VW messed up, but the emissions scandal won’t turn off customers

October 9, 2015, 5:30 PM UTC
A Volkswagen car is seen in front of Toyota Motor Corp cars at their dealership in Tokyo
A Volkswagen car (R) is seen in front of Toyota Motor Corp cars at their dealership in Tokyo July 30, 2014. Volkswagen is closing in on Toyota Motor Corp as the global leader in vehicle sales, with a rapid expansion drive in China - the world's biggest auto market - while Toyota curbs growth to focus on shoring up quality. REUTERS/Toru Hanai (JAPAN - Tags: TRANSPORT BUSINESS) - RTR40LJD
Photograph by Toru Hanai — Reuters

As Volkswagen’s emissions scandal escalates, it’s clear that executives are pulling out all the stops to save the company (and its brand). On Thursday, Volkswagen America CEO Michael Horn apologized at a hearing on Capitol Hill and said the automaker is “determined to make things right,” after years of deception on an air pollution device.

Horn’s remarks may or may not resonate with consumers, but that might not really matter. However much Volkswagen has messed up, consumers still value the automaker, according to a research study on Volkswagen and other German/luxury brands. More than 800 U.S. consumers were polled during the past two weeks. Time will tell, but the initial results of the survey, conducted by Kellogg School of Management at Northwestern University, with Brand Imperatives and Survata, are not what most would expect.

Even after weeks of negative press coverage, the survey finds that nearly 50% of consumers have a positive or very positive impression of VW. Remarkably, 22% of respondents claim to “very positive” impression and only 7.5% had “very negative” impressions. Furthermore, when asked to share the “first association that comes into your mind” about Volkswagen, consumers’ top associations include descriptors like: German, Beetle / Bug, reliable /dependable, small/compact, affordable. Surprisingly, the share of respondents who associated the carmaker with negative terms was low: “cheater/liar” (2.5%), “diesel /emissions scandal” (2.8%), and “criminal” (0.8%).

Various factors help explain the surprising results. For one, Volkswagen’s scandal follows Toyota’s recall over problems with its accelerators in 2010 and GM’s recall over issues with its ignition switches in 2014. It could be that consumers have come to expect bad news from auto companies. Reaction to bad news has become very muted, especially when there is no immediate, personal safety hazard. The Toyota and GM scandals were safety related and involved perceived slow responses and possible cover-ups to mitigate corporate liability. With these scandals, people died. Cars without brakes and ignition malfunctions are more frightening than an emissions problem limited to the diesel cars in the VW line. In the case of VW, no one died.

Secondly, while VW’s problem may be worse than GM (GM) and Toyota (TM) in that it involved clear and intended cheating, many consumers today fundamentally believe that big corporations are inherently dishonest and untrustworthy. Therefore, this “news” doesn’t strike them as real news. And while climate change matters globally, most consumers don’t seem to care enough to act on it. VW owners bought them for their economy, quality and resale value, with a little quirkiness thrown in for the Beetle. Those who bought the TDI Diesel did it for the fuel efficiency, with a passing homage to the green badge. If they really wanted to wear their greenness on their sleeve, they’d have bought a Prius. (Or if budget allowed, a Tesla (TSLA).)

Also, VW has very smartly handled this crisis with an immediate admission of guilt, the resignation of the CEO, and the full assumption of responsibility for the problem. There was no blaming of “consumer driving error” or “supplier part malfunction.” They acted first and then launched the necessary thorough internal investigation. They also indicated willingness to cooperate with all external investigations. In short, though caught in a position of egregious guilt, they behaved in what appeared to be a very principled way.

Is VW in trouble? Absolutely, but it may not be anything the carmaker can’t recover from. The biggest concern for VW should be their repeat customers. Only time will tell whether there is a permanent negative impact on the brand. It’s crucial that they get in front of the scandal with their own customers. VW’s future depends on the way it mends this most important trust.

Julie Hennessy is a clinical professor of marketing at Kellogg School of Management at Northwestern University. John Wong is a managing partner at Brand Imperatives.

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