At Torque News, we’ve asked this question before, and we’ll ask it again, right now: What in the name of Filo Q. Mindbender is Volkswagen doing? Okay, so we’ve dressed up the question a bit, but, nonetheless, it stands.
Last year, about this time, Volkswagen was in the process of a daily pillory as with each dawn there seemed to be a new nasty development in the emissions cheating scandal. By this time, though, we knew the essential outlines of the scandal. For instance, it was known that Martin Winterkorn, former chief exec, might have been informed of the scandal before it became public. We also knew that the Environmental Protection Agency (EPA) had slapped a sales hold on any unsold turbodiesel vehicles that were still on dealer lots, creating a drag on dealer profits. We also had heard that 3.0-liter V-6 vehicles, not just the 2.0-liter four-cylinder mills, were included in the scandal. And, we knew that the cheating device was just a software routine that turned the pollution control system on and off so that the turbodiesels appeared to be passing emissions testing for nitrous oxide, a major and nasty part of diesel emissions. And, we knew that Michael Horn, the popular president of VW of the U.S., was likely to be on the chopping block and dealers weren’t happy.
VW Apologizes For Dieselgate
That’s not all. Volkswagen had launched its “We’re sorry! We didn’t mean it! We hope everyone, especially our customers will forgive us!” campaign. The automaker has asked for forgiveness from everyone, including the Federation, Kirk, Spock, Picard, Number One, Counselor Troy, the Romulans and the Klingons, and probably several hundred other entities that we’ve not even thought about.
Most importantly, though, the automaker apologized to its dealer body – already upset by the handling of Horn and sales holds -- and promised to do better. Atlas was part of that pledge. Indeed, Wolfsburg even said it had learned its lesson and that, instead of foisting marketing decisions on the U.S. division, that it would let North America have its head and create its marketing campaigns, even to the point of naming vehicles. Dealers were ecstatic.
Naming vehicles is, apparently, a source of pride and contention for Volkswagen. Throughout its history, Wolfsburg has carefully controlled the names of vehicles and vehicle lines. For instance, vehicles with names starting with G are hatchbacks, and have the name Golf, while compact crossovers start with the letter T or Tiguan.
For Volkswagen to have agreed to let the U.S. subsidiary name models is remarkable. At the time this decision was announced many skeptics didn't believe it would happen. For a bit, time seemed to have proven the skeptics wrong as Volkswagen seemed to proudly announce that, after holding marketing clinics where panels rated new-car names for their impact, VW had agreed to the name Atlas for a three-row, large crossover that was aimed specifically at the American market in 2018. It was also to be a U.S.-only vehicle.
The Atlas was promised to VW of America (VWoA), a move that was applauded by dealers and other observers in the auto world, including the editors at Torque News. Everything looked totally legit, too. The usual round of press events, including a huge sendoff bash announcing the Atlas to the world and its special place in the VW hierarchy as the only vehicle, developed, named and marketed by a subsidiary. VW touted the Atlas as a vehicle that aimed at the heart of the American market. And, the automaker announced that since American marketers understood the U.S. market better than any Wolfsburg specialist VWoA specialists would shape its future.
Atlas Marketers Get To Work
Once the San Diego launch festivities ended, VWoA marketers went to work on sales strategies for the three-row crossover. Everything seemed set for the future. VWoA apparently expected Atlas to be the first of an exclusive set of models, designed for and by Americans. All was well as dealers waited for the buildout to begin in Chattanooga. The manufacturing team started filling the pipeline a couple of weeks ago, again to huge fanfares, speeches, dignitaries and the whole shooting match.
To some, it all seemed too good to be true; maybe it has been too good. Wolfsburg looked to be easing the reins, but was it really easing them or was it practicing another form of deceit?
We doubt that Volkswagen looks at it that way. However, we are not privy to the private water-cooler and coffee-fueled conversations that may be happening all over Wolfsburg, VW's world headquarters. However, knowing VW as we do, though we had hoped Wolfsburg had promised to ease up on the reins, we also knew that if might never let go of what it perceives as its prerogatives.
A couple of colliding coincidences seem to prove that VW's words weren't worth the paper they weren't printed on, either. First, the North America International Auto Show in Detroit was about to occur. Apparently, VW thought it might be a good place to drop its bomb shell. And, drop, the automaker did. While VWoA, which had formally introduced the Atlas with its attendant fanfare weeks ago, was limited to announcing a dress-up version of the Atlas, VW was able to use NAIAS gut-punched VWoA with a new, larger Tiguan.
Wolfsburg was able to grab every news cycle this week with its new three-row crossover, leaving VWoA, way out on a limb with nothing for cover. The parent automaker decided to add 10 inches to the wheelbase, giving Tiguan the same specs as the Atlas. Suddenly, Wolfsburg pulled the rug out from under VWoA. Wolfsburg gave lip service to what seemed implicit in its promise that Atlas would have the U.S. market to itself. Now, it turns out, VW has decided to show it is still the big dog in the house with an Atlas clone named Tiguan.
VW built the new Tiguan using the same MQB platform that forms the underpinnings of the Atlas. The configurations of each vehicle were almost identical, as was base engine availability.
It seems strange that Volkswagen would compete with its U.S. subsidiary in its home market, but it isn't, honestly. VW has a history of inept marketing. Let's look at the Dieselgate scandal for a bit of enlightenment on our point.
About 14 years ago, a brand-new VW chief exec by the name of Martin Winterkorn held a series of strategy meetings in Wolfsburg where he and his advisers determined that VW would become the dominant player in the U.S. market by using diesel power. Winterkorn and company decided that they wanted to sell on the order of 1 million diesel cars per year here, significantly increasing the automaker’s yearly average sales across its lines.
Engines Wouldn’t Pass Emissions Tests
One of the problems they ran into almost immediately was the fact that the engine they were going to use to power the new diesel entries was too dirty. To clean them up would mean VW was going to have to strangle performance. And, they would also lose any mileage advantage, as well. What to do; what to do? The answer to some engineers was easy, use an “invisible” switch that would allow engines to “pass” emissions tests when they were detected and then reset the powerplant after the test completed.
You know, they almost got away it. VW told the world it had made "clean diesel" work and everyone agreed. That is, until some independent researchers found that there was something not-too-kosher about VW’s “clean diesel” vehicles. They just weren't clean, at all. In some cases, they were 40 times too dirty. But, the VW misinformation machine cranked up so the automaker could continue to show its diesels were clean, despite what some might be whispering about them.
It worked for a time, too, as no one believed that VW's diesels weren't clean. After all, emissions testing showed them to be clean, right, so they must be, most people thought. Little did anyone suspect VW had stacked the deck by using a hidden defeat device to make it appear as if its diesels were clean.
For six years, 2009-2015, the automaker had managed to keep its deep dark secret locked behind closed doors. The world continued to believe VW could make "clean diesel, but things were about to change as a group of researchers, looking at the Volkswagen "miracle" found something that was hardly miraculous at all, VW's was doing dirty diesels.
VW needed to keep the chimera of "clean diesel" alive and well because its marketing was based on the slogan. Still, it couldn't refute the findings of the researchers who were none to pleased that after sharing the data with the automaker, VW's response was a very lame, non-working patch and stony silence.
Apparently having crossed a line the researchers couldn't support, the group of West Virginia University researchers shared its findings with the Environmental Protection Agency that looked at the data and a few months later confronted VW with the data and findings. The environmental agency told VW that its products couldn't pass emissions tests and slapped the automaker with a Notice of Violation in September 2015. And, the rest, as the saying goes, is history. Dieselgate has become a household word, though not the type the automaker likes.
The key reason this was brought up here was to show the lengths that Wolfsburg would go to prove its point. The point was that it wanted to lead -- even create -- a market and demand. It could have, provided someone didn’t look too closely.
Moving to the Atlas/Tiguan issue. As is pretty evident, Wolfsburg seems to have a problem if it is not in control of everything. The parent automaker had some pretty harsh times following the Sept. 25, 2015, revelation that it was a diesel cheat. Wounded not so much by the news of the diesel fraud but by the fact that it was caught, Wolfsburg started to apologize to any audience that would listen. And it did apologize and apologize and apologize, apparently finally realizing no one was listening – and they still are apologizing and still no one listens.
Why would people listen in the first place? You see, things came out during the probe into the Dieselgate scam that were damning. For instance, VW’s engineering team decided to trash what could have been the best method of controlling NOx emissions, using Blue doping (urea formaldehyde), a process licensed by Mercedes-Benz. However, the team chose a poor control system.
They used an unworkable solution (trap reburning with no catalyst). That was why they implemented the cheat device. It was also why VW management kept it in place until the automaker was found out.
Is This A Stretch?
Now, if you have an engineering staff willing to do something that is clearly beyond the pale of legality, is it another stretch to think that VW would knowingly market the new and improved Tiguan to compete with -- and perhaps sink -- Atlas in the U.S.? Do you think that Wolfsburg might tilt things toward the Tiguan and away from Atlas? If the past is prolog anywhere, it is in Volkswagen. That appears to be why it is willing to counter-market against its own subsidiary's product with another so clearly aimed at the American market.
This conclusion is pretty evident. Some in VW must think it is a no-brainer. They must believe it is an easy way to get control back. Maybe they skipped basic Marketing 101 the day they discussed competing against your own products, who knows? What is more likely known is this, once the genie is out of the bottle, it isn't going back inside, at least no willingly. How much damage will this counter-selling do? That’s an unknown. More important, though for those who are pushing Tiguan, as "the Atlas killer," is the question, will it work? Apparently, they think it will, though, it is a rather myopic view that is more likely to harm both Tiguan and Atlas, in the long run than give Wolfsburg the clear-cut win it thinks it will obain.
The bottom line is this: if past is prolog, things may not work out as neatly as some in Wolfsburg believe they will. Dieselgate certainly has proven catastrophic for VW and it may just be that the counter-marketing push may work out the same way. Only time will tell if it will work or not.