Volkswagen surpassed Toyota in 2016 car sales despite its diesel emissions cheating scandal. Not many analysts were predicting this turn of events when the ugly narrative came to light. VW’s successful performance was influenced by three factors:
- Brand strength — Consumers clearly like what VW is selling, and the brand retained global cachet.
- New markets — VW deliveries to China increased 12 percent in 2016.
- Brand recovery — The company’s program of recalls, fixes, and customer incentives has helped regain consumer confidence and loyalty.
Volkswagen stumbled badly when the emissions scam was revealed in 2015. The executive team claimed to be ignorant of the misconduct, which later proved false, further undermining its reputation and making its apology appear hollow.
But VW—and government regulators—started holding executives accountable. The company took more aggressive action to root out the cheaters in the organization and win back public trust. Only three weeks ago six high-level VW executives were charged with conspiracy to defraud customers and the U.S. government and to violate the Clean Air Act.
Volkswagen’s cost for resolving claims, recalling vehicles, and paying penalties in the U.S. alone has reached $20 billion.
The moral: The public has the capacity to forgive. But you must live up to the brand promise and act in good faith. VW may have taken the scenic route, but it appears to have arrived at the destination.