Industry Analysis: Wolfsburg, we have a problem!
Thank God, predominantly we still buy cars because of our emotions and less out of mere rational considerations. This can be good or bad – depending on the angles we see this from.
Citroën for instance was seen as a manufacturer who builds unreliable and rust-prone cars. Citroën still suffers from that verdict from 20 years ago, but nowadays it is nothing but a cliché. Alfa Romeo is in the same league: bad quality history in the past, but for over a decade, very good endurance tests and almost zero quality issues.
In one of the earlier features we’ve already pointed out that this usually has a huge impact on residual values – usually but not necessarily. Look at the eager beaver and best-in-class Volkswagen for instance. Loved by the people and the press, a great brand and strong make. In such cases, even the most respected manufacturers can make mistakes without getting punished as hard as others with even minor quality issues. The current TSI-problems for example are a threat to Volkswagen, no doubt about that. Once they have solved the problem with a great amount
of generosity and in a business-like manner, there should be no great problem for image or residuals.
But even a strong image can be a fragile thing. Opel experienced this in the ‘80s, when the Omega had many problems. The market share dropped significantly and Opel – although now amongst the high quality producers – is still recovering from those times.
In the past, even Mercedes had several issues regarding quality or safety. They had the challenges with the W 124 models and the so-called "jig-saw-effect", which caused a heavy and unpredictable bucking of the engine. But famous were the severe safety problems that were caused by the ‘elk-test’ for the A-Class. In both examples Mercedes reacted ideally: with every regular service, maintenance or repair, the engine mountings of the W 124 were quietly put right.
The other problems were solved with great financial efforts and the reputation still remained strong.
Mercedes-Benz even used the A-Class debacle to establish themselves as the pioneer of ESP, which became the standard equipment on every A-Class, to avoid the problems. This was the best and smartest way to handle such a big problem.
So VW should learn from the given examples and provide a fast and non-bureaucratic solution for the actual upcoming ‘TSI victims’ and the ones yet to come. Yes, this costs a lot of money, but keeping the reputation and a strong brand name is worth even more.
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