The Cable

Report: Damage From Volkswagen’s Emissions Cheat Spreads to All of Germany

The U.S. inquiry into the Volkswagen emissions cheat takes a bite out of the German brand.

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Volkswagen, the iconic German automaker that last month admitted as many as 11 million of its vehicles worldwide are outfitted with software that alters how they work when undergoing diesel emissions tests, is already paying a steep financial price for the scandal, with its stock trading at around 108 points Monday morning, down from yearly highs of 255.20. Now, the rest of Germany is feeling the pain from the scandal as well.

On Monday morning, Brand Finance, a firm that measures the power of individual names, released its annual report on the strength of national brands. Germany sat atop the rankings last year. In 2015, it has been replaced by Singapore, and Brand Finance says Germany’s fall is directly attributable to the Volkswagen cheat.

“German industry is lauded for its efficiency and reliability while Germans as a whole are seen as hard-working, honest and law abiding. That such an iconic German brand, the ‘people’s car,’ could behave in this way is beginning to undo decades of accumulated goodwill and cast aspersions over the practices of German industry,” Brand Finance CEO David Haigh said in a statement.

According to the report, the value of the German brand dropped $191 billion, to $4.2 trillion.

The report, which comes amid continuing U.S. and German investigations into Volkswagen’s actions, raises new questions about whether the damage to Germany’s brand will be limited to the auto sector. Last week, Frank Appel, CEO of Deutsche Post, Europe’s largest mail service, told German newspaper Süddeutsche Zeitung that any distrust would be contained to Volkswagen.

“I don’t think ‘Made in Germany’ will be damaged,” Appel said. “It’s also the small and medium-sized companies and not just the large corporations which are responsible for Germany’s export boom and the excellent reputation of German products and services.”

Brand Finance disagrees. According to the report, the emissions scandal “has dealt a hammer blow not just to Volkswagen’s reputation but potentially to the entire German nation brand.”

Photo credit: Matt Cardy/Getty Images

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