Sunday, September 27, 2015

The Volkswagen Diesel Mess - How Will the Brand Step Up?

If ever there was a brand in crisis, VW is it. The revelation this week that some of its "clean diesel" engines are not so clean leaves it with a brand image problem that could linger for a couple of generations. And more importantly, it could drive away many who have been loyal to the brand for years.

In his resignation statement this week, CEO Martin Winterkorn did his best imitation of Claude Rains' character in Casablanca, saying he was "shocked and stunned" to find that some of VW's cars had been programmed to cheat on emissions tests.  

Volkswagen has long been a "quirky" brand, outside the mainstream. In the U.S., which comprises a relatively small portion of the brand's global sales, VW was happy to sell its cars to people like me who appreciated the German engineering and performance/handling characteristics that came along with it, and simply could not picture themselves in one of the banal and often overpriced offerings from Toyota or Honda.

But in the last decade VW made the choice to expand its share. They did so, unfortunately, by making their cars look more like their bland, utilitarian Asian competition. Ok, so the 2015 Passat is plain, and its base 1.8 liter isn't as good as the 2.0T in my 2008. There are hard plastic door panels where there was once stylish upholstery. I could go on, but I won't. So they've made their cars look less different, less charismatic. That's understandable, they want to be more appealing to the U.S. consumer, whose loyalty to Toyota and Honda is as bewildering to me as it is unwavering.

Based on my personal experience with the brand, VW has always stepped up for the consumer. A recent intake manifold replacement on my 2008 was covered under an extended warranty - No charge. Same thing for a catalytic converter replacement on a 2003 Jetta with around 90,000 miles. I think you'd be laughed out of the service bay if you tried to get Ford or Chevy to make good on something like that.

Now, just as they've begun to convince the U.S. consumer of their mainstream worthiness and environmental friendliness alongside Asian and U.S. products, they have a scandal on their hands that is every bit as damaging as any experienced by Toyota (unintended acceleration), Chrysler (Grand Cherokee rear-mounted gas tanks) or others in recent memory.

So how much damage has VW done to its brand? 

In his September 25 NY Times story, Ron Lieber suggests that beyond potential vehicle buy-backs or compensation of another kind, there’s a trickier question. Many of those who bought the diesel autos were trying to do their part for the environment. He says now, the logos on their vehicles have made them brand ambassadors for confessed cheaters, and they are now driving cars that spew as much as 40 times more pollution than emissions standards permit. How do you compensate somebody for that?

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