By William Boston
BERLIN -- Volkswagen is staying Volkswagen.
Volkswagen AG's U.S. subsidiary said Tuesday the company would
rebrand itself as Voltswagen of America to promote its electric car
strategy, but a spokesman for the parent company in Germany later
said the move was a joke.
The name change, which immediately lit up social media and
online news sites, was originally intended as an early April Fools'
Day stunt to get people talking about VW's ambitious electric car
strategy as the company rolls out its first all-electric
sport-utility vehicle, the ID. 4, in U.S. dealerships, the
spokesman said.
The problem for VW is that everyone took it seriously, creating
confusion about the company's intentions and moving the shares,
putting VW's communications team on the defensive.
"We didn't mean to mislead anyone," a Volkswagen spokesman in
Wolfsburg told The Wall Street Journal. "The whole thing is just a
marketing action to get people talking about the ID.4."
The spoof began late Monday, when VW communications in the U.S.
published a draft of the press release on the company's website and
then quickly took it down, according to VW officials in
Germany.
They left the document online long enough to grab the attention
of journalists and VW fans, sparking a flood of online news and
tweets.
VW communications officials in the U.S. declined to comment at
the time.
VW's U.S. unit published the release in full again on Tuesday on
the U.S. website, a move that suggested the name change was in fact
real and would take effect as stated in the release in May.
The press release quoted Scott Keogh as president and CEO of
Voltswagen of America saying: "We might be changing out our K for a
T, but what we aren't changing is this brand's commitment to making
best-in-class vehicles for drivers and people everywhere."
Back in Germany, a VW official told the Journal that the name
change shouldn't be taken seriously.
"There will be no name change," the official said.
But after it became clear the joke's intended recipients were
doing exactly that, officials in Germany scrambled to reach their
colleagues at VW's U.S. headquarters in Herndon, Va., to pull the
plug on the campaign, according to Wolfsburg officials.
Volkswagen's top executives have become more active on social
media recently. The CEO, Herbert Diess, is a frequent contributor
to his LinkedIn page and recently opened a Twitter feed. But until
now the company has refrained from PR stunts or outlandish
statements that are more typical of Tesla CEO Elon Musk.
Investors have been clamoring for shares of companies involved
in electric vehicles and have recently been pouring money into the
stocks of established car makers with solid EV plans.
The second publication of the press release helped send VW
shares 4.7% higher on the Frankfurt stock exchange, handily
outperforming the broad Dax index of German blue-chip stocks. In
the U.S., the company's American depositary receipts rose as much
as 12% Tuesday before sliding near the close after the company
confirmed the name change was a joke, closing up 9%.
Securities laws require public companies to speak truthfully to
the market. If a company makes a statement that is misleading, it
can open the firm to claims of market manipulation or hurt
investors who relied on the misstatement when they made trades.
Kyle DeYoung, a former SEC enforcement official and partner at
the law firm Cadwalader, Wickersham & Taft LLP, said that while
there is a tradition of companies making April Fools' Day
announcements, usually they are so trivial or obviously a joke that
they don't move the company's stock.
"I do think this is a bit of an unusual situation," Mr. DeYoung
said. "I would not be surprised if the SEC had some questions about
what was going on here and what Volkswagen was thinking."
The SEC declined to comment on Volkswagen's actions.
In 2003, VW officials replaced dozens of road signs for the city
of Wolfsburg with signs reading Golfsburg to celebrate the launch
of the latest edition of its bestselling model. The campaign roused
attention around the world and spawned a collection of Golfsburg
souvenirs.
Among old-school auto makers, VW has been a leader in developing
and launching new electric vehicles, aiming to switch to a largely
electric fleet within the decade. But not all the press has been
glowing, and executives at the company often complain that they
don't get enough credit for the company's transformation.
The road to electric cars has been fraught with setbacks. The
new vehicles -- VW's ID. 3 and ID. 4, the e-tron built by its
luxury car maker Audi, and the Taycan made by its sports-car brand
Porsche -- have had to overcome obstacles and met with mixed
reviews. The ID. 3, which wasn't released in the U.S., initially
struggled with software glitches.
The name change stunt comes as the company is eager to get U.S.
consumers jazzed about the ID. 4, which went on sale in U.S.
showrooms this month. The vehicle is a competitor to Tesla's Model
Y and has been praised largely as very good, but still not quite a
match for Tesla's offering.
Earlier this month, VW released earnings for 2020, which showed
that the company had weathered the Covid-19 pandemic well.
Despite the pandemic, VW generated pretax profit of EUR12
billion, equivalent to $14.07 billion, down about 36% from 2019, on
sales of EUR223 billion, down 12%. The company benefited strongly
from China's recovery, where VW generates more than 40% of its
sales.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 30, 2021 20:00 ET (00:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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