The CEO of Volkswagen is in the hot-seat right now as accusations of deception swirl around this venerable car marque.
The VW brand has been built upon a foundation of dependability and trustworthiness and its marketing has maintained and reinforced this positioning over nearly eighty years. I should know as I worked with Volkswagen for over 20 years as their global advertising lead.
The brand's positioning, especially its more recent drive to be a champion of sustainability, is undermined by the revelations
Now the brand equity, and as importantly, the brand’s reputation has taken a serious hit overnight as the emissions scandal erupts.
A calculated betrayal?
Volkswagen has been caught out in what appears to be full-blown, calculated betrayal of consumer trust after fitting diesel-powered cars with technology to cheat pollution tests. Its positioning, especially its more recent drive to be a champion of sustainability, is undermined by the revelations and the torrent of negative media coverage is overwhelming.
The question on Chief Executive Martin Winterkorn’s mind must be not just "how can we fix this" but "how can we start to rebuild into a position of trust?".
What is important now is how the company reacts and In between making apologies, Winterkorn must be frantically scanning his memory for other high-profile corporate scandals and how the brands in question recovered from them.
It is possible. Primark has survived the 2013 Bangladeshi Rana Plaza factory collapse that killed more than 1,100 workers and put the spotlight on the conditions under which fast fashion garments are produced.
It paid out reparations without quibble, has audited every step in its supply chain and worked with factories to improve conditions and improve and overhaul regulations. Fast-forward to 2015 and Primark has just launched in the US with a triumphant Boston flagship opening.
In the same year, Tesco faced a backlash from consumers sick to their stomachs at the thought of having eaten substantial amounts of horsemeat where they had been told they were buying beef.
Other brands such as Findus, Ikea and Iceland were implicated but Tesco became the public’s primary whipping boy. Miraculously, (while it has faced a number of other, unrelated blows to its reputation) Tesco’s public perception has largely been restored, and the brand was still ranked Britain’s Favourite Supermarket by Nielsen in 2015.
Volkswagen must act quickly to show that its apology is meaningful and that this error of judgment was merely a blip as opposed to an endemic and long-standing corrupt practice
The long road to recovery
So how can VW get back in the driver’s seat and apply the brakes before this scandal does further damage? There are some defined steps Volkswagen can take from a PR point of view. Winterkorn has done the right thing by holding both hands up and confessing to the brand’s violation and breaking of the public’s trust – step one of the process of damage limitation is complete.
Step two, however, is far trickier. Volkswagen must act quickly to show that its apology is meaningful and that this error of judgment was merely a blip - a divergence from the norm, as opposed to an endemic and long-standing corrupt practice permeating the entire automotive industry.
I believe the former to be the case, so the task is to convince the consumer public to accept this and patch up the brand, fast.
The company has to also accept it can be a long road back to rehabilitation, and the critical thing is to do it right rather than to do it quickly. There is still a long walk of shame to be made, and the company may see a period of falling sales to accompany its falling share price.
They will have to dig in and accept that rebuilding the trust in the eyes of the consumer may take years.
As mentioned, before co-founding Atomic I worked on branding for Volkswagen and after years of experience with the company I am confident that its operation is, essentially, based on integrity and this mis-step is out of character.
I believe it will have enough goodwill in its "brand bank" to survive this scandal, but only if it takes the right steps and administers as much rigour into this process as it does to its engineering.