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VW Scandal Lowers Germany's Brand Value by $191 Billion

Oct. 12, 2015
In the wake of Volkswagen's diesel scandal, Germany loses its standing as the most powerful nation brand.

Volkswagen’s diesel emissions scandal has already resulted in the CEO’s resignation, a 40% drop in its market capitalization, a criminal investigation and a slew of lawsuits. It gets worse.

VW’s pollution scandal has lowered the brand value of Germany itself by $191 billion, or 4%, to $4.2 trillion, according to a new analysis by Brand Finance, a firm that specializes in brand valuation and strategy. Because of this debacle, Brand Finance asserts, Germany has lost its position as the most powerful nation brand.

“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, making the Siemens bribery scandal appear less a one-off than evidence of a broader malaise” said David Haigh, Brand Finance’s CEO.

Source: Nation Brands 2015 report, Brand Finance

Until the VW scandal broke, 2015 had been a fairly positive year for Germany’s international reputation, Brand Finance stated. The country benefited from its receptivity to Syrian migrants and would gain from the addition of these generally young people to its labor force.

With Germany’s fall, Singapore moves up to become the most powerful nation brand. Brand Finance said the city-state’s first prime minister, Lee Kwan You, had provided the “vision, pragmatism, longevity, intolerance of corruption and relative benevolence” that undergirded its success.

“Though the passing of Lee Kuan Yew in March this year is a sad loss, he leaves a legacy that few can hope to better,” said Haigh. “Singapore is now seen as modern, innovative, industrious, welcoming to outsiders and increasingly culturally rich and has left its neighbors, including Malaysia (from which Singapore was ejected 50 years ago) far behind it.”

Though Singapore is the most powerful brand, “being closer to its full potential than any other nation,” Brand Finance said the United States remains the most valuable nation brand, with a national brand value of $19.7 trillion. Brand Finance said this is largely due to the sheer size of the American economy.

“Not only is there a large, wealthy market predisposed to ‘buy American’ but also an unrivalled group of established companies and organizations exporting worldwide whose American heritage forms (to a lesser or greater extent) part of their appeal,” said the consultancy.

It added: “The U.S.’ world-leading higher education system and the soft power arising from its dominance of the music and entertainment industries are significant contributors too. This soft power will help the U.S. to retain the most valuable nation brand for some time after China’s seemingly imminent rise to become the world’s biggest economy.”

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