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Volkswagen's crowning of world's top car maker a triumph for crisis PR strategy

Volkswagen

After a scandal that would have crushed lesser brands, was it crisis PR or well-honed marketing that helped Volkswagen claim the crown of the world's biggest car maker?

Volkswagen this week overtook Toyota to become the world’s biggest car manufacturer despite the emissions scandal that rocked the brand. And although it’s among the world’s biggest ad spenders, it was arguably not VW’s marketing prowess that edged the brand towards recovery, but effective crisis PR.

The revelations that it had been cheating diesel emissions tests – affecting 11 million vehicles worldwide – came as a major blow, not least because VW had sold its brand on the promise of no performance compromise with economic and environmentally friendly engines.

In the immediate aftermath, the German car marque blundered its way through its communications, making a series of guff’s, including a video issued by now former chief executive Martin Winterkorn, who avoided detailing the company’s cheating and only acknowledged dishonesty. He eventually admitted VW had “totally screwed up” and resigned from the job.

But as the dust settled and the full scale of the scandal emerged, Volkswagen drew up plans to repair the shattered trust in its ‘Made in Germany’ image. Its famous Das Auto tagline was dropped and any marketing still living on the internet that bore a reference to ‘clean engines’ was swiftly deleted, including its ‘Diesel Old Wives Tales’ and ‘Like Really Clean Diesel’ work.

It was a ruthlessly efficient PR strategy to manage the brand globally, helped along by the creation of an ‘integrity and legal affairs board’, led by Christine Hohmann-Dennhardt.

In spite of the scandal, its heavy ad spend never wavered. According to Adage the brand spent $388m on measured media in 2015 and in an interview with the publication VW’s marketing boss Vinay Shahan said that it “didn't pull back in 2016 and we will spend more in 2017." Among the adverts it invested on was a slick pan-European campaign that tugged on heartstrings in an effort to remind people of VW’s past.

But according to brand tracking data given to The Drum by YouGov, while VW has experienced a significant uplift in Ad Awareness - especially in January 2016 (a rise of five points) its gradual recovery from the emissions scandal in terms of consumer perception has more to do with fewer people discussing the brand following less press scrutiny. Today, VW finds itself crowned the world’s biggest car manufacturer, seeing its 2016 sales total just under 10.3 million vehicles (0.1 million more than Toyota).

“Indeed, our data shows that as Volkswagen’s Word of Mouth Exposure score (have you talked about a brand with somebody?) fell, its Impression score (do you have a good impression of a brand?) increased,” said Michael Stacey, director of YouGov BrandIndex.

“The good news for the brand is that several metrics continue to rise – although they remain lower than pre-crisis levels. For example, VW’s Quality score is now ten points higher than it was 12 months ago.”

The work that VW had already put in to building its reputation over many years could also have helped its return to recovery and secure its top position globally, according to Niall Quinn, deputy managing director and head of corporate PR at The Reputations Agency.

“Our research shows that organisations which invest in building reputation experience less damage and recover more quickly following a crisis than organisations which do not,” he said. “While advertising can help support a brand in crisis, VW needed a more nuanced PR-led strategy to turn things around given the issue’s complexity, multiple stakeholder audiences, and the brand’s international profile.”

VW also enjoyed a boom in sales growth in Mainland China, where it sells few diesel vehicles, enjoying a year-on-year sales growth of 14.1%. The brand said it expects this to grow further in 2017 as it continues to transform itself into the ‘New Volkswagen’. And in the West it will invest heavily in the launch of the new Atlas vehicle with an ad campaign in the pileline to put VW in front of families.

However, despite VW’s new lofty status, it is too early for the brand to celebrate success in its battle to preserve its reputation argues Jonathan Hemus, managing director of crisis management consultancy, Insignia.

“Indeed, the irony of becoming the world’s number one car maker is that Volkswagen’s singular focus on achieving this goal is likely one of the reasons why the crisis happened in the first place. When people are driven to hit ever increasing targets, there’s always a danger they will cut corners to meet the challenge.

“It’s striking that all media coverage about VW’s sales success is framed in the context of the emissions scandal. In the two days after the sales figures were released, more bad news emerged with announcements that VW’s head of compliance and legal affairs had left the business with a 10 million Euro payoff and that the company had agreed a compensation deal with US car owners costing an additional $1.2 billion dollars. VW is clearly struggling to shake off bad news.”

Reporting by Natalie Mortimer and Jennifer Faull

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