Volkswagen has been in the news for all the wrong reasons over the past two weeks. I happened to be at a reveal event in New York for the facelifted Passat on the same day news of the diesel-emissions scandal broke.
Any doubts I had about whether the issue would be brought up were soon dispelled as VW’s United States president Michael Horn got straight to the point after striding onto the stage: “Our company was dishonest with the EPA [Environmental Protection Agency], and the California Air Resources Board and with all of you. In my German words, we have totally screwed up.”
However, VW’s Middle East communications team aren’t as yet in a position to be as forthright, and were only able to essentially say “no comment” in response to questions about whether the scandal will alter the German car maker’s strategy in our region, or affect public confidence in the brand here.
All that VW ME’s spokesperson would say for now is that the brand doesn’t offer any diesel engines in our market. The implication is that there aren’t likely to be any direct consequences – as yet, no evidence suggests emission levels for VW’s petrol models aren’t above board. But the big question is how consumers here will now perceive a company that has admitted to public deception on a grand scale.
One thing that’s in VW’s favour in our region is that few people here give two hoots about emission levels. Lie to local motorists about their cars’ safety, performance, durability or after-sales service, and they’re more than likely to react, but nitrogen-oxide emissions? I don’t think so. It’s sad but true. Protecting the environment simply doesn’t occupy a large space in the public psyche in the Middle East. If it did, we wouldn’t be buying the biggest, thirstiest and most luxury-laden vehicles that our budgets (or credit ratings) can stretch to.
However, the fact that VW went to such great lengths to deceive the EPA and American public will likely have a negative effect on the brand’s global sales in the short to medium term. A lot will depend on how VW handles the crisis in terms of management restructuring, strategy realignment and communicating a positive message in the face of adversity.
Volkswagen AG (the conglomerate) sold 10.14 million vehicles last year, with VW-branded cars accounting for 6.12 million, with most of the balance made up by Audi, Skoda, Seat and commercial vehicles. Porsche, Bentley, Lamborghini and Bugatti accounted for the rest.
The only carmaker that’s bigger than VW is Toyota (10.23m sales last year), and it, too, has had to recover from monumental setbacks over the past few years. The Japanese brand was in a whole world of pain in 2011, having been forced to recall 14 million cars globally for various safety failures over a two-year period.
At the time, many pundits questioned whether Toyota would ever be able to bounce back to its former glory. After all, its bottom line was severely hit, and likewise the public’s confidence in the brands (Toyota, as well as Lexus). Time has proven Toyota had the resilience to not only hang in there, but also restore its gargantuan sales volumes.
Can VW overcome the scandal? One factor that may help bury the bad news is if it comes to light that other manufacturers have been playing the same game in a bid to meet the ultra-stringent EPA standards.
At the end of the day, the general public’s collective memory can be short. But whether this whole saga will be all but forgotten in a year or two, and VW will march on, just as it has since 1937, remains to be seen.
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