’m very curious to see what happens to the VW brand, as well as the broader portfolio of brands that include Audi, Porsche, Bentley, and Lamborghini.
In the meantime, here’s what they should doing:
Act quickly, boldly, decisively.
Brands in crisis often require swift decision-making and taking a bold stance to do what is right. I’ve yet to see this from VW. A recent article says that they may try to recover from this scandal by focusing on electric. Seriously? How about coming out and saying you were wrong, how you’ve jeopardized the trust of your consumers, and sincerely apologize for polluting the earth. Assure your customers that they will be taken care of and you will do everything you can to regain their trust and loyalty. In 1982, even though it wasn’t Johnson & Johnson’s fault, the company recalled ALL Tylenol after it was found that someone refilled capsules with cyanide, resealed the bottles, and returned them to shelves, resulting in 7 deaths. This decisive action, at a huge expense to the company, demonstrated their complete commitment to health and public safety regardless of cost. Tylenol then immediately innovated to launch the first tamper resistant packaging in the industry just 6 months after the crisis.
Communicate with your consumers.
I’ve received numerous communications from VW in the past few weeks, none of which addressed the elephant in the room. In fact, while many had to do with my lease, what I owed VW credit, and how I could set up automatic payments (to ensure I of course never miss a payment), numerous ones were emails from dealerships promoting sales and lease deals. While current VW/Audi diesel drivers received a letter of apology and a promise to provide more updates when known (although they did not openly admit to cheating the emissions tests), I’ve received nothing. I would appreciate some kind of acknowledgment of my loyalty to the brand, and an apology from the manufacturer that I must now drive a car whose brand equity is now tainted with “cheater” and “polluter”. When JetBlue cancelled over 1,000 flights due to an East Coast ice storm in 2007, the CEO didn’t blame the weather. Rather he communicated to all of his consumers via a public letter of apology, introduced a consumer bill of rights, and presented a detailed list (including monetary compensation) for what JetBlue would do to help the affected passengers.
Go beyond the obvious.
Taking care of the current diesel engines and retrofitting them to no longer cheat the emissions test is only the first step. This will take time and cost billions, but it must be done. And in fact, it’s pretty much been ordered to be done. Changing CEOs and conducting internal investigations to determine how this happened is also given. But VW needs to do more to not only appease, but also retain their consumer base. How about estimating how much additional pollution they’ve created by circumventing the emissions tests and making some kind of clean energy payment to offset that excessive carbon footprint? Consider committing to additional clean energy measures in not only your future vehicles, but also your plants. And how about paying for a month of my lease? Regardless, the actions should go well beyond what is required and demonstrate VW’s commitment to righting their wrongs.
Maybe I’m making too big a deal out of this. Maybe this scandal won’t impact VW owners, drivers, and prospective consumers as I think it will. Maybe the brand has enough equity and loyalty to overcome this crisis. Maybe focusing on developing a new Phaeton (the failed luxury sedan that VW initially debuted in 2008) and launching the Golf electric will redirect consumer sentiment more positively (this, apparently, is part of their recovery plan). And maybe that’s what VW is thinking, which is why my summary of their actions to date is “lethargic and insensitive”. It will be interesting to see how quickly VW can recover and the steps they take to do so. However, if they don’t take some decisive measures, proactively communicate with all of their consumers, and take action that’s beyond the obvious, their brand and business will continue to erode until it’s past the point of no return. And in 3 years when my lease is up, I’ll be shopping for other brands.