German carmaker Volkswagen (VW) had been cheating its consumers and regulatory bodies in addition to lying to them.
On September 18, it was revealed that German carmaker Volkswagen (VW) had been cheating its consumers and regulatory bodies in addition to lying to them. The wake-up call came when the US Environmental Protection Agency (EPA) issued a notice of violation to the company. Turns out that VW cars being sold in the US had a built-in device in their diesel engines that could detect when they were being tested and change their performance accordingly to improve results. So, while the fuel emissions – nitrous oxide, to be specific – of VW cars were meeting EPA’s regulations during the tests, they were an astounding 40 times higher than the acceptable limit in reality. Although EPA’s study covered only cars in the US – including Audi and other brands like Jetta and Beetle – VW came clean and admitted that 11 million cars across the world contain the in-built cheat mechanism.
YouGov’s daily brand tracker, BrandIndex, which observes the health of brands among consumers in the UAE, Saudi Arabia and Egypt, released a survey outlining the negative impact on the brand in Saudi Arabia, based on four key factors: impression, reputation, attention and word of mouth (WOM) exposure. The data represents a 30-day time period between September 18 and October 18.
The fiasco resulted in the resignation of Martin Winterkorn, VW’s CEO, and the suspension of a number of other executives, as well as the recall of hundreds of cars across the world. Naturally, this has resulted in VW’s brand impression taking a major hit among consumers around the world, but it’s particularly interesting to note how the scandal affected Saudi consumers – a market where there was no direct impact or recall.VW’s impression and reputation both dropped substantially, by 54 percent and 56 percent, respectively. However, considering all the media attention and social media outrage surrounding the scandal, unsurprisingly, its WOM and attention score shot up by 62 and 91 percent, respectively. Luckily, Audi’s reputation went down by only 14 percent, whereas Bentley’s remained unaffected. Yet, a tad surprisingly, Bentley’s WOM and attention dropped by 14 and 18 percent, respectively. Ted Marzilli, CEO of YouGov BrandIndex, summarizes the findings: “BrandIndex demonstrates [that] word of mouth (WOM) exposure and attention have clearly gone up for VW and, given that its impression and reputation scores are trending down, the increase in WOM and attention appears to be having a negative impact on the VW brand in Saudi Arabia. While WOM remains flat for Audi and Bentley, there does appear to be a modest negative halo effect on the impression scores for those brands amongst consumers. However, their reputation remains unscathed.”
Communicate’s sister title, Gulf Marketing Review (GMR), reached out to Volkswagen and Audi in Dubai, along with Al Nabooda, the exclusive distributor for both brands in the UAE. They declined to comment on the marketing activities that they are undertaking in the region to address negative consumer impressions.
However, Volkswagen referred GMR to statements made by Matthias Muller, its group CEO, in October, which are posted on its web- site. In the statement, Muller says: “Apart from the enormous financial damage, which is still not possible to quantify as of today, this crisis is, first and foremost, a crisis of confidence. That is because it is about the very core of our company and our identity: it is about our vehicles… Our most important task will therefore be to win back the trust we have lost – with our customers, partners, investors and the general public… Believe me – like you, I am impatient. But in this situation, where we are dealing with four brands and many model variants, care is even more important than speed.”
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