Automobile recall stories have become more and more frequent in recent years, with dubious management decisions and cover ups causing damage to long-admired brands General Motors, Honda, and Chrysler. Most recently, Volkswagen made headlines for an emissions scandal that has already unseated the company’s CEO and promises to cost the Volkswagen billions of dollars in penalties, as well as the hard-earned trust of its customers.
Each day, new revelations about Volkswagen’s actions are coming to light and, with each new detail, the company that just this summer achieved its goal of becoming the world’s dominant car maker quickly finds its brand diminished and its revenues plummet. From a PR perspective, it’s fascinating to watch how a global institution with an otherwise stellar reputation navigates a crisis of this magnitude. While much is still being learned about the situation, already there are lessons that other businesses can take away from this evolving story.
Cheaters Get Caught
Volkswagen’s scandal began back in 2008, when tougher emissions rules were first implemented. Unlike many other car manufacturers that opted to install a system that uses a chemical catalyst to ensure that unburned fuel doesn’t get into exhaust, Volkswagen decided to go its own way. The path the company chose involved the development of an elaborate scheme featuring software that could identify when cars were being tested in order to reduce harmful exhaust and make it appear as if the vehicle actually met the new requirements.
Unfortunately for Volkswagen, this software, called “the switch,” worked so well that clean-air advocacy group, the International Council on Clean Transportation, honored the company by selecting its cars for a study on how diesel could be a clean fuel. What they found, however, was that two of the three models tested exceeded emissions caps by as much as 35 times, leading the organization to alert the Environmental Protection Agency (EPA) and California Air Resources Board (CARB) last year.
When Caught in a Lie, Fess Up and Try to Control the Message
When presented with the findings by the EPA and CARB, Volkswagen chose to dispute the test results, citing “various technical issues.” Interestingly, the company did implement a voluntary recall of 500,000 cars in order to install a software patch that it said would fix the issue. In the end, the patch didn’t work and Volkswagen remained in the hot seat with the EPS and unable to explain why the diagnostic systems of its vehicles don’t register accurate emissions under test conditions.
This month, Volkswagen did finally admit the truth about the scheme to fix the emissions tests, but it took the company a few rounds of admissions to finally tell the whole truth. First, they admitted to installing the “switch,” then admitted that the number of cars with the switch was larger than originally reported—as many as 11 million worldwide.
When given the opportunity to come clean, the company chose to deflect and deny. For Volkswagen, this was a critical misstep. Sure, the company’s reputation would have taken a hit for the scheme either way, but by admitting the truth earlier, Volkswagen would have had an opportunity to better frame the situation and present a sense of remorse that may have been perceived as authentic. If Volkswagen had opted to trust its customers by admitting fault and taking responsibility when initially caught, the company may have prevented losing the trust of its customers and society-at-large.
It’s likely that more will be revealed in the coming weeks about this elaborate scheme and, for those of us watching, the story promises to remain dramatic. This reputation-crushing misstep also acts as a strong reminder that all companies are vulnerable to potential crises that may threaten their integrity and core values. As such, it is imperative that organizations be prepared to respond to a crisis with a communications plan that can be implemented with lightning speed and transparency. When a crisis occurs, swift, accurate, and controlled communication delivered with transparency and sensitivity during the initial hours and days following the crisis is crucial to preserving a company’s reputation. Unfortunately for Volkswagen, the damage from this crisis may already be done and irreparable.