Tripp's Blog

Trust is one of the fundamental elements for building a relationship with consumers. The more confident consumers feel about a company’s honesty and ability to deliver what it says it will do, the more loyal those consumers will be. That includes recommending their friends and family members purchase from that same company and continuing to make future purchases themselves. But once that trust is broken, companies may lose the opportunity to build relationships with those consumers again. This was demonstrated by Volkswagen’s diesel emissions scandal of 2015, known as “dieselgate.”

Before this, Volkswagen had established itself as an automotive manufacturer based on engineering excellence, innovative technology, and a commitment to environmental protection. As such, the company aggressively promoted its line of diesel-powered vehicles as an environmentally-friendly option for consumers who wanted high-performance vehicles with very low emissions. However, beginning in September 2015, the United States Environmental Protection Agency (“EPA”) revealed that over nine million of Volkswagen’s diesel vehicles contained sophisticated computer software that would detect if it was undergoing testing under controlled conditions, and during that time reduce emissions to meet regulatory standards. While operating under normal conditions, these vehicles produced levels of pollution significantly higher than allowed under federal regulations.

This development in the scandal completely altered how consumers viewed the Volkswagen brand. Those customers who had purchased diesel vehicles believing them to be environmentally friendly felt betrayed. The loss of credibility for Volkswagen extended beyond the specific issue of environmental responsibility to include skepticism about all aspects of the company’s ethics. The negative press generated by the scandal spread rapidly throughout social media, online forums, and newspapers, raising public awareness of the issue and further reducing consumer confidence in the Volkswagen brand. For example, many people who had been interested in purchasing a new vehicle from Volkswagen postponed making that purchase until after the crisis subsided or decided to buy from a competitor instead. Additionally, although many of Volkswagen’s current customers continued to own and operate their vehicles, they displayed decreased loyalty to the brand. Overall, the lack of trust caused by the scandal resulted in decreased consumer engagement; there were fewer recommendations made about Volkswagen’s vehicles and participation in brand-related activities (e.g., joining Volkswagen-sponsored car clubs). These factors contributed to decreased customer satisfaction, lower-than-expected sales in many areas around the world, and significant reputational harm. Since then, Volkswagen has regained some of its lost market share through investments into electric vehicles and sustainable technologies. However, regaining the trust of its consumers took numerous years and cost billions of dollars in terms of financial settlements related to the recall of affected vehicles, civil and criminal fines, advertising campaigns promoting the company’s sustainability efforts, etc.