Volkswagen

An attendee takes a photograph of the I.D. Vizzion electric vehicle, manufactured by

Volkswagen AG, ahead of the 88th Geneva International Motor Show.. Credit: Chris
Ratcliffe/Bloomberg
Interpublic's Deutsch has lost the Volkswagen creative account
in the U.S. as the automaker nears the end of its global agency
review, according to people familiar with the matter.
WPP, Publicis Groupe and Omnicom have all pitched for the
business, which was put into review in April. Deutsch, which
had held the U.S. business since 2009, was only gunning for
the North American portion of the account. The shop's
elimination could signal that VW wants to consolidate larger
portions of its business with one or two holding companies.
Omnicom's DDB already handles major portions of the VW
business in Europe and Canada.
WPP's involvement is notable because the holding company
has traditionally observed an exclusivity arrangement with
Ford, meaning that it must get the automaker's approval to
pitch other automotive accounts. The arrangement includes
agencies and their subsidiaries that were part of the
multiagency dedicated Ford entity called Team Detroit that
was formed in 2006, including JWT, Ogilvy Y&R, Wunderman
and Mindshare.
With Ford now undergoing its own creative agency review,
however, that exclusivity arrangement is expected to go away,
according to a person familiar with the matter. WPP, whose
Ford-dedicated shop was rebranded to Global Team Blue in
2016, is fending off a challenge from Wieden & Kennedy and
Omnicom's BBDO in the Ford review.
Deutsch ran its VW account from Los Angeles. The shop
weathered multiple CMO changes at VW, as well fallout from

1
the emissions cheating scandal that broke in 2015 and lead to
major organizational changes at the company. Deutsch was
behind several notable creative efforts, including the widely
praised 2011 Super Bowl ad, "The Force."
Volkswagen Group was already Europe's top-ranking carmaker, but it
seized the top spot globally in 2016 ahead of Toyota and GM, two
years ahead of target despite the shadow of the diesel emissions
scandal which emerged a year earlier. The group was found to have
installed sophisticated software in some of its diesel engines to cheat
emissions tests, making its vehicles appear more environmentally
friendly than was in fact the case. The repercussions of that scandal
are wide-ranging and very expensive, but don't appear to have
dented the popularity of Volkswagen's cars. The group controls a
broad portfolio includes VW itself, Audi, Seat, Skoda, Lamborghini,
Bentley and now Porsche. Towards the end of 2009 it agreed to
acquire a strategic shareholding in Japanese company Suzuki, but
that partnership failed to deliver significant results and was later
dismantled. The group has also built a dominant position in trucks
through controlling stakes in MAN and Scania. Yet despite its range,
Volkswagen has struggled to combat flat performance in its home
market and especially in the US, as well as fierce competition in its
biggest market, China. Many of those problems have been addressed
with an aggressive expansion strategy initially inspired by luxury
sports car manufacturer Porsche, which had attempted to engineer
an unsuccessful reverse takeover of Volkswagen in 2008. The tables
were turned after Porsche suffered the full force of collapsing credit
markets, forcing it to concede the upper hand in a merger to
Volkswagen. That whole experience awakened a far more dynamic
and combative spirit within Volkswagen Group itself. Perhaps a little
too dynamic in the light of the diesel emissions scandal.

2
Volkswagen Group is launching a global creative agency
review for its namesake brand as executives at the
German auto giant look to centralize marketing control
and improve VW's image in the wake of the diesel
emissions scandal.

The review, expected to be held at the holding company

level, could threaten Interpublic Group's hold on the
brand in the U.S., where Deutsch Los Angeles has held
the account since 2009. Interpublic Group will likely be
battling with Omnicom, whose DDB is the longtime VW
agency in major portions of Europe.

Omnicom's BBDO also oversees VW brand advertising in

some global markets, including Brazil.

VW Chief Marketing Officer Jochen Sengpiehl outlined

his vision for a more centralized agency model organized
around regional hubs at a press briefing Monday in
Berlin, according to the German magazine Horizont.

VW spokespeople in the U.S. and Germany did not

immediately provide comment to Advertising Age, a
sibling publication ofAutomotive News. But people
familiar with the process told Advertising Age that the
review would likely be held at the holding company level
and include the U.S.

Sengpiehl wants to consolidate the account into big

regional hubs covering Europe, China, North America,
South America and the rest of the

3
world, Horizont reported. VW's global media business,
which has been handled globally by Omnicom's PHD
since 2016, is not expected to be part of the review,
according to people familiar with the matter.

But Sengpiehl is eyeing big changes in how VW spends

its marketing dollars, in hopes of gaining efficiencies.
"We've spent far too much money on paid media in the
past, and we want to change that," he said, according
to Horizont.

Volkswagen Group, whose brands include VW, Audi,

Skoda and Porsche, is the world's sixth-largest
advertiser, spending $6.74 billion in 2016, the latest
figures available from the Advertising Age Data Center.
VW brand is a smaller player in the U.S. than in some
other global markets, but the brand still shelled out
$421.6 million in measured media in 2016.

DDB's relationship with VW goes back decades. In the

U.S., DDB predecessor agency Doyle Dane Bernbach
took on the account in 1959 and the New York office was
behind award-winning work whose witty and self-
deprecating style helped turn the Beetle into the best-
selling imported car in America by the 1960s. But by the
mid-1990s VW began turning to other agencies in the
U.S. DDB tried to win VW back in the U.S. in 2009, but
Deutch emerged victorious.

4
Omnicom is expected to make an aggressive run at the
U.S. business again as part of the new review. And
anything is possible this time as VW Group operates
under new leadership globally and in the U.S. Late last
year, Volkswagen of America tapped Jim Zabel as senior
vice president of marketing, overseeing VW brand.
Zabel, who came from Omni Advertising in Los Angeles,
replaced Vinay Shahani, who departed for Toyota after
overseeing multiple Deutsch-led campaigns.

Sengpiehl has been overseeing VW brand's global

marketing since May of 2017, after a stint as Hyundai
Europe's marketing boss since 2014. It marked a return
for Sengpiehl, who had held the VW marketing post from
2006-09.

VW Group also has a new leader at the top. Herbert

Diess, who had been overseeing VW brand, was named
VW Group CEO last week, replacing Matthias Mueller.
Diess has made North America a priority, where
Volkswagen hasn't posted a profit in the last 15
years, Automotive News reported.

VW brand's image took a beating in the wake of the 2015

diesel emissions scandal. But U.S. sales have been on the
uptick recently. VW brand's U.S. sales are up 10 percent
through March, led by the Tiguan and Atlas crossovers.

Volkswagen is seeking to create a series

of regional agency "powerhouses" as

5
part of a new long-term marketing
strategy announced today by chief
marketing officer Jochen Sengpiehl.

Each powerhouse will bring together resources from

multiple agencies to work together in a single location.
They are expected to be responsible for creative, digital,
social, PR and media.

Speaking to journalists in Berlin today (16 April), Sengpiehl

said that each of the five units would be composed of
teams from a single holding company – but it is not
necessarily looking for the same one to run all five.

Four of the powerhouses will be responsible for top-level

strategic output in North America, Latin America, Asia and
the Rest of the World respectively, though in each region
the brand will continue to work with local agencies for
some work, mostly dealership and point-of-sale marketing.

Europe, where Sengpiehl said the individual markets were

most similar, will operate differently, with the powerhouse
acting as the sole creator of marketing assets – while, as
the global HQ, it will also provide strategic guidance to the
other regions.

Although VW is headquartered in Wolfsburg, Germany,

Sengpiehl said a decision on where to base the European
powerhouse had not been made – and London was one
possibility, along with "other capital cities".

The new structure applies only to Volkswagen passenger

vehicles and will not affect VW Group’s other brands,
which include Audi and Skoda, or VW commercial vehicles.

6
'Too many' agencies
Sengpiehl said the decision to rationalise
marketing services in regional operations was a
result of the increasing number of products and
services the brand was launching, and the
corresponding increase in marketing output.

This includes the ID range, a new line of electric

vehicles, which are going into production in the
next two years.

He said VW used "too many" agencies and

production companies and wanted to change this –
echoing moves by Procter &
Gamble and Unilever to reduce the number of
agencies they work with.
"We want to improve our brand visibility and our
consistency," Sengpiehl said. "So we are moving in
a direction of making central campaigns. That
means of course we collaborate very closely with
our European markets, but at the end someone
needs to make a decision and produce all these
assets.

"In the past we have had a couple of videos, a

couple of assets, and now we have masses of
content. This is something that no one [market]
individually can afford."

7
No firm timeline has been announced for creating
the powerhouses, but Sengpiehl said he wants the
process to be complete by the end of 2018.

VW currently works with agencies including Adam

& Eve/DDB and its sister shop, DDB Berlin, which
have in the past collaborated on campaigns for the
brand.
Sengpiehl said that regardless of which companies
won the business of supplying VW’s five regional
hubs, it would continue to work with Omnicom
Media Group’s PHD, which won Volkswagen Group’s
£2bn global media account in 2016.
Sengpiehl took up the role last September, having
previously done the same job from 2006 to 2009.
He was CMO at Hyundai Motor Europe from 2014 to
2017 and has held roles with WPP, BBDO, Daimler
and Nissan.

How Volkswagen relied on clever

advertising to build its reputation
VW built its reputation by using impactful advertising. Here’s
a selection of car adverts that appeared in the Guardian from
1956-1991

8
 Parade of vintage Volkswagen cars during the Super VW
Festival on Le Mans’ racing circuit, 2014. Photograph: Jean-
Francois Monier/AFP/Getty Images

1956: A best selling car loved by many, the Beetle was a

German export success story after the second world war.

Appeared in the Manchester Guardian in 1956

1962: No matter which of their cars you bought,

reliability, according to Volkswagen, came as standard.

9
Appeared in the Guardian in 1962
Advertisement

1972: Volkswagen motor caravans, converted by

companies like Devon, could ‘take you places you’ve
never been, and in comfort you never dreamed possible.’

10
Appeared in the Guardian in 1972

1972: For British motorists less keen on Volkswagen,

the K70 model came with a promise that it looked like a
‘normal, civilised car.’

11
Appeared in the Guardian in 1972
Advertisement

1975: Having survived bankruptcy, Volkswagen started

to design sportier models, like the Golf. Later VW Golfs
included the GTI, described as a ‘hot hatch’ by the
motoring press.

Appeared in the Guardian in 1975

12
1978: The VW Polo had to live in the shadow of the
hugely successful Golf, but the small hatchback was still
a bestseller.

Appeared in the Guardian in 1978

1982: This advert preceded the law change making

British drivers belt up in 1983. Seat belt use in the back
became law for children in 1989; extended to adults in
1991.

13
Appeared in the Guardian in 1982

1991: When subtly was in short suply, VW’s advertisers

were willing to take a more aggressive approach.

14
Appeared in the Guardian in 1991
In case you missed it…
… we recently posted some good news. Three years ago
we set out to make The Guardian sustainable by
deepening our relationship with our readers. The same
technologies that connected us with a global audience
had also shifted advertising revenues away from news
publishers. We decided to seek an approach that would
allow us to keep our journalism open and accessible to
everyone, regardless of where they live or what they can
afford.
More than one million readers have now supported our
independent, investigative journalism through
contributions, membership or subscriptions, which has
played such an important part in helping The Guardian
overcome a perilous financial situation globally. We want
to thank you for all of your support. But we have to

15
maintain and build on that support for every year to
come.
Sustained support from our readers enables us to
continue pursuing difficult stories in challenging times of
political upheaval, when factual reporting has never been
more critical. The Guardian is editorially independent –
our journalism is free from commercial bias and not
influenced by billionaire owners, politicians or
shareholders. No one edits our editor. No one steers our
opinion. This is important because it enables us to give a
voice to those less heard, challenge the powerful and
hold them to account. Readers’ support means we can
continue bringing The Guardian’s independent
journalism to the world.
A badge sits on a Volkswagen e-Golf electric automobile at the
Volkswagen AG (VW) headquarters in Wolfsburg, Germany,
on Tuesday, Oct. 30, 2018. Credit: Krisztian Bocsi/Bloomberg
WPP has won Volkswagen's creative account in
North America, following a seven-month global
agency review. The incumbent in the U.S. was
Interpublic's Deutsch, which was eliminated in
September after holding the account since 2009.
Omnicom will handle Europe and South America,
while Cheil will hold onto the business in China.
DDB was the incumbent in the key European
market.
WPP formed a new entity to handle the account
called The VW Partnership. Agencies involved
include Possible, David, Taxi, Geometry Global and
Hogarth.
The automaker announced the results of the review
today as part of marketing overhaul that includes a
16
heavy emphasis on keeping costs down. The review
covered the automaker's flagship VW brand, not its
other nameplates, which include Audi.
VW will says it will "improve its marketing efficiency
by about 30 percent by 2020 at the same time as
keeping its marketing budget approximately stable
at €1.5 billion," according to a press release. The
German automaker will centralize its marketing to
be run from four main hubs that it calls
"powerhouses." They are based in Berlin, New York,
São Paulo and Beijing. VW previously used roughly
40 agencies globally.
The four new hubs will include 100 to 200 people in
which creative professionals will work on campaigns
using a "cross-functional" approach, VW stated in
the press release. Omnicom's PHD remains
Volkswagen's global media agency.
"Campaigns will be developed globally and be data-
driven," Jochen Sengpiehl, chief marketing officer of
the Volkswagen passenger cars brand, said on a
media call on Monday. "For the first time we now
have the capability to run global campaigns."
Jürgen Stackmann, the Volkswagen board member
responsible for sales of the VW brand, stated in the
press release that VW will be "managed in a leaner,
more centralized way."
Volkswagen is the 61st-largest advertiser in the U.S.
with $746 million in spending last year, according to
the Ad Age Datacenter. That includes $415 million
on the VW brand and $146 million on VW-owned
17
Audi. Globally, the Volkswagen company ranks
sixth, at $6.74 billion, according to the Ad Age
Datacenter, whose latest global spending data is
from 2016.
The agency decision means WPP will gain an
automotive client nearly two months after it was
demoted on the Ford account. The holding
company was replaced by Omnicom's BBDO as
Ford's lead global creative agency, but held onto
responsibilities including media planning and
buying, shopper marketing and CRM. Ford is a
much larger brand in the U.S. than VW. But the
Volkswagen win gives WPP a crack at leading
creative for a brand that has a history of making
groundbreaking ads.
Europe accounts for roughly 70 percent of VW's
global measured media spending, according to the
Ad Age Datacenter, meaning Omnicom avoided
losing a significant source of revenue. But the
holding company lost a chance to make gains in
North America. It was the incumbent in Mexico and
Canada, meaning it has lost those accounts. DDB
Global CEO Wendy Clark was heavily involved in
Omnicom's pitch, making multiple visits to VW's
German headquarters. The holding company will
handle VW via a new bespoke agency team called
Voltage that will be led by DDB and include
members of Omnicom's PR, CRM and data analytics
groups.

18
VW's new marketing model will focus on increasing
the brand's direct, personalized communication
with consumers. This was previously mostly the
terrain of its dealers. The brand's global website will
serve as a key communications channel. By 2020
VW wants to lure 360 million visitors to the site,
which would represent a 70 percent increase from
2015.
The automaker also wants to update its look, saying
it will roll out a new brand design by the spring.
That includes changing the VW brand logo. "We
want to become younger, we want to appear more
modern and more digital," Sengpiehl said on the
call.
In the U.S., the automaker is trying to adapt to the
growing demand for SUVs and crossovers. It
recently announced it would be ending production
of the Beetle next year. And it is trying to lure
American buyers with larger vehicles such as the
seven-passenger vehicle Atlas Atlas SUV that
debuted last year. The automaker also continues to
try to repair its image in the wake of the emissions
scandal that began in 2015, setting of a PR crisis
after the automaker was found to be duping
regulators by installing software intended to evade
emissions tests for its diesel vehicles.
In the first 10 months of 2018, the VW brand grew
U.S. sales by 5.4 percent to 295,228 vehicles,
thanks to strong sales for the Atlas and Tiguan
crossover.
19
VW's U.S. brand advertising has changed
significantly under Jim Zabel, who was named
Volkswagen of America's VP of marketing late last
year after a stint as senior VP and managing
director of Omni Advertising in Los Angeles. He is
said to favor product-oriented marketing. One of the
first big campaigns under his watch launched
earlier this year for the all-new 2019 Jetta. The
campaign by Deutsch, called "Betta Getta Jetta,"
features close-ups of Jettas, which are put in motion
using special effects accompanied by upbeat music.

With the first press drives complete and the

car now in showrooms, the European
advertising campaign for the new Volkswagen
Polo was launched today. The primary focus
will be on the sixth-generation car’s safety
assistance and convenience systems, with
the first press advertisement proclaiming
‘Your back-up when backing-up’, and
promoting the Park Pilot and Park Assist
functions.

‘Emotional, authentic and humourous’

‘As one of the world’s most advanced small
cars, the new Polo calls the tune in its class
when it comes to safety – something that is
important to people. Our campaign highlights
this subject in typical Volkswagen style:
emotional, authentic and humorous’, said
Jürgen Stackmann, Volkswagen Brand Board

20
Member for Sales. According to Volkswagen,
the new TV commercial, print materials and
social media campaign will highlight how the
new Polo ‘combines safety with adventure’.

The ‘emotional’ aspect comes in the form of a

father and son story illustrated in the TV
commercial. The spot which shows how
assistance systems ‘can enrich lives’, with
the father’s unsuccessful attempts to assist
his more adventurous son documented
through time. But, when they are both in the
new Polo, he can relax as the car will ‘assist’
his son, through its numerous safety systems
which include a blind spot lane change
monitor, as well as front and pedestrian
monitors.

The ‘360-degree’ campaign begins in over 30

European countries simultaneously. The print
campaign will focus on modern convenience
and safety technologies, while Volkswagen
also states that the new Polo will also be the
star of ‘entertaining’ feature films especially
made for social media channels. The
campaign has been devised by DDB Berlin,
DDB Hamburg, and Adam&Eve DDB London.

Europeans are back in a buying frenzy and are snapping

up more cars across the region — but they are
abandoning Volkswagen.

21
Data from the European Automobile Manufacturers’
Association (ACEA) revealed that registrations of new
passenger cars rose by 8.2% between January and
March to reach 3.8 million.
Sales rose across every major market in Europe. Britain
clocked a 5.1% rise, Italy a 20.8% jump, and Germany
a 4.5% increase.
However, when looking at what types of cars are being
bought — VW was the only brand in the top ten to
experience a fall in sales.
It is perhaps unsurprising considering it is still tackling
the fallout from the emissions scandal. Volkswagen's
reputation is in tatters after it was revealed the company
cheated on diesel emissions tests in the US for seven
years.
It did so through a clever piece of software that could
identify when it was being tested and reduced harmful
exhaust so it looked as if the cars met requirements,
when in fact they didn't.
Cars with the VW brand saw sales slip by 0.5% to
420,000. However, the VW group was saved overall in
sales by its range of other brands without an explicit VW
logo on the vehicles.
Overall sales rose 3.7% in the quarter, boosted by Audi
and Skoda.
Now, the decline in Volkswagen branded vehicles may
not seem like a big deal but when you look at this table
and how it is failing to cash in on the improvement in
Europe's consumer sentiment — you'll see why it is.

22
Volkswagen Group hands Tribal
Worldwide Singapore digital
account
Volkswagen Group Singapore has appointed
Tribal Worldwide Singapore after a pitch
process. This win marks a homecoming
victory for Tribal as VW returns to the fold.
Tribal was responsible for VW’s digital
marketing duties from 2010 to 2013.

This partnership will see Tribal Worldwide

spearheading brand campaigns as well as
retail marketing programmes for all business
divisions, including new and used car units.
The agency will also take charge of
developing integrated communication plans,
spanning ATL, digital, social, mobile and CRM.

23
This brings to life the ethos behind the series of T-Divisions
that offer best-in-class solutions in tech innovation, with a
combination of Tribal (integrated communications and tech
innovation), TracyLocke (shopper marketing), and the
recently launched Tango5 (social impact).

This appointment of Tribal Worldwide Singapore by VW

adds to the DDB Group relationship with Volkswagen
worldwide.

On the digital front, Tribal Worldwide’s technology team

will focus on enhancing Volkswagen’s portal using Adobe
Experience Manager and leverage cross-channel analytics
to drive lead generation. This data-driven digital
transformation places customer experience at its core,
informed by the right data points and supported by
optimised business processes.

Jamie Lee, general manager of marketing and

communications at Volkswagen Group Singapore said: “We
thank all agencies for their insightful proposals in
preparation for the challenging economy this year. Tribal
Worldwide’s proposal in particular went beyond our
advertising needs as it was geared towards efficiency and
smart targeting to help us with tracking and optimising
sales performance. They stood out as a co-marketing
partner for us especially with their divisions for data and
shopper marketing.”

Joshua Lee, managing partner of Tribal Worldwide added:

“We’ve come back stronger and better with a new
generation of data and technology practitioners to
enhance the path to purchase, brand loyalty and customer
engagement. I also anticipate our team working closely
with the sales team for conversions.”

Chuck Brymer, DDB Worldwide CEO said: “This is a

tremendous win for us because we share the same DNA
with VW. The strong alliance with our global offices allows

24
the Singapore market to stay in pole position working with
the best teams.”

Volkswagen: Is great advertising

enough to make people stick with a
brand despite major PR disasters?
Having bought his first VW at the age of 18 and stuck with the
brand ever since, Mumbrella’s Dean Carroll examines whether the
emissions scandal would make him buy differently next time around
0

The arrest of Audi chief executive officer Rupert Stadler earlier this
weekover the Volkswagen emissions scandal got me thinking. As a
VW-Audi fanboy of sorts (my first car, so to speak, at the age of 18
was a classic 1972 VW Camper Van and I’ve since owned a VW Polo,
a VW Golf GTI and an Audi TT), I asked myself: Would I buy another

25
vehicle from the Wolfsburg-based auto giant, given the alleged fraud
seemingly designed to deceive customers, dealers and regulators?

It was not an easy question for me to answer and given the

prohibitively high cost of driving here in Singapore and the amazing
public transport system we enjoy, it was not a conundrum I needed to
solve anytime soon.

However, the fact that I would have to ponder further and didn’t have
an immediate answer led to even more interesting questions. Why am
I hesitating? Is it because VW products are so good? Is it because my
closest friends loved the firm’s vehicles too and I gave into peer
pressure without even knowing it?

Or is it because Volkswagen has such a rich history of advertising

stretching back to the very beginning of modern marketing some 60
odd years ago? An ad heritage that may have inspired goodwill in me,
and many millions of others, to the point whereby we might be willing
to forgive what could turn out to be criminal behaviour?

Adland guru Bob Hoffman would certainly say it’s the latter. On VW,
he once told me that advertising quality and longevity actually counts
for a great deal to the man on the street : “They went through this
horrendous problem in the last couple of years over lying about
emissions and all that crap.

“But the brand equity they built by spending billions of dollars over
half a century on good advertising kept them afloat. If they hadn’t
created that positive feeling about the brand they would have been in
danger of going under. So far at least, they have survived.

26
“These days, because of the metrics of online advertising, we are
measuring nothing but short-term results. Take a walk through the
supermarket and tell me if you see any brands that were built by
online advertising. I can’t find a single soap, soda, beer or shampoo
that was.”

But is good old Bob right? Let’s consider the evidence. It all started in
1959 with the classic Doyle Dane Bernbach ‘Think Small’ ad. Work
that it is often said changed advertising forever and indeed kick-
started the multi-billion dollar ad industry we know today.

27
Then came the infamous ‘Lemon’ campaign, which was such a water
cooler moment that even Don Draper got jealous in a fictitious (but no
doubt based on a true story) scene from Mad Men.

It also led to the insightful documentary Remember Those Great

Volkswagen Ads? by British filmmaker Joe Marcantonio, son of
Alfredo who served as VW’s advertising manager in the 1970s.

Jumping to 1984, we witnessed ‘The Man’. A TVC that hasn’t dated

well – they rarely do – but certainly caused a stir at the time. Given
the 1980s Bacchanalian references, VW was no longer ‘The People’s
Car’ it started life as in the 1930s when it was hijacked as a concept by
the fascist German leader Adolf Hitler.

28
Cut to 2012 and the ‘Door Thunk’ ad focused on ‘The Power of
German engineering’.

There were many other truly astonishing ads across the decades too
from VW. Some won with humour, others with a great aesthetic, more
still with a focus on bulletproof product quality and some by simply
tapping into the zeitgeist of the time.

Other brands I love have also gone through their own public relations
disasters. Apple had me from 1998 onwards when the colourful iMac
was launched. I’ve stuck with them through multiple iPod, iPad,
iPhone and MacBook purchases. And yet there have been questions
raised over treatment of the labour force in China and the firm’s green
credentials. Not by coincidence it would seem, Apple too has
produced great adverts over the years.

Looking to the skies, Emirates remains my favourite airline to fly with

by a country mile, despite the government subsidies scandal and
general unease over Middle East business models. Once again,
Emirates too runs great ad campaigns as it happens.

Having processed all of this, it seems obvious that most of us wouldn’t

buy a bad product just because the advertising was great. The product
has to be great. And when the advertising is great in unison, there is

29
definitely a snowball effect of positive consumer sentiment that leads
to longevity and loyalty. In short, almost unbreakable brand equity.

Possibly enough of the stuff for us to ignore the odd PR disaster, just
so long as the product remains first-class – Vorsprung durch Technik,
as Bartle Bogle Hegarty founder Sir John Hegarty put it when he
popularised the German phrase in those game-changing ads – and the
marketing hits the grade.

Volkswagen sells China-made

cars in Southeast Asia, helping
partners scale export readiness
Until 2022, German car giant and its joint-venture partners are
expected to invest US$18b in China on developing electric
and self-driving vehicles, and other new-mobility services

Volkswagen was among the first global carmaker to assemble in China,

establishing a venture with SAIC in Shanghai 33 years ago to produce the
Santana, which quickly became the most popular model when car
ownership took off in the country.

Volkswagen followed up six years later in 1991 with a venture with FAW in
the Jilin provincial capital of Changchun in northeast China, where they
produce the Volkswagen Jetta and the Audi premium brand.

30
Audi already makes six models in China with FAW, with plans to introduce
10 more by 2022, seven of which will be made locally with FAW. The
premium brand aims to introduce the A7, the Q8 SUV and the e-tron electric
sports utility vehicle, in addition to the A8 four-door executive vehicles.

SAIC, China’s largest home-grown carmaker, harbours export ambitions

itself. The Shanghai company, which also makes vehicles with General
Motors, also owns the MG brand that it bought from the British namesake
carmaker. SAIC assembles the MG in Thailand, and has been exporting
small numbers of GM’s Chevrolet-branded vehicles to India.

Separately, SAIC and Audi are studying the feasibility of assembling

vehicles together, possibly starting in 2022, according to a report in China
Daily, quoting Audi China’s President Joachim Wedler.

“We are progressing. These are intensive discussions,” Heizmann said, in

response to a question about Audi’s discussions with SAIC, stressing that
its likely export agreement with FAW is also strengthening.

Foreign carmakers could tip their future China plans at

Beijing’s auto show this week

31
Until 2022, Volkswagen and its joint-venture partners are expected to
invest 15 billion euros (US$18 billion) in China on developing electric and
self-driving vehicles, and other new-mobility services.

Herbert Diess, Volkswagen’s new group chief executive officer, also said on
Tuesday that he sees “positive momentum in all regions”, pinpointing China
as a strong driver.

“The Chinese auto market is key for the international auto industry and it is
key to our success,” Diess said in Beijing, on his first foreign trip since
taking the steering at Volkswagen on April 12.

VW’s global deliveries expanded 7.4 per cent in the first quarter to 2.7
million vehicles. In the first three months, it sold over 1 million cars in
mainland China and Hong Kong, a 13.4 per cent increase. During the
period, it saw SUV sales soar 34 per cent to 100,000 units.

China’s tech giants give auto show a miss even as they push
to dominate future of mobility

Audi also closed the first quarter with stunning growth, delivering 154,300
cars, a 41.9 per cent increase from the same period last year.

32
Global carmakers received a double dose of good news from China’s
President Xi Jinping earlier this month – a reduction in import tariffs and a
raised investment cap with regards to mainland-based factories.

New-energy carmakers, especially, are set to become the top beneficiaries

of a relaxation by Beijing on foreign ownership in the automobile sector,
following statements by Xi in Hainan province.

He told the Boao Forum that China will further loosen its grip on
manufacturing industries as it seeks more foreign investment in the car,
shipbuilding and aircraft sectors.

33