VW……Very Wrong

by theresco

The Volkswagen scandal hit the airwaves in September last year and the impact will roll on for years to come.

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Volkswagen was established in Germany by the Nazi trade union in 1937. It was branded as ‘the peoples car’ as vey few people in Germany owned a car at that time. Over the past 80 years it has grown to become the largest car manufacturer in the world after Toyota. It employees 590,000 people and produces nearly 41,000 vehicles daily.

Volkswagen has built its reputation on premium quality, environmentally friendly, German engineered vehicles and these attributes are valued by consumers. Sigmar Gabriel, the German Vice-Chancellor and Economics Minister, said on September 21 2015 that “Germany’s economic strength rests in large part on the idea that anything stamped ‘Made in Germany’ will offer a high level of reliability, trustworthiness and engineering prowess.”

This trust was broken the day the emissions scandal came to light and Volkswagen’s share price plummeted. The United State’s Federal Trade Commission alleged that VW systematically deceived customers over seven years with an advertising campaign promoting “clean diesel” vehicles that were in reality much dirtier than government rules permitted.

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Volkswagen was quick the develop a message about how the engine could easily be fixed, which was not well received by consumers, who responded with scathing messages such as:

Don’t bother trying to contact VW,  just sell your vehicle now before the full extent of this scandal is uncovered. Given their deceit over the last 10 years, do you honestly think this is a proper fix?

Until Volkswagen can demonstrate that their simple fix does not adversely effect my diesel, I’ll remain skeptical. As others have pointed out, if it was so simple why did VW not install it in the first place instead of risking this destruction of confidence in their products? I’ve owned VW’s since 1964, both petrol and diesel. Terribly disappointed in these folks.

As highlighted by the above posts Volkwagen broke the psychological contract that it had with many of its customers. In the wake of the scandal Volkswagen Group Australia, have created a new role of Director Consumer Experience that brings together responsibility for all customer touchpoints in the business including loyalty. This appointment is a recognition of the brand damage they have experienced and the significant effort that will be required to reestablish trust with their consumers.

Consumers who purchase Volkswagen undertake a high involvement speciality buy and have a high degree of attitudinal loyalty, they have often been the customer to ‘talk up’ the brand. Volkswagan have now entered into a new stage of needing to re engage with their previously loyal consumers through their ‘then, now and always’ campaign.

This add taps into the emotions of consumers as stated by Iacobucci (2013) marketers have started to pay greater attention to the impact of emotions on consumer behaviour.

Volkswagen’s global sales declined in 2015 for the first time in 13 years, with sales in the United States reduced by 15% (Wall Street Journal, Dec. 2015). Consumers voted with their feet as their attitudes and beliefs (Iacobucci, 2013)  had been negatively affected by the emissions scandal.

As recently as yesterday Herbert Diess, head of the Volkswagen passenger-car vowed to “redefine” company’s tarnished image and “relaunch” the Volkswagen brand.

The jury is out on how long it will take Volkswagen to recover from this scandal.

 

Therese Cotter: Student ID 214407067

 

 

 

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