The Volkswagen emissions scandal is damaging both VW Group and its owned marques such as Audi in Saudi Arabia – just as the German car maker sees an estimated US$10 billion wiped off its brand valuation globally, a survey shows.
Revelations in the US on September 18 that Germany’s biggest company secretly deployed software designed to trick fuel-emissions tests has resulted in consumer impressions of Volkswagen sinking by 50 per cent in Saudi Arabia, according to YouGov data yesterday.
There was also a negative impact on the VW-owned Audi, the polling company said, using data from its daily brand tracker index, which asks residents which brands they have positive or negative feelings about.
Saudi consumers starting showing more negative feelings towards the VW brand from September 22, YouGov said, with its “impression” score hitting a six-month low. The score for Audi fell to 29.4 on September 30 from 35.4 on September 21, YouGov said.
“Saudi Arabia is a key market for Volkswagen and even though the current scandal doesn’t yet impact their cars sold in the region, the ripple effect of the negative publicity is clearly reflected in the significant decline of its brand impression,” said Kailash Nagdev, YouGov’s UAE managing director. “That, together with an overall increase in word-of-mouth exposure, and the subsequent dent in Audi’s brand impression score over the same period, demonstrates how damaging the revelation could be not only for Volkswagen but its brand portfolio in Saudi Arabia”.
Saudi Arabia is Audi’s second-biggest market in the region behind the UAE.
Shares in VW, the world’s biggest manufacturer of cars and commercial vehicles, have tumbled by about 40 per cent since the emissions scandal broke.
On top of that €30bn (Dh 123.81bn) loss comes the estimated $10bn wiped off Volkswagen’s brand value, according to Brand Finance. The London agency estimated the VW brand to be worth about $31bn before the scandal broke.
Robert Haigh, the marketing and communications director at Brand Finance in London, said the decline “could easily be the biggest annual brand-value loss that we’ve ever recorded.
“Every couple of days there seems to be further revelations. It makes it seem as though the entire corporate culture may be a bit toxic.”
But Charles Wright, a principal at the global branding agency Wolff Olins, who previously ran the company’s office in Dubai, said not all VW-owned brands will be tainted by the scandal.
“The VW group owns a dozen powerful brands. Most people who buy an Audi in the Gulf might know it’s part of VW Group. And maybe a Porsche. But I doubt if a Bentley, Lamborghini or Scania customer knows or cares,” he said.
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