Emissions scandal is a huge marketing blow for VW

We all know what a financial disaster the Payment Protect Insurance (PPI) scandal could have been for British banks. As it happened it wasn’t because the nearly £20bn they’ve had to pay back to customers was more than covered by the vast profits they’ve been allowed to make with interest rates at 0.5 per cent but the freedom to charge their customers much more than this. The same dubious commercial logic applies to investment banks and the vast fines they’ve been forced to pay for rate rigging by US legislators.

Car companies, though, don’t have a licence to print money and so the action being taken in the US against Volkswagen for allegedly falsifying diesel emissions data – through a crafty little widget hidden in the cars – is potentially disastrous, not just for VW but other makers too. Fines could amount to $37,500 per car.

VW doesn’t seem inclined to put up a fight. “I personally am deeply sorry that we have broken the trust of our customers and the public,” says VW chief executive Martin Winkerhorn. “Volkswagen has ordered an external investigation of this matter.”

Winterkorn has just won a power struggle at VW with departing chairman Ferdinand Piech. He’s likely to be on his way out soon too.

Volkswagen has suspended US sales of cars containing the company’s four-cylinder turbo direct injection (TDI) engine. The so-callled “clean diesel” engine is used in models including VW’s Beetle, Golf, Jetta, Passat and the A3 luxury compact made by VW-owned Audi.

It’s become glaringly apparent recently that the claims of low emissions you see in every single car ad are so much baloney. Emissions levels are still rising – reaching scandalous levels in Central London for example – and can’t all be blamed on buses and taxis, although these don’t help.

Diesel is a disaster and it looks as though the car companies have been deliberately hiding the fact. The pain starts here for all big car companies. For VW, which has risen steadily to become the world’s biggest car manufacturer on a consistent marketing platform of sustainability and practicality, this is a disaster. Remember the old DDB ads (below)? This “we’re better than the others” proposition has underpinned VW for 50 years but nobody is going to believe it any more.

The company, which now owns gas-guzzling brands Bentley, Lamborghini and Bugatti for some reason or other, is paying the penalty for chasing size and scale at any price.

One Comment

  1. Helmut Krone was Bill Bernbach’s greatest art director, but also a great strategist. He devised the look of the famous VW Beetle campaign and did the first 100 ads (including the newly relevant ‘Lemon’.)
    He then moved on to Avis, devised their strategy: “We try harder” and, when Avis let down that promise, Krone did the extremely relevant “The writer of this ad rented an Avis car recently. Here’s what I found.” Click Here to see the Avis Ad
    Maybe the past holds a key to the future

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