Volkswagen, which quietly sidelined its "Das Auto" tagline after its emissions scandal erupted in late 2015, was trying out a new two-word phrase at this week's North American International Auto Show in Detroit: Think New.
Thinking New: Inside Volkswagen's Plans to Become Relevant Again
A brightly lit sign carrying those words hung above the German automaker's show floor space as a not-so-subtle reminder that VW needs a fresh start as it seeks to win back consumer trust. And the man leading the brand's U.S. marketing knows it won't be easy. "We are moving in the right direction," Vinay Shahani, U.S. marketing VP for the VW brand, said in an interview this week at the show. But "we've got a lot of work to do to win back trust and really become relevant again in the United States."
That "Think New" phrase hovering over VW's display of shiny new vehicles at the show is not a new tagline. Rather, Mr. Shahani described it as an internal mantra underpinning VW's U.S. strategy of selling more family friendly-SUVs and electric vehicles, while plugging high-tech features such as driver-assistance systems and internet connectivity.
Volkswagen, which has long positioned its vehicles as fun to drive, wants to expand that concept to "fun to be in," he said. That's an acknowledgement of the shifting priorities of younger car buyers. They are less infatuated with driving thrills like taking tight turns and more excited about features like seamless smartphone integration embodied through a system VW calls App-Connect that interfaces with services like Apple CarPlay and Google Android Auto.
The emissions cheating scandal destroyed what had been one of VW's marketing pillars: Pushing so-called clean diesel vehicles with environmentally friendly messaging. That approach suddenly looked hypocritical in late 2015 when it was revealed that the automaker had used so-called defeat devices to evade exhaust emissions testing covering an estimated 11 million vehicles worldwide.
The automaker this week made a big step in climbing out of its legal quagmire when it announced on Tuesday that it had negotiated a draft criminal and civil settlement worth $4.3 billion with the U.S. Justice Department.
Wall Street analysts greeted it as good news for investors. "VW managed to come to an agreement that allows the company to move on from here," Evercore ISI stated in a note following the announcement. "It's a major relief that this doesn't get dragged into the new U.S. administration," the note added, referring to Donald Trump's pending inauguration on Jan. 20.
There are even signs that VW has begun climbing out of its sales hole. While VW U.S. brand sales fell 7.6% in 2016 to 322,948 vehicles, monthly sales for December jumped 20.3% to 37,229, according to data compiled by Automotive News.
VW is counting on its new Atlas SUV to help carry that momentum into 2017. The seven-passenger Atlas -- which goes on sale in the spring -- will be the largest vehicle VW has ever sold in the U.S. The vehicle, built at a VW assembly plant in Chattanooga, Tenn., is the manifestation of a new approach in which Volkswagen of America has gained more autonomy from VW's German headquarters.
Historically, "there was a lot of need to run things by the central office and run things through for approvals whether it's a campaign or whether it's a product decision," Mr. Shahani said. U.S. officials even had the freedom to name the new SUV, whose American-sounding Atlas name stands apart from the foreign-sounding monikers of other VW vehicles, like the Tiguan crossover. The 2018 Tiguan has updated to be 10.7 inches longer than previous versions as part of VW's approach to better appeal to American consumers.
The Atlas enters a market that is increasingly crowded with SUVs and crossovers as automakers seek to quench the thirst of Americans who are moving away from cars and into larger vehicles. The task of raising consumer interest in VW's offerings falls to Mr. Shahani and his 40-person marketing team in Herndon, Va.
The son of a longtime Ford employee, Mr. Shahani, 42, joined Volkswagen in late 2013 after a nine-year stint at Nissan North America where he held various sales and marketing jobs. Mr. Shahani, who holds a master's degree in business administration and engineering from Stanford University, has also worked for Sun Microsystems, Arthur Andersen and Ford Motor Co. in a variety of marketing, management and engineering roles.
His team is putting the finishing touches on an ad campaign for Atlas. "You are going to see us talk about life is as big as you make it with this vehicle. It really speaks to adventure, it speaks to family time," Mr. Shahani said. "This vehicle can go places and it can empower the lifestyle that you want to live, which I think is a nice parallel to what the word Atlas means -- and that freedom to go anywhere and point a finger on the map and take a road trip."
He declined to share Volkswagen's ad spending plans for 2017. But he said VW's marketing outlays will be "competitive." He added: "We didn't pull back in 2016 and we will spend more in 2017." The Volkswagen brand spent $388.3 million on measured media in 2015, according to the most recent full-year data available from the Ad Age Datacenter, which figures from Kantar Media. VW explored running a Super Bowl ad, but Mr. Shahani said "I don't think it's part of our mix for this year."
Volkswagen's U.S. agencies include Deutsch, L.A. for creative and Miami-based Creative on Demand for Hispanic. Omnicom's PHD took over media duties as of Jan. 1 after winning the account last year from WPP's Mediacom.
Mr. Shahani acknowledged that turning the page from VW's "clean diesel" positioning will not be easy. "It presents a challenge, for sure," he said. "It used to be something that was somewhat synonymous with the brand: this notion of performance, fuel economy, no compromise." Examples of the old approach include a digital video series that VW ran in early 2015 called "Old Wives Tales" that depicted elderly women humorously debunking the notion that diesel cars are dirty.
Diesel vehicles had accounted for roughly 20% of Volkswagen's U.S. sales prior to the emissions scandal. VW is abandoning diesels in favor of aggressive plans to sell electric vehicles. Globally, the automaker wants to sell one million electric cars per year by 2025, according to a plan outlined in late November. "Our future electric cars will be the new trademark of Volkswagen," VW brand CEO Herbert Diess said in a statement announcing the global plan, which is called "Transform 2015+."
In December, Volkswagen Group of America launched a program called "Electrify America." Planned investments include installing electric vehicle charging stations covering 15 metropolitan areas. VW also plans to run an awareness campaign about electric vehicles that will include multi-channel advertising, social media and educational programs, according to initiatives outlined on a new website called electrifyamerica.com.
Asked if VW might try to reclaim its environmentally friendly positioning via the electric vehicle push, Mr. Shahani said: "Since I took the helm three years ago, our focus had not really been on the environmental piece. It had really been on the pragmatic pieces -- looking at fuel economy, looking at how far you can go, looking at the fun-to- drive nature. From my perspective I think with electric vehicles you inherently have a message of sustainability which is part of a full package of being fully electric."
Michelle Krebs, a senior analyst for AutoTrader, said, "it sounds like Volkswagen is making the right moves. It needs to find a new hook after diesel." But she added that the marketer "must have patience and persistence, as this is a long journey back."
As for replacing "Das Auto," nothing seems imminent. "Taglines are secondary," Mr. Shahani said. "You first need to have a very clear sense of where you want this brand to go, what you want this brand to stand for. Taglines can come later."
For now, VW is just trying, as its auto show sign suggests, to think new.