Contrite VW is making a comeback
Wells Fargo could get tips from rebound of automaker
Volkswagen raised its earnings forecast for 2016 last week, demonstrating that deceiving customers does not necessarily mean the end of the road for a major corporation.
Wells Fargo executives should be taking notes.
Last year, Volkswagen admitted that engineers had programmed the computers on some diesel passenger vehicles to cheat on emissions tests. The admission came after VW spent millions touting the environmental benefits of its allegedly “clean diesel” engines.
The company came under criminal investigation for violating clean air laws and was forced to recall thousands of vehicles. The scandal has cost the company $18.2 billion and severely damaged the company’s flagship brand.
Yet Volkswagen announced higher profits than expected for the quarter ending Sept. 30. Yes, executives acknowledged that the Audi and Porsche brands still need to reach settlements with diesel car owners and regulators, but the corporate parent will likely make a profit this year.
Wells Fargo is currently trying to dig out of a scandal where employees desperate to hit sales targets created 2.1 million accounts without their customers’ permission. The company paid a fine, and after blistering criticism, replaced the CEO.
Consulting firm cg42 estimates the bank could lose 30 percent of its customers because of the scandal, and the number of new accounts has dropped dramatically.
But VW shows it doesn’t have to be that way.
The road map to corporate redemption is not dissimilar to an individual’s path to contrition: fully and wholeheartedly confess, sincerely apologize, pay restitution and adopt meaningful reforms.
Volkswagen started that process in December, with impressive results. Wells Fargo has also begun with the beginning of what I expect to be a sophisticated rebranding campaign.
The truth is that most humans are ready to forgive as long as they believe the apology and reforms are real.