27 September 2015

There can only be one topic for discussion today with the news of VW (Volkswagen) unfolding.

One of the greatest car manufacturers in the world found cheating the public is probably one of the biggest scandals I am likely to witness in my lifetime.

Does anyone remember Gerald Ratner?

The infamous businessman who owned a chain of extremely popular jewellery shops.

Ratner’s empire came crashing down after he made a speech addressing a conference of the Institute of Directors at the Royal Albert Hall in 1991.

During the speech, he commented:

We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?”, I say, “because it’s total crap.”

He made matters worse by remarking that some of the earrings were “cheaper than an M&S prawn sandwich but probably wouldn’t last as long.”

Ratner’s comments are a lesson to all business owners, entrepreneurs and company executives. Never mock your customer, whether in jest or not.

When the news broke the British public reacted in a way never seen before or since. Customers exacted their revenge by staying away from Ratner shops. Ratner’s value plummeted nearly £500 million and resulted in him losing his business and the new owners having to change the brand to the Signet Group.

I can’t help thinking this VW gaffe makes Gerald Ratner’s pale into insignificance.

A brand is the connection between you and your customer. It’s a sacred emblem that stands for everything you believe in. It is essential for attracting great new hires and inspiring the next generations to want to trade with you.

VW Bleeding logo Volkswagen Logo Bleeding by greenbob1986 Volkswagen Logo Bleeding by greenbob1986

Volkswagen Logo Bleeding by greenbob1986 Volkswagen Logo Bleeding by greenbob1986

VW now stands for cheating, misleading customers  and lying to extort money from the very people who they inspired to buy their cars through false advertising!

I can’t help thinking, “what else might they have lied about?” An official from the government organisation investigating VW in the UK has made it clear there are a number of claims that all manufacturers would struggle to prove if they were held accountable.

I am a VW owner. The Farinet, a business we own in Switzerland, has a VW Van and I was about buy another, but I have to say I won’t be buying one again. Trust is essential for me when choosing a product. As consumers we look for products we can associate with. If the car you drive says “cheat, liar, conman” you are not going to be queuing up for one!

Sadly, the cut is deeper than it looks on the outside too. This debacle affects many more people than just those of us who purchased their cars.

Think of the thousands of people who work for VW who, until this news of their cheating, will have had no knowledge of the hidden software. How do they feel? Think about the proud dealerships and their teams who have been selling VWs, all of whom have been unwittingly lying to every customer who walks on to the forecourt.

 

VW list of incredible brands, Bugati, Porsche, Bentley, Audi

VW list of incredible brands, Bugati, Porsche, Bentley, Audi

VW is a brand that has profited for behaving unfairly and they are the parents of brands like Bentley, Porsche and Audi, and they make engines for Skoda too who have also been affected by this scandal. This is a horrific blow to so many businesses and people right across the globe.

How does this scandal affect the German car manufacturing market as a whole?

Is this a “Ratner Gaffe” or is this potentially bigger?

It is definitely bigger! It’s the biggest I’ve witnessed, but it will be interesting to see what ensues. VW is one the world’s largest and, up until now, trusted brands. They have lost that trust. Consumers these days are savvy. Yes people will think twice before they buy a car however, if the price of a VW drops significantly, will there be enough people who will be seduced by their cool lines and sporty image?

Somehow I have a feeling that they will ride through this storm, unless, like back in the 1990’s with Ratner, VW customers and consumers unite and boycott the newly tarnished brand. Then no amount of corporate groveling will save them.

Ironically it looks like the governments will be the main winners and not the consumers they have duped. The US Government is becoming increasingly effective at policing brands who mislead or disrupt markets unfairly. I am currently in Switzerland for the weekend, a place where the banks have suffered greatly at the hands of the US authorities who have fined them billions for not conforming.

The once powerful German company is reportedly facing up to $18bn (£12bn) in fines, as well as potential cases from the Department of Justice, FBI and the European Union.

So, with Sepp Blatter finally looking like he is to be held accountable for his behaviour, again uncovered by the US with the FBI uncovering the problems, what is happening to our world? Fifa, VW who is next?

All our lives we look up to huge brands in the comfort that they do things properly. Isn’t that why we pay a little bit more for the privilege of buying the best?

But, actually, it’s quite clear that all businesses are run by people and people are fallible. We come in all different shapes and sizes, none of us are equal and we all have very different values.

VW is an example of a company who has let the wrong people accelerate to the top of their ranks and allowed people who make poor decisions in their boardroom. Whilst it’s right that their CEO Martin Winterkorn has resigned, this is the tip of the iceberg, the entire board of directors and anyone who knowingly covered this up should step down.

Until such time, VW is a shadow of its former self.

When you mess up, it’s important that you unequivocally hold up your hands and come clean. The world is such a transparent place these days with Twitter, Facebook, blogs and so many platforms to make opinions public, just like mine today. You can’t hide from public opinion, nor should you.

Whatever your brand stands for, honesty and integrity has to be a given. When you are building your brand, go the extra mile, don’t try to cut corners. Try to surprise your customers by giving them more than they expected. Too many businesses cut and paste and plagiarise marketing material and ideas from the plethora that are out there on the internet. Quite frankly, you will be the loser if you do this in the long run.

Build your brand around what you believe in and how you like to be treated. Never stray from this purpose and you will create a lasting business. Ultimately thats the most fun watching your business evolve and grow up, weathering the economic and global storms. Life is complicated enough, so never willingly promise, much better to over deliver and you will end up with a happy and loyal customer base.

It will be an interesting few months watching things unfold with VW. I think it’s a difficult one to predict.

What are your thoughts?

  • Do you own a VW?
  • Would you buy a VW?
  • Will they survive?
  • Should they survive?

I’d love to hear your opinion.

Drive safely!
LJ

PS. One more thing…..

Remember this VW advert ? You will probably not have seen as it was banned. Quite apt really, it’s called “Bollocks!” You should be careful what you wish for!

https://www.youtube.com/watch?v=Ow0a06gsiF4

 

 

 

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