This Week in Bad PR

Photo Credit: New York Times

Photo Credit: New York Times

This Week in Bad PR

 

Turns out “Das Auto” is going to cost Volkswagen “Das Geld” or, in plain English, tons of money.

But isn’t VW old news?

I know what you are thinking. “VW has already owned up to their mistakes,” and they have. Their CEO stepped down, and others have been very open about their deceit.

However, news broke this morning that VW vastly underestimated the amount of cash needed to cover all their losses and repairs to vehicles. Originally, they set aside $7.5 billion, which is a ton of schnitzel, and they weren’t even close. New figures point to a number north of $18 billion. Think about that for a second. VW set aside $7 billion and they weren’t even in the ballpark, or Fußball pitch for all you Germans.

According to The Wall Street Journal, VW is going to offer 500,000 U.S. owners the option of selling their cars back to VW, because the repairs needed to comply with U.S. emission standards are simply too costly and will compromise the vehicle's power, a large selling point to many buyers.

 

All of this can be traced back to an Environmental Protection Agency report last year in which VW was accused of duping emissions tests with software embedded in the engine.

As a result, the German automaker's stock has slid significantly and every major credit ratings agency has downgraded the once-trusted manufacturer. Bad news when you need to come up with $18 billion in cash.

The bad PR is all over the place in this saga, but anytime several billion dollars are not enough to cover your mistakes, you win the distinguished title of having the worst PR for this week, at minimum.

How this could have been avoided: For starters, let’s not dupe the United States government.  They tend to frown upon that. So do consumers, come to think of it. Alas, we are beyond that misfire, and we should focus on the latest news.

If you find your company in a position in which financial compensation needs to be conveyed to customers, always over-estimate the amount, especially if you are required to report earnings/losses publically.

Volkswagen began this scandal by lying, and now they look like incompetent liars. At this rate, VW will be sold so cheaply I might have a chance to buy it.

Congratulations, Volkswagen.

-- Casey Whittington