Lack of communication and sluggish response compound and already bad situation
Most everyone was surprised when Volkswagen sales stayed strong immediately following the automaker’s emissions scandal breaking. While stock price tumbled, dealers were reporting that cars were moving off the lot just fine. Now, that story is changing. According to Automotive News VW brand sales dropped 25% in November, and coping with limited inventory is adding difficulty for dealers.
With the details surrounding the scandal still murky at best and no solution or firm plan to set things right on the table the crisis is sitting at a slow boil. The lack of communication from VW is leaving plenty of room for rumor, innuendo, and just plain worry to set in, and it’s being reflected directly in the financial issues the company is facing.
Putting hard numbers to crisis situations can be difficult, but this situation speaks loud and clear to the incredible costs crises can incur. We’re going to keep hammering this point because it’s the crux of the entire situation – now that VW’s been exposed the most effective crisis management plan would see a clear explanation of what happened, amends made to buyers and regulators as best possible, and a specific plan to ensure such a mistake is never made again. Until that happens we firmly expect to see continued negative impact on both reputation and finances for the VW brand.
The BCM Blogging Team
www.bernsteincrisismanagement.com