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Volkswagen domestic sales to bear the brunt of brand’s foreign faux pas?

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Volkswagen domestic sales to bear the brunt of brand’s foreign faux pas?

In the wake of controversies surrounding automaker Volkswagen which started internationally has come to affect the sales of the vehicles domestically too. As per recent reports the India sales was down to a seven month low. The German automaker faces serious charges regarding its global emission-fudging crisis involving its diesel cars and has also resulted in senior most management of the company stepping down. This is after US-based reports first emerged on September 18 regarding a software being used to manipulate the true emissions of the diesel cars.

While Volkswagen India usually releases its sales figures every month however has refrained from releasing its figures in September. Nonetheless,  a report by Business Standard yesterday said that the sales figures by the industry had pegged it at about 3,230 units for the month of September. This was the lowest figures in 15 months and 21% lower in comparison to the same month last year. Sales in the month of August were at 4,191 units which was a 4.6% growth than over the corresponding period in the previous year. It has also grown from July were the sales were 4,029 units. The sales during the first five months of this financial year had grown by over 23%.

The company in India also one of the largest exporters of automobiles and in fact export sales are more than the domestic sales. It had exported 64,994 units during the last financial year. Exports too are expected to see a major slump in sales figures.

Impact of the global crisis

The crisis that has hit one of the world’s largest automobile manufacturers even warranted a response from German Chancellor, Angela Merkel who said the turmoil won’t have lasting effect on Germany’s reputation. The scandal is said to have wiped out more than 20 billion Euros ($22 billion) of the company’s market value. It even led to the Volkswagen AG’s CEO Martin Winterkorn post US officials revealing that the company had cheated on the emission tests. There are more head expected to roll as the company found out more executives involved in the scandal. Some media reports even claim that Hans Dieter Poetsch as saying that the scandal presents an existence-threatening crisis for the company.

Matthias Mueller has now taken over the role as the new CEO. The company had recently undertaken new media campaigns in Germany to repair the damages. However, this was criticised as it came on the 25th anniversary of Germany’s reunification and instead of having a message of celebration on the occasion had an assurance gaining back trust. The crisis also drew the attention of John Oliver in his weekly satirical comedy show Last Week Tonight on HBO which poked fun at the automobile manufacturer’s false claims.

While emission laws are quite lax in India in comparison to that in the US or Europe, the scandal which hit the company in the west has definitely impacted the auto manufacturer’s reputation even in India. The question remains how big is that impact and will it hurt the company during one of the key sales period during the festive months of October and November. Will this also result in the company rolling out any media campaign in the country is another question. 

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