The manufacturer's badge is displayed on a VW car in London.
The headline in a German newspaper Bundesdeutsche Zeitung says it all: "'Made in Germany' in the gutter."
The resignation by Volkswagen's head doesn’t necessarily help matters: CEO Martin Winterkorn resigned today, less than a week after the news that VW skewed emissions tests with secret software installed in its diesel vehicles.
So VW's brand is in gutter, but is all “Made in Germany” in the gutter, too? Is consumer confidence in products made by Mercedes, Leica, Braun, Bosch also going down the tubes?
“There’s a lot of people saying that, and saying it very loudly including the top newspapers,” says Stefan Wagstyl, who reports from Berlin for the Financial Times, “but opinions when you dig a bit more deeply are divided. People say it all depends on how VW handles this, what they turn out to reveal, and especially whether it turns out that other German carmakers are involved even tangentially. I must emphasize at the moment, there is no evidence that they are. But in the worst case scenario, yes, ‘made in Germany’ is very much in jeopardy.”
Internationally German brands have a reputation for high quality. German carmakers charge high prices that reflect that fact, says Wagstyl, “so any damage to brand will of course affect their sales prices and their profits.”
But so far at least, Wagstyl says he’s not seeing volatile markets (today) or for that matter any evidence that consumers are reluctant to buy German products. A case in point, he says, is a VW dealership in Frankfurt that was busy as usual this week with mostly German customers buying or at least checking out new VW cars including diesel models. They seem to be “shrugging their shoulders and saying I’m still going to buy a Volkswagen, they make great cars.”
Another German newspaper has called the VW scandal the "most expensive act of stupidity in the history of the car industry." But Wagstyl says it’s important to remember that this scandal is unlike manufacturing scandals of the past, because of its covert nature: “Here we have a scandal that seems to have been born from a deliberate decision to change the software to fool the authorities, to over-engineer the software.”
Because the emissions evasion engineering appears to have been done secretly and deliberately, then that makes it more difficult, says Wagstyl, to judge how far it will go, and where it will end.”
In other words: Who at Volkswagen knew, and when did they know it?