VW Brand

Absolving the Sins of Dieselgate

Volkswagen
VW hopes to iron out its difficulties thanks to Germany’s beloved national sport. Source: DPA.

Dieselgate has torpedoed Volkswagen’s image. According to Interbrand’s global ranking, VW’s brand value plummeted 10 percent, to $11 billion, between 2015 and 2016, as a consequence of the diesel emissions cheating scandal. It now languishes at the 40th place among global brands. VW sold just 330,000 cars in Germany this year — a decline of 3.8 percent compared to the first six months of 2016.

With a new game plan urgently needed, Herbert Diess is betting on soccer kicking the brand back into the premier league. Germany’s number one national sport is an ideal fit for Volkswagen, sources close the brand chief are saying.

Which is why the carmaker has reportedly tripled the approximately €8 million, or $9.2 million, rival Daimler was paying annually for its Mercedes brand to sponsor the German national team. VW is hasn’t commented on the sum. But Reinhard Grindel, president of the DFB, Germany’s soccer association, says it can expect “a significant increase in revenue.”

“It may not be the most creative move, but VW has a long tradition of soccer marketing. ”

Arndt Ellinghorst, Evercore ISI

Mr. Diess has admitted Volkswagen is facing big challenges both in its conventional vehicle business and the switch to electric mobility. “The partnership with the DFB will help us connect with people on these issues,” Mr. Diess said.

Its new electric models, hitting the market in 2020, are hoped to clean up the emissions-soiled brand. VW is banking on the irresistible image of the country’s beloved soccer stars behind the wheel of an e-car rebuilding public faith. “It may not be the most creative move, but VW has a long tradition of soccer marketing,” Arndt Ellinghorst of analysis company Evercore ISI said.

Volkswagen is promising the “greatest model offensive of all time,” completely replacing its current vehicle range by 2020. And since it was an environmental scandal that brought the brand to its knees, the Wolfsburg-based company is working hard to project keen environmental awareness.

As of this spring, VW has an advisory council on sustainability, populated with prominent scientists like the German government’s internet ambassador, Gesche Joost, and former European Commissioner for Climate Action Connie Hedegaard. VW’s premium brand Audi, meanwhile, is trading the noise and filth of the 24 Hours of Le Mans race for the new electric car Formula E series.

Alongside sports and ecology, Volkswagen is covering one last base to in pursuit of redemption — the Protestant church. The carmaker is of the one of the sponsors of the 500th anniversary of Reformation this year, providing vehicles for the celebration’s organizers. If that does not absolve VW, nothing will.

 

Stefan Menzel writes about the auto industry focusing on Volkswagen. Astrid Dörner is an editor for Handelsblatt’s weekend section based in Düsseldorf. She is a former long-time correspondent in New York. To contact the authors: menzel@handelsblatt.com and adoerner@handelsblatt.com.

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