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Volkswagen Smashed Its Brand Promise


To car buyers looking for the sweet spot between performance and clean energy, Volkswagen’s diesel line almost seemed too good to be true.

And sadly, it was.

The dirty footprint of the Volkswagen diesel scandal got even bigger on Tuesday when the company confessed that 11 million vehicles worldwide are equipped with the now-notorious software used to cheat the EPA. And their customers.

At the heart of the issue for many Volkswagen buyers (outside from the lying and the cheating and the fraud) was that they’d been duped into believing they could have their green cake and eat it too.

Clearly, Volkswagen felt driven (pun intended) to take extreme measures to create a product with the right balance between fun and responsibility. The goal? Get ratings to keep the American government off their back while pursuing a coveted market share that had been eluding them.

Delivering on the promise of these vehicles  never seemed to be on the table.

This is a sad tumble for the company that was named one of the top global brands in 2014 (praised for being “clear and consistent in its design and brand story”) and also awarded the National Energy Globe Award Germany the same year.

But it’s not enough to tell a good story. You have to make it real for your customers.

And that’s why Volkswagen hasn’t just put a few dings in their brand; they may have totaled it.

All of this is fascinating given that only few months ago, Volkswagen listed its intangible assets (which includes goodwill) at $67 billion.

“Volkswagen’s goodwill makes up a much larger percentage of its net worth than is the case at other car companies,” reports Stephen Gandel of Forbes.  “Volkswagen’s goodwill and other intangibles makes up about 16% of its total assets. Compare that to just 4% at Daimler and 3% at GM.”

Apparently, arrogance takes up a substantial percentage of those intangibles. And it makes perfect sense when you look more closely at where the company’s values seem to lie.

Their latest international tagline, “Das Auto” (“The Car”), strikes me as internally, not externally, focused. There’s nothing in those two words about the benefit to the customer, about the driving experience they can expect or about how Volkswagen will stand behind their products.

That’s a pretty big shift from “the People’s Car.”

Brand promises are not naive or idealistic. They are actually excellent road maps to success. The right ones are grounded in the knowledge of how a company can make money and thrive by selling benefits that can be consistently delivered.

It’s that easy, and that hard.

I can’t help but feel a bit sad about how badly Volkswagen has driven off the road. One of my first cars was a very elderly VW Bug that lacked a solid floor but could always be counted on to start on even the frostiest mornings.

Unfortunately, their lame apology is not a good start. (One of the worst, frankly, if that’s a point of pride for them.)

I hope they go back to the drawing board to rethink their promise to their customers. I hope they’ll make substantial, and expensive, acts of contrition. We will all be watching closely to see how well the repairs go.



Posted on: September 24, 2015, by : FAS SWFL