Investor experts are calling on the Securities and Exchange Commission to investigate Volkswagen after it claimed to be changing its name to ‘Voltswagen’ in an April Fool’s Day stunt, which they say misled investors and briefly saw the automaker’s share price rise more than 16%.
The German car giant, which has previously fallen foul of the SEC for fitting millions of vehicles with deceptive emissions software, claimed on Monday it was changing its name to celebrate its transition to electric vehicles.
After maintaining the ruse for more than 24 hours, in several press releases and comments to reporters, it finally leaked to the Wall Street Journal on Tuesday afternoon that the move was a prank.
The company later confirmed it had been an early April Fool’s Day joke designed to hype the release of its new electric SUV.
Shares in the company had opened at $33.13 on Monday, and by 3pm on Tuesday afternoon were trading at $38.46. They were trading at just over $36 on Thursday morning.
Financial experts believe the prank could constitute market manipulation and are calling on the SEC to investigate.
Volkswagen’s share price began the week at $33.13, before rising as high as $38.46 on Tuesday afternoon as fake news of its name change spread around the world
Scott Keogh, Volkswagen Group of America CEO, was quoted in a fake press release 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’
Volkswagen finally admitted its name change was an early April Fool’s Day prank after misleading investors for more than 24 hours
The farce began on Monday when the car giant’s US office appeared to mistakenly post an incomplete press release saying it was changing its name to ‘Voltswagen’.
The new name was supposedly to celebrate the upcoming release of its new all-electric SUV, the ID.4.
Super Bowl ads and Iron Man movies: Scott Keogh’s history of marketing coups
Keogh oversaw Super Bowl commercials and the product placement of Audis in the Iron Man movies, starring Robert Downey Jr, above
After graduating from Hobart College with a BA in comparative literature, the Volkswagen US CEO briefly entertained a career as a foreign correspondent.
Instead, he started at Mercedes-Benz as an ‘alternative media specialist’, later moving to Audi America as its chief marketing officer.
A biography from Hobart College, a liberal arts college in upstate New York, lists his ‘successes’ at Audi included overseeing their Super Bowl adverts.
Audi bought ads on sport’s biggest day for as much as $10m under Keogh’s watch, with some being received well, such as the 2016 edition featuring a retired astronaut rediscovering his lust for life.
Others were panned by critics and fans alike.
The 2017 advert ‘Daughter’ was supposed to show the automaker’s commitment to gender equality.
‘Instead, the ad’s downbeat message turned off more people than it inspired,’ wrote Jeff Kauflin in Forbes Magazine. ‘It also drew attention to Audi’s own record on gender equality, which is mixed at best.’
A YouTube clip of the advert quickly attracted 59,000 dislikes, and has since been set to private.
Keogh’s other achievements include the Truth in 24 documentary series about Audi’s history at the 24 Hours of Le Mans endurance race, and securing product placement in the Iron Man movie series.
The company claimed it would use the new name in ads and on its electric vehicles.
The Associated Press reported Mark Gillies, a company spokesman, had later insisted that the release was legitimate and the name change accurate.
On Tuesday, the company emailed to reporters a press release that quoted its CEO Scott Keogh announcing the fake change.
‘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,’ Scott Keogh, president and CEO of Volkswagen of America, said in the release.
‘This name change signifies a nod to our past as the peoples’ car and our firm belief that our future is in being the peoples’ electric car,’ Keogh added.
Analysts on Wall Street released guidance to investors on Tuesday morning about what the new ‘Voltswagen’ brand might mean for the carmaker’s future viability.
Wedbush analyst Dan Ives said the name change ‘underscores VW’s clear commitment to its EV brand’. The name change garnered massive global media coverage.
On Tuesday afternoon, an unnamed source at the automaker’s headquarters in Wolfsburg, Germany, revealed to the Wall Street Journal that the press release announcing the re-branding effort was just a joke.
‘It’s a premature April Fool’s joke. It’s part of a marketing campaign for the ID.4,’ the newspaper quoted one unnamed source as saying.
‘There will be no name change.’
On Wednesday, VW released another statement explaining that the US wing of the company had developed the marketing campaign to draw attention ‘with a wink’ to ‘Volkswagen’s e-offensive’.
It’s unclear whether the misfiring prank had sign-off from the company’s German headquarters.
Deliberately misleading markets for more than 24 hours was extremely unusual for a major public company, Charles Whitehead, Professor of Business Law at Cornell Law School, told CNN.
He said: ‘Will the SEC inquire? Well, of course they will. It’s gotten enough publicity and people are concerned about it and there are issues about whether or not companies should be doing this that I’m sure [the SEC is] going to make a phone call.’
He added: ‘This is not the sort of thing that a responsible global company should be doing.’
James Cox, who teaches corporate and securities law at Duke University, told AP that regulators had to take action.
‘The whole market has gone crazy,’ Cox said.
‘We need to throw a pretty clear line in the sand, I believe, about what is permissible and what isn’t permissible.’
The company was not responding to media queries on Thursday.
The SEC was also tightlipped about whether it was looking in to the car giant.
Volkswagen’s electric SUV the ID.4 is part of the company’s transition to a cleaner future, as it attempts to put the 2015 emissions scandal behind it
Volkswagen’s ID.4 SUV electric cars – seen here ready for delivery at the carmakers headquarters in Wolfsburg, Germany – were the subject of an April Fool’s Day prank which may backfire
Keogh, the head of Volkswagen’s US operations since 2018, is a former marketing and PR executive who wanted to be a foreign correspondent for the New York Times.
According to a biography on the website of his his former university, Hobart College, where he graduated with a B.A. in comparative literature, Keogh’s first job was at Mercedes-Benz as an ‘alternative-media specialist’.
In 2006, he joined Audi as chief marketing officer where he was responsible for ‘leading all product planning for the US market, as well as marketing and advertising campaigns’.
At Audi he oversaw its Super Bowl advertising, documentaries, and ‘increased use of social media and product placement, such as in the ‘Iron Man’ movie series,’ the college website states.
Explaining his philosophy in a 2019 interview with Volkswagen’s inhouse magazine ahead of the launch of the company’s previous electric SUV, Keogh said: ‘We want to throw a good first punch.
‘We never want to throw a weak first punch because you might not get a chance to throw a second.’
Volkswagen had been attempting to repair its image after the 2015 emissions scandal in which it cheated on government emissions tests and allowed diesel-powered vehicles to illegally pollute the air.
In that scandal, Volkswagen was investigated by the SEC as well as facing probes in Europe, and eventually admitted that about 11 million diesel vehicles worldwide were fitted with the deceptive software.
That discovery triggered a global backlash that has cost the German automaker more than $34.4 billion, including $4.3 billion in U.S. criminal and civil fines in 2017, Reuters reported.
The software reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving.
VW has admitted to installing the software in approximately 500,000 U.S. vehicles.
WAS IT A MARKETING VICTORY OR AN ILL-JUDGED STUNT BY A BRAND WITH AN EXISTING REPUTATION FOR LYING TO THE PUBLIC?
by Rob Hull, Deputy Motoring Editor for MailOnline and This is Money
Volkswagen’s electric vehicle charge in recent years has been part of the German brand’s efforts to repair its reputation following the Dieselgate scandal.
The manufacturer dominated headlines from September 2015 when it was found to have tweaked software – referred to as ‘defeat devices’ – in its diesel engines to produce fewer emissions during official tests compared to when motorists use them on the road.
Harmful pollutant outputs in real-world driving scenarios were found to be up to 40 times higher than quoted in laboratory measurements, leading to a backlash from the media, green campaigners and owners of millions of affected cars.
Following investigations by regulators, VW has since been forced to recall and refit all impacted models at the cost of billions of dollars – on top of billions in fines issued by federal judges.
With such a high-profile case of misleading the public so recently, the timing of an April Fools’ joke of this scale will be questioned by many. But, was it all worth it?
David Leggett, automotive analyst at GlobalData, a leading data and analytics company, said that as PR stunts go, this will ‘probably go down as a case study in sending out a message that causes confusion but ultimately gains column inches and readers making the hoped-for connections’.
He told us: ‘Everyone likes a good April Fool and this one took a lot of news publishers in because of the way the press statements were sent out and the fact that it was ahead of April Fools’ Day (1 April).
‘However, it has succeeded in getting plenty of media coverage for Volkswagen’s electrification strategy, especially in the all-important US market in conjunction with the market launch of the ID.4 electric SUV.
‘If some publishers have egg on their face and there are one or two miffed reporters, that’s probably seen as a small price to pay.’