Skeletons In The Closet Haunt Volkswagen As PR Stunt To Highlight EV Foray Backfires
Volkswagen AG (OTC: VWAGY) April Fool’s Day prank on media has not been received well by some.
What Happened: The German automaker issued a press release Tuesday, announcing the rechristening of its United States operations as “Voltswagen of America.” CNBC, which reported the development, said a person had confirmed the authenticity of that statement.
On Tuesday night, Volkswagen denied that it would be renaming its U.S. unit.
“The alleged renaming was designed to be an announcement in the spirit of April Fools’ Day, highlighting the launch of the all-electric ID.4 SUV and signaling our commitment to bringing electric mobility to all,” a Volkswagen spokesperson told the Washington Post.
The prank, coming from a company involved in a massive emissions scandal in 2015, has reportedly left experts perplexed.
“It just shows a lack of understanding about what this company did and what its standing is in the world and how it needs to rectify its history and rebuild its image,” said Paul Argenti, a professor of corporate communications at Dartmouth’s Tuck School of Business, as per the Post.
“Goofing around about who it is and what it’s trying to do, particularly with anything related to sustainability strikes me as really, really bad taste. It’s just terrible.”
Why It Matters: In 2015, Volkswagen was discovered to have rigged millions of diesel cars with devices that allowed them to show low emission even though they were 40 times the legal U.S. emissions limit, according to the Post.
See Also: Volkswagen Excess Emissions Will Cause 59 Early Deaths, Study Says
The fake press release could also get the automaker in trouble with the U.S. Securities and Exchange Commission as the company’s shares rose almost 5% on Tuesday after it was issued, reported AP.
James Cox, a professor at Duke University who teaches corporate and securities law, called for SEC action on such misinformation.
“We need to throw a pretty clear line in the sand, I believe, about what is permissible and what isn’t permissible.”
The seriousness with which Volkswagen’s joke was taken can be gauged by the fact that even seasoned analysts like Wedbush’s Daniel Ives took stock of it.
Ives wrote on a note Tuesday that “VW Not Playing Around and Name Change Speaks to EV Vision.”
The analyst suggested the move further fueled Wedbush’s belief that Volkswagen was also the most likely EV partner for Apple Inc (NASDAQ: AAPL) for its rumored Apple Car.
While cute April Fool’s jokes may be entertaining Volkswagen, the cost could be credibility, according to Tim Calkins, a marketing professor at Northwestern University.
“In the long run, you really do need positive and good relations with the media. For a company that already has credibility problems, this is really a strange move.”
Price Action: Volkswagen OTC shares closed 8.95% at $37.75 on Tuesday.
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