Why some Volkswagen fans are shrugging off ‘dieselgate’ – MarketWatch

Posted: Tuesday, November 24, 2015

In the weeks since the September revelation that Volkswagen cheated on emissions tests in the U.S., things have, by and large, only gotten worse for the German car-making giant.

The company has since said its “cheat” software was installed in millions of cars world-wide, and it’s under investigation in countries in the Americas, Europe and Asia. Its shareholders have paid the price, with the stock losing a quarter of its value.

For superfans, none of that has really mattered.

Through the deception, the stumbling public response and the disregard for environmental regulation, many of the faithful are still drinking the Fahrvergnügen. Even as the story has taken additional dark turns, Volkswagen enthusiasts have flocked to social media, fan websites and discussion forums to express support for the company.

“VW never lost my trust,” one Facebook user wrote recently on the company’s page. “VW now and forever!” wrote another.

Others, meanwhile, have responded angrily. The range of responses, experts say, illustrates the complex relationship consumers can have with brands, particularly ones in which they have invested large amounts of time, money and personal association.

“This is a brand whose products have been loved and admired by many for years. It’s a brand whose users are often as passionate as Apple’s

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or Nike’s

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 ,” said Edward Boches, professor of advertising at Boston University. “That’s both good and bad.”

‘Loyalty, enthusiasm, trust — and all of that has been betrayed’

One the one hand, words of support probably thrill the brain trust in Wolfsburg, who are surely counting on backers to help the company rebuild its reputation in the coming months and years.

On Volkswagen’s

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 official Facebook page, the number of supporters seems to have dwindled in recent weeks. Many who remain, however, are steadfast.

“For the true VW fans, I really haven’t heard anything negative,” said David Evans, who has run a doting website for Herbie the Love Bug for nearly two decades and says the scandal hasn’t changed much for him or his readers.

But there is also a vocal contingent of upset Volkswagen owners, and their bitterness doesn’t look to be going away soon.

“I bought a 2014 Jetta [SportWagen] because it was ‘eco-friendly’ and fun to drive,” wrote a Volkswagen Owners Club website user under the name of Ryan Hynds. “Now I’m told it’s not all that ‘eco-friendly’ and in order to remedy that it might not be all that fun to drive, [and] meanwhile I’m stuck with the $500 car payment.”

“I purposely sought a car that would lower my carbon footprint,” wrote “breckash,” another user of that site. “I feel sick knowing that I am possibly having the opposite effect on the environment. The right thing to do is to refund us the money we paid for the lie we bought. I’m sad and upset because I loved VW so much and can’t believe they’ve done this.”

The culture of Volkswagen has, clearly, been dealt a blow. Once viewed as quirky budget cars, Volkswagen now has a faction in Portland, Ore., waging a war against the brand — and this is Portland, where more than a few Westfalias are known to provide shelter for those escaping the rat race.

Many longtime Volkswagen fans “feel as if they’ve put a lot into their relationship — loyalty, enthusiasm, trust — and all of that has been betrayed,” said Boches.

Impact on sales seen world-wide

Even if Volkswagen can count on some fans remaining at its side, and vocally so, it’s clear that the scandal won’t subside soon.

The hits keep coming, including the mid-November news that more than 10,000 Australians have signed on to a class-action suit against the company seeking damages of more than $71.1 million. Volkswagen has set aside $7.3 billion to cover the fallout as this sort of action mounts.

Down on the lots, consumer reaction has been swift. While the U.S. automobile industry in September enjoyed its highest selling rate since 2005, Volkswagen laid an egg: Sales rose 1% from a year earlier, well below the 8% push analysts had been expecting before the scandal broke.

Vehicles involved in the controversy were absolutely gutted in the immediate aftermath. The Jetta, Beetle and Golf all endured double-digit sales declines from September 2014. The company recently announced a sales event with incentives including no down payment or first month’s payment.

Tim Fleming, an analyst at Kelley Blue Book, said the impact on Volkswagen diesels early on was ”remarkable,” with the average diesel model dropping nearly $2,000, or 13.1%, over the course of the month. The prices of Volkswagen’s gasoline-fueled models slipped just 2.2%.

“We have seen notable reactions from recalls in the past, but this one is different,” Fleming said. “This isn’t about a safety fix. This is going to impact performance.”

The same story is unfolding across the pond, where Volkswagen’s market share dropped in September even as sales rose from the same period a year earlier.

It didn’t get much better in October, with Volkswagen global sales dropping 5.3% in the first full month since the revelations. “The Volkswagen passenger cars brand is experiencing challenging times,” said Jürgen Stackmann, a Volkswagen sales executive. “We not only face the diesel and [carbon-dioxide emissions] issues but also tense situations on world markets.”

The scandal damaged Germany’s brand, too

I’s not only the Volkswagen brand that’s suffering. Germany as a whole, which had held tight to the top spot among the world’s most valuable nation brands, dropped two spots in the weeks that followed the scandal, according to Brand Finance, trailing both the U.S. and China.

“German industry is lauded for its efficiency and reliability, while Germans, as a whole, are seen as hardworking, honest and law abiding, a perception that the Merkel government’s approach to the Greek debt crisis has only intensified, even if it has antagonized Greeks,” the report read. “This scandal threatens to undo decades of accumulated goodwill and cast aspersions over the practices of German industry.”

There’s reason, however, to believe it could all blow over eventually, even as a planned Leonardo DiCaprio’s film on the topic promises to extend Volkswagen’s public scrutiny.

General Motors

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had the doomed Corvair, which was crucified by Ralph Nader in “Unsafe at Any Speed.” Ford Motor Co.

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 had the exploding Pinto and the unreliable Firestone tires. Toyota

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 had its sticky pedals. All three managed to emerge relatively unscathed over the long run.

If Volkswagen fans can look past the Adolf Hitler chapter in the corporate biography — the Führer is credited for coming up with the concept that became the much-adored Beetle — there’s little reason to believe consumers’ love affair with Volkswagen can’t be rekindled down the line.

“This is a perfect time for VW to embrace the mantra, ‘A brand is not what it says, a brand is what it does.’” Boches said. “No advertising or PR spin will solve this problem. VW will have to start behaving in a way that creates new stories that can be told and shared.”


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