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The biggest self-inflicted corporate scandal of the 21st century?

In this blog post, Leeds Business School Senior Lecturer, Robert Minton-Taylor reflects on the ongoing VW Group crisis, ahead of his forthcoming Leeds Business Week session, ‘Crisis? What Crisis?’.

The global banking meltdown of 2008, the scandals affecting politicians’ expenses, directors’ bonuses and the illegal hacking of people’s mobile phones has meant that public confidence in politicians, big corporations and bankers is at an all-time low. We don’t have to look very far to understand why.

The debacle engulfing the mighty VW Group is a case in point. How a company with such a legendary heritage as VW has got into such a pickle is unfathomable.

How could a company be so brazen and so disrespectful to the regulatory authorities to lie about its diesel emissions in order to gain pecuniary advantage in the marketplace?

The deception by VW on its customers is breathtaking in its arrogance. Like the banks it is now paying a high price. VW’s share price has also taken an expected nosedive.

The company has been setting the standard for forty years, with rival car makers consistently benchmarking their models against it. But today VW’s brand reputation, so carefully nurtured over the years from its iconic 1950s and 1960s advertising created for the VW Beatle by Doyle Dane Bernbach (DDB) to the seventh generation of its Golf model, is in freefall. Inevitably the toxicity of the crisis is now affecting VW group’s premium brands like Audi. The late William Bernbach, along with his colleagues, Ned Doyle and Maxwell Dane are probably turning in their graves right now at the current state of VW or relishing the opportunity in heaven of re-establishing the brand.

Crises tend not be nicely containable. So it is little surprise to me, as a former leisure and motoring journalist, that the questioning of VW has moved off into other areas like the fact that carmakers’ miles to the gallon performance figures bear little relation to reality. I read a raft of newspaper articles over the weekend with headlines like “Aside from any emissions problem does your car really go the distance?” So bad has the situation become that the Eurozone central bank is reputedly refusing to buy the loans that finance the sales of VW vehicles. Since 80% of new cars are bought on finance, usually through a subsidiary of the car maker, that really is bad news. So where are we now? VW has a new CEO at the helm. He has every opportunity to begin to put matters right.

VW needs to be transparent about any other skeletons that may be lurking in its back cupboard before the media catch on to them. It is always better to put your hands up and say sorry we screwed up which VW bosses have done on both sides of the Atlantic, but you then need to quickly move on to saying how you are going to deal with the issues rather than attempt to micro manage each issue as it arises. While the CEO has announced an investigation into the matter, this needs to be a thorough independent investigation with a panel of experts drawn from engineering and environmental backgrounds. Self-policing is unacceptable to the public these days and will not be believed. To reinforce the sincerity of its actions VW should announce that an independent laboratory, like the Consumers’ Association in the UK, will implement regular and unannounced inspections to ensure that the emission statistics are true.

The long held practice of delivering for road test to consumer motoring publications of specially prepared cars also needs to cease. That’s a con – not only on journalists, but also on readers of the articles. There certainly needs to be a clean sweep of all those involved in the emissions scandal and I suspect that as this is a German firm, it’s not just the engineers who knew about the altered the software that gave the false emissions readings but the management too. No-one working for a German company would do something without conferring with their manager and that manager conferring upwards to his/her director and so on right to the very top. There are a lot more people to be fingered.

Crises are like a box of bad apples. The more you dig into the box the more rotten and unsavory the fruit becomes. Whistleblowers within VW will see to it that this crisis runs and runs as the individual reputations of engineers and managers are called into question and they try to save their jobs and stature within the automotive industry.
I suspect that individual customer sales of its cars may not be affected, but I can see company fleet managers demurring on VW supplying their cars, vans and trucks until such time that this mess is sorted out, or taking the VW brand off their preferred list of vehicle suppliers. It does not bode well for the company.

So VW needs to move the debate on. The company needs to talk openly about how it will ensure that its emissions’ statistics and fuel consumption are not just figures that work in the controlled clinical conditions of a road research test centre but in the day-to-day stop and start driving conditions in town and on the open road. In other words VW needs to be upfront about the ‘real’ driver experience on fuel consumptions.

In short the car maker needs to demonstrate that it is putting matters right, that it is making amends and that it is putting procedures in place to ensure it never happens again.

If it’s smart VW could take a lead on the diesel emissions front and come out the other side of this crisis with some of its dignity intact by setting the agenda on emission and fuel consumption statistics and be the first car maker to do so.

If this crisis is left to drift the company will be consigned to years of being in the doldrums. It will take a long time to rebuild its broken reputation and to extricate itself from a morass of legal actions against the firm.

Robert Minton-Taylor will share his wisdom and experience with delegates at Leeds Business Week at 14.00 hrs on the 14 October 2015 at The Leeds Club, 3 Albion Place, Leeds, LS1 6JL. 

Robert Minton-Taylor is a fellow the Chartered Institute of Public Relations and a former motoring journalist. He is now senior lecturer in the School of Strategy, Marketing and Communications at Leeds Business School, Leeds Beckett University. His most recent experience has been in the shipping and logistics industry where he gained international recognition for his work on maritime environmental issues. In 2010 he was given a ‘Lifetime Achievement Award’ by the Seahorse Club for services to the shipping.

About the Author

Robert Minton-Taylor

Robert Minton-Taylor has 48 years' experience in journalism and public relations. He’s been president, Chartered Institute of Journalists, director of an international consulting firm, managing director of a Leeds PR consultancy and global media relations manager of a shipping conglomerate.

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