Volkswagen Crisis Management 

Volkswagen is the world’s leading automobile-manufacturing German multinational company. A carbon emission scandal broke out which highlighted the automobile company’s involvement in manipulating the carbon emission test. However, it greatly jeopardized the brand’s reputation and had negative financial ramifications. Today, we’ll discuss the Volkswagen crisis management case study; crisis event; strategy approach, and lessons learned from Volkswagen crisis communication strategy. 

Crisis Event to Volkswagen

Shocking news broke out in 2015 and it jeopardized the trust and confidence of millions of customers in the automobile brand. It revealed that Volkswagen has been involved in the carbon emission scandal by installing software in its diesel vehicle that would manipulate the carbon emission test. 

However, the “defeat device” software-assisted vehicles adjust their performance relevant to the regulatory requirements and standards. It is because diesel vehicles emit a higher level of nitrogen oxide and other pollutants that aren’t permitted by the environmental regulations and requirements. 

Initially, various tech researchers found the manipulated software of the automobile brand, and later regulatory department confirmed it. It highlighted the unethical and deceptive practices of the company; it negatively impacted the sale of Volkswagen’s vehicles along with raising many environmental concerns. 

Impact of Volkswagen Carbon Emission Scandal 

• Jeopardized the trust and confidence of customers, the public and stakeholders 
• Company’s willing to cross ethical standards and practices to gain a competitive edge
• Shattered the company’s brand value and reputation in terms of honesty, integrity, and environmental sustainability 
• Decreasing brand loyalty and sale of the company’s automobiles 
• Vehicle recall, heavy fines, and settlement compensation had a severe financial impact on the company 
• Impacting the company’s market value and profitability in the long terms 
• People started questioning the overall quality and integrity of the company’s entire vehicle line

Strategic Approach to Volkswagen Crisis Management 

Let’s discuss some of the main strategic approaches of Volkswagen’s crisis management to mitigate the impact of the crisis and rebuild its brand reputation. They’re as follows; 

Denial & Refusing the Scandal 

When the news of Volkswagen’s involvement in the carbon emission and manipulative software broke out in the media; the automobile brand initially deflected the situation and denied the scandal charges. The company underestimated the severity of the situation and referred to the problem as a technical glitch and software error; rather than intentional manipulation of carbon emission test. 

Delayed Acknowledging the Manipulation 

By the time Volkswagen’s CEO realized the severity of the crisis and acknowledged the company’s involvement in the wrongdoing and the defeat device software. It was very late and the public perceived delayed acknowledgment as a sign of the company’s limited remorse for its actions and presenting a cover-up apology. First denial and then delayed response and apology jeopardized the trust of the company’s customers and stakeholders. 

Inconsistent Communication 

There had been a lot of inconsistent messages and communication from Volkswagen throughout the crisis event. The public and customers could easily spot the lies and deceptions when they listened to inconsistent and limited communication. The PR team was issuing different statements completely unrelated to each other. It showed the incapability of the company’s leadership to give a unified and consistent communication response to the public. 

Limited Customer Focused Communication 

Limited communication jeopardized the trust and confidence of customers. They felt that their automobile brand had been lying to them and keeping them in the dark. However, they didn’t what type of steps the automobile brand would take to deal with crises. The direct and proactive communication strategy would have answered the concerns and queries of customers. 

Non-empathic Public Apology 

Limited and inconsistent communication made people think that the apology of Volkswagen wasn’t real and empathic. It is because the company was changing its stance in every media appearance and interview. The automobile brand was reacting to the situation, rather than following the proactive communication strategy. 

Corrective Action 

After the resignation of Volkswagen’s CEO Martin Winterkorn; the new leadership and CEO launched a massive vehicle recall to fix the carbon emission problem and comply with regulations. The automobile brand invested a significant amount of capital resources in the development of hybrid and electric vehicles to shift towards clean energy. However, these corrective actions and steps showed the company’s commitment to clean energy and environmental regulations and resolve the situation. 

Legal Compliance

Volkswagen also settled the legal dispute with the regulatory department with heavy fines and compensations. It showed the company’s new leadership initiative to resolve the crises and comply with regulatory requirements. 

Lessons Learned from Volkswagen Crisis Management 

Some of the main lessons learned from the Volkswagen crisis communication strategy and Volkswagen crisis management strategy; they’re as follows; 

• Volkswagen should have followed an open, honest, and transparent communication strategy. 
• Taking right and corrective actions swiftly without any delays; because the delay has consequences
• Building and maintaining the trust and confidence of customers with an open and clear communication strategy 
• Complying with ethical practices and regulatory requirements
• Proactively responding to the crisis 

Conclusion: Strategic Crisis Management Example Company | Lessons Learned from Volkswagen Crisis Communication Strategy 

After an in-depth study of the Volkswagen crisis management; we have realized that Volkswagen is the world’s leading automobile brand. If you are learning about Volkswagen crisis communication strategy; then you should keep in mind the abovementioned crisis event; strategic approach, and lessons learned from the crisis event.