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VW could become a far bigger crisis for Merkel than Pig-Gate or Coke-Gate are for Cameron
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23 September 2015
I am not really a car person but I drive a Volkswagen. It is a strong brand. It says reliable. It says German. Which emphasises reliable. And, translated, it means People's Car, which is kind of nice.
That brand has taken many years to build, the reputation decades to cement. Now all of that is at risk. VW is in crisis, and that has implications for the broader German and therefore European economy as well as for the broader automotive industry.
My book WINNERS has a chapter on crisis management and spells out that the first rule of crisis management is that most of the things that we call crises are not crises at all. They are problems, setbacks, challenges. My definition of crisis is 'an event or situation that threatens to overwhelm you unless the right decisions are taken.' It is why in ten years in Downing Street with Tony Blair I reckon we had five maybe six full blown crises, no more.
The second part of the definition is important - it can remain a 'potential' crisis 'provided the right decisions are taken'. But it may be the only decision that matters in this is the one that has already been taken - the one to deceive about diesel emissions. The US having been the first country clearly to establish the veracity of long-running rumours of dirty dealing, other governments are bound to follow suit with the kind of investigations and punishments that could present the company with an existential threat. This is big stuff.
In a crisis people look to leaders, both for leadership - obvious - and also for blame. CEO Martin Winterkorn is resisting any pressure to quit. But if he is shown to have been close to the decision making process himself, and known what was being done, he will have no choice. Leaders can only lead in a crisis if there is both internal and external trust. It is far from clear Mr Winterkorn can command it.
If he feels deep down that there is a good chance of him being forced out, he would do well to go now. And even if he did not know about the 'defeat devices' there will be a strong argument that he should have done. [VERY PRESCIENT IF I SAY SO MYSELF! AN HOUR AFTER I POSTED THIS, AS I WAS WATCHING SCOTLAND HAMMER JAPAN IN THE RUGBY, A BBC NEWSFLASH TOLD ME THAT HERR WINTERKORN HAD INDEED RESIGNED.]
Other automotive company leaders are drawn into this crisis whether they like it or not. In the modern suspicious world, where small campaigns and small complaints can be quickly ventilated on social and 24/7 media, they are all going to have to go through that horrible process of proving a negative. 'No, we did not do a Volkswagen, and here is all the evidence we can provide.'
Angela Merkel is another leader who is almost certain to have to take a role in this, because of the damage it does to the German economy and the - currently incredibly strong - German national brand. She will be furious at what has been exposed. But she is also a pragmatist and she knows there will come a point where she has to step in both to deal with consequences and also help restore the strength of a sector that is hugely important to the German economy.
Her British counterpart is currently having to contend with something far more embarrassing, but far less serious. The fall-out from Piggate, Michael Ashcroft's brutal act of literary revenge, will reduce David Cameron's standing a little, make him the butt of more jokes than his thin skin will be able to enjoy. But it will blow over. It is not a crisis and will only become one if it is mishandled, or if the Prime Minister or his office says anything untrue in response to the allegations.
Of course having your PM as something of a global laughing stock is not good for a country's reputation. But the lasting impact on Germany of VW's act of deception will be far greater than anything David Cameron did or did not put up his nose, or did or did not put inside a dead pig's mouth.
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Seems what Hameron did with his todger was supposed to stay indoors. But he has been/they have been outted now. Interesting stuff. The Masons seem lame now in what they get up to in their lodges, in comparison.
Scotland did well against the tricky Japanese. I have predicted to rugby mates online that I can see Scotland reaching the semis, and many, yes, questioned my sanity, again. We’ll see.
As for VW, as I am supposed to be a trained engineer, and car engines is just another bit of kit, had a quick look into it. It is the 2 litre+ VW/Audi cars that are the problem. Yes, the posh end, which the AB’s buy, whether company car or private. So the stink will be bigger. Had a look about my Peugeot/Citroen/Ford 1.6 turbo diesel in my Pug 207SW station wagon estate van cum car, and that seems to be fine. It has a self-cleaning particulate filter, that tends to clog up in too much slow traffic driving. A blast down a dual-carriageway cleans them, or going up a side-street at 30mph in first gear. But what comes out when cleaning is an umm, though… But yes, both nitrous oxides production is a head scratcher – their testing needs improving, and engineers need to come up with something, as they did with platinum catalytic converters in petrol engines twenty odd years ago for burnt petrol waste nasties.
We have had food crises, and it is the same mind-set of management, they go down a path, and everyone becomes blinkered, and self-denial sets in, and before you know it, a space shuttle blows up and falls out of the sky due to failed fuel tank rubber seals, a simple component.
Anyway, since you were asked about Corbyn last night on Newsnight Ali (surprise-surprise), my new latest brand new Corbyn vid from a couple of days ago. Corbyn depicts that people really have had a gutsful of the establishment, so if they are going to be f’cked about, let’s have someone we like to f’k us up at least, I think is the thinking there, I think.
https://www.youtube.com/watch?v=7Qy1d_tTC-0
I am amused at the number of PR folks who think this has been a text book handling of crisis comms. If the comms team were effective, they would have been involved in decision making and stopped this from happening. What about the elephant in the EU lobby? VW have made a significant increase in investment on lobbyists over the past year ($1.1m to $3.7m, directly employing 48 lobbyists compared to 4) https://www.linkedin.com/pulse/volkswagen-defeat-deceit-devices-sean-trainor
I disagree completely. I have driven VWs ever since I was probably too poor to afford one and still drive one now when arguably I could drive something ‘better’.
Alastair, to be fair, admits at the start he is not a car person. People like Tim Montgomerie in the Times have written similarly without admitting it, even though it is obvious they are typical Londoners who don’t even drive.
I am intending to buy a VW in the next couple of weeks. Do you think I am going to not buy one because of this?! Well first of all mine have all been petrols. But second of all, what do I know about VW that I didn’t before? Well that their technical proficiency is even better than I realised, what with this clever emissions software.
But are they any less reliable? No. Will they break down more? No. Are they slower after this revelation? No. Are they worse looking? No.
Will this scandal improve the build quality of French, Italian, American or British cars up to the level of VW? No.
Will the Japanese, who make even more reliable cars, start to build cars that are not only reliable but good looking? No.
I’m afraid if you want a car that is good looking, and fast, and reliable, at a reasonable price, you still can’t beat a Veedub!
Ps Alastair if you’re selling yours, let us know, I’m interested… 🙂
Pps If I do a burnout in it can I call myself the spin doctor? 🙂
“My book WINNERS has a chapter on crisis management and spells out that the first rule of crisis management is that most of the things that we call crises are not crises at all.”
I must say Alastair, my gast is truly flabbered that you can say that in the next paragraph after you claim VW’s reputation for great, reliable cars can be destroyed by cheating at emissions tests!
You will probably find that renault, fiat, ford, citroen, peugeot and vauxhall all have similar sensors and software, just theirs don’t work…
Re Dave, wouldn’t happen in Deutschland of course, German pig’s heads have software that detects emissions
I’ve not looked around to find out what piggate (does gg become a j sound? Pijate – nice looking too).
I’m not sure this latest scandal can be worth much thought until I also try to guess what contortion DC would have had to assume and how was the pig arranged to be easily available?
Are there photos? ……… thud.
Straight on or sideways and was giggling allowed?
Who held the pig’s body and how close to DC’s parts did they need to be?
Was it a boy pig or a sow?
We’re a VW family, three who’ve only ever had Golfs (and me still pining for my Karmann Ghia – years after it’s been gone 🙁
A Karmann Ghia! They fetch thousands upon thousands of quid these days Michele.
I am kicking my arse too – twenty-five years ago I had kept at farming family close relative a barn full of old classic Mini parts and bodies and engines that I sold as a job lot for £8 grand. You can multiply that figure by twenty now, at least. What a pisser! Hoarding is good at times. All my Great Uncle wanted for keeping it there was a few pints in the local pub when he was there. My Great Uncle was into old Massey-Ferguson tractors. He had about twenty in various conditions lying about when he sadly passed away about eight years ago. But still got quite a few Mini bits left in the garage here, might be worth a fair few thousand quid.
I’ve got a mark two 1991 Vauxhall Astra the space buggy shape in mee garage too, mothballed, in fair shape. I am waiting for the classic car prices for it to rise. It might take a while…
Just seeing this one Ehtch. Yes but it was a stupid stupid purchase. Did I mention soft-top? Wahhhhhh. I spent a freezing New Years Eve day underneath it on a board with wheels pretending I knew how to replace the clutch cable while London buses roared by just inches away.
I hope it’s still around and being better-looked after :-s