Sales & Marketing

Is a brand ever unsalvageable? From persecution to commercial popularity, the VW story

9 min read

25 January 2019

Reporter, Real Business

Is any brand beyond saving? Not if you take the Volkswagen example. The car producer shook off its Nazi associations by atoning for its dark past and re-building the brand from the ground up via name changes and product acquisitions.

The last week of January is known for many things, (Blue Monday, and the tightening of belts both monetary and physical), among them.

But it’s also known for something much more significant, it’s the week when the world commemorates the Holocaust, a genocidal event where millions of Jews were persecuted and systemically killed under the German Nazi regime.

But why are we talking about the Holocaust if we’re a business site?

We’re talking about it because Volkswagen, one of the world’s most popular car manufacturers, is taking an active role in Holocaust Remembrance Day this year.

The mega brand is set to oversee a series of commemorative services that will take place at their German production plant in Wolfsburg, but why are they taking such an active role?

Volkswagen: The mega brand

Volkswagen is known to be one of the most successful car brands in the world, and last year was no exception when it came to global sales.

In 2018, the brand performed exceptionally well, with a record 6,244,900 cars being delivered to customers around the world. Their impressive performance included making key in-roads into the South-American car market via a positive sales performance in Brazil.

Why are they commemorating the Holocaust?

But the question remains, just why are they wading into the space of post-war commemoration?

Today the brand is part of a car-producing collective, owning 12 subsidiaries including Audi, Seat and Skoda. Pretty respectable right? But Volkswagen wasn’t always this way…

The brand that’s now synonymous with en-masse consumer appeal used to be associated with darker things, Nazism among them…

If we consider the brand’s (now firmly ended) relationship with the Nazi regime (that occurred back in the 1930s), we can see how far the brand has come to revolutionise and rebrand itself today.

What the Volkswagen example proves (no matter how dark or devasting its past), is that it isn’t impossible for a ‘toxic’ brand to reform itself.

Let’s take a look at its incredible story to find out more…

The darker days of the brand

A Nazi propaganda image featuring a Volkswagen car. Source: Reddit

In 1937, Volkswagen, (then called the Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH, and later, Volkswagenwerk GmbH), was set up by the Nazi trades union organisation, the Deutsche Arbeitsfront.

The idea was to make car-ownership a reality for every German family, but the reality was that, during the war years, the company, like many others operating in Germany at the time, used slave labour from concentration camps to produce their products.

At this time, the brand was also manufacturing weaponry for the war. It’s estimated that between 1941 and 1945, Volkswagen employed around 7,000 slave labourers, (included persecuted Jews, Slavs and Gypsies) to make munitions for the war, including V-1 missiles and anti-tank rocket launchers.

Business ethics and morality

Of course, this view of Volkswagen is rather different from the global commercial brand we see today.

However, the company’s long and not always savoury past is not being used to vilify the brand in this case. Instead, it’s to show how a brand can evolve and disassociate itself from the wrongdoings of the past, whether that’s minor commercial damage, or in the case of Volkswagen, involvement in the governmental persecution of minority populations.

The full work of brand restoration and moral reparations finally came to pass in 1998 when Volkswagen created a $12 million dollar fund for Holocaust survivors who laboured for the company.

But the work towards rebuilding the brand from its dark days first started after the end of the Second World War…

From the ground up: Re-building the brand

Volkswagen’s journey towards a more positive brand transition started when the British took over the German Volkswagen factory after the war.

Noting the engineering quality of the vehicle, the British Army placed an order for 20,000 of them. By 1946, production levels reached an estimated 1,000 vehicles a month.

It was during this time when the company worked hard to put it’s Nazi associations to bed, renaming itself simply, Volkswagen. Production was moved to a new location, eventually choosing the new town of KdF-Stadt, now known as Wolfsburg, as their HQ. This location is where the brand has it’s main factory today.

New product launches and acquisitions

The Beetle (and its ground-breaking advertising) becomes Volkswagen’s iconic product during the late 50s and early 60s.  Source: Adweek

As part of Germany’s ‘post-war’ regeneration project during the late 1940s, the Volkswagen company went into state ownership.

By 1955, the brand set its sights on producing just one design of car, the now iconic ‘Beetle’. This model swiftly became the defining zeitgeist car product of the late fifties and swinging sixties, where sales hit the 1 million mark in 1955 alone.

The Beetle with its unique design and playful name, signalled the solid departure of Volkswagen from its industrialist ‘war days’, (and its dark associations) as the brand marched forwards into the future of modern consumer trends.

– After all, what’s the best way to signal the start of an era? Release a new product or service that you hope will define that new era, for the better.

Volkswagen expands

By the time the 1970s came around, Volkswagen had become known as VW, and became a holding group for a series of car brands the company had acquired over the years.

Just before the millennium, the VW group made its way into the luxury cars market, buying up legacy brands such as Bentley, Bugatti and Lamborghini.

Fast forward to the post-2000s and VW has become one of the biggest car manufacturers in the world, with their products sold in over 153 countries globally. Do we think of them as a car brand with a dark past? The answer for most of us is rarely…

The brand in 2019, What businesses can learn

Whilst the Volkswagen case represents the challenges and success of ‘brand rebuilding’ at its most extreme, (and most serious), it shows that no brand can be deemed ‘too toxic’ to touch.

When a company has experienced a severe loss of reputation, whether that’s from poor treatment of workers or something else, the priority is to readdress any moral and compliance ills through the relevant compensation.

Only when the necessary ethical issues have been addressed, brands can then begin to create new legacies to dissociate themselves from older, less tolerable ones.

Respecting history and VW today

From changing their names to creating an ‘era’ defining product launch to signal a new direction, or expanding the brand through new acquisitions, whilst history never can (and never should) be erased, businesses can shift consumer perspectives about a brand by making these moves.

Whilst we’re not making a moral judgement on the Volkswagen case, it’s clear that the tactical decisions the company has employed across the years have worked, as the VW group continues to dominate the global car market without much mention of the past.