Brand Meltdown?

Elektroauto Energieverbrauch

As a branding firm we could not let this week go without making mention of the brand catastrophe at Volkswagen.

Apparently in pursuit of market share, Volkswagen managed to engineer the Perfect Storm for their brand. Marketers leveraged the firm’s core values of engineering excellence, a sporty driving experience and ecological consciousness in compelling ads to promote innovative, new diesel technology. The promise was better fuel efficiency, low emissions and performance. By most measures the ads were successful in convincing a skeptical market even with recollections of earlier generations of less emissions sensitive diesel motors. Unfortunately VW engineering, knowing that the product fell short of meeting its promises, engineered a complicated workaround to avoid detection. The combination of the lie and the cover-up together undermined everything the market had heretofore valued in the Volkswagen brand, sending its equity values tumbling more than 30%.

This situation is a reminder that brands are built on promises that are kept. Strong brands can tolerate occasional mistakes like errors in engineering or periodic delivery shortages. But, intentionally taking steps to deceive the market, particularly one that is values driven, is another thing entirely. It is unclear at this early stage what the ultimate impact on Volkswagen will be. But it is unlikely that the typical call for quick and transparent investigations or the resignations of some top executives will be sufficient to regain the market’s trust.