Emissions Rigging

VW Scandal Damaging 'Made in Germany'

Volkswagen car crash. Source: Handelsblatt
The emissions scandal is a car crash for Volkswagen.
  • Why it matters

    Why it matters

    In reporting incorrect emissions figures, VW has harmed its own image, and Germany’s reputation for reliability.

  • Facts

    Facts

    • The emissions-fixing scandal affects 11 million VW vehicles worldwide.
    • VW could face a penalty of up to $18 billion (€16.2 billion) in the United States.
    • Past scandals that have eroded confidence in the “Made in Germany” brand have involved companies like Daimler and truck maker MAN.
  • Audio

    Audio

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Companies, German trade bodies and politicians have worked for years to protect the “Made in Germany” mark of quality and uphold it abroad. They had been succeeding. German companies are proud of the designation “Made in Germany.” It was once used as a derogatory term for low-quality products, but is now a signifier of quality and reliability.

From negotiations over the Transatlantic Trade and Investment Partnership with the United States to forays by the European Union, companies are vehemently defending their right to advertise the fact that products are manufactured in Germany, even when a product was only assembled in Germany.

But corporate scandals like the current VW affair are jeopardizing the strength of the “Made in Germany” brand. These scandals erupt suddently, without warning, and no one knows at first how substantial the damage will eventually be. Be it the corruption affair at the Siemens industrial group or the bribery scandals at automaker Daimler and truck manufacturer MAN, these examples of worst practices always have the potential to cast all German companies in an unfavorable light.

Each buyer of the 11 million cars affected by the scandal worldwide now has plenty of reason to feel personally deceived.

The VW scandal is just as serious, because of its highly personal nature. Many drivers have an emotional relationship with the brand and the company that has often evolved over years. Each individual buyer of the 11 million cars affected by the scandal worldwide now has plenty of reason to feel personally deceived.

A private customer of a large German company is unlikely to verify that the information he is given is actually true. Instead, he has faith in the notion that the German carmaker – his German carmaker – is not lying to him.

This isn’t the first time buyers of products “Made in Germany” have been disappointed. One of the most sensational cases in the German corporate landscape was the dioxin scandal in late 2010, when individual countries quickly imposed a ban on imports of German meat and eggs, jeopardizing the image of Germany’s agriculture industry. But everything returned to normal shortly after the scandal.

The Volkswagen Group will be dealing with the consequences of the scandal over doctored emissions levels for years to come, and the company will see significant declines in revenues as a result. It could also face a penalty of up to $18 billion (€16.2 billion) in the United States. In addition, the company will be plagued by the taint of having disappointed and lied to its customers for years to come.

But despite the severity of the scandal and the resulting damage to consumer confidence in the German brand, a scandal of this nature will not permanently harm the “Made in Germany” seal – at least as long as it doesn’t spread to other German carmakers. The image of Germany’s long-established brand is too strong for that.

 

007 VW Volkswagen - Neu 2015-07-03-01 resume WTB 2014

 

To contact the author: heide.d@handelsblatt.com

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