Rise of Volkswagen: The Automobile Powerhouse

Introduction

Volkswagen, a prominent German automotive manufacturer, was founded in 1937 and has
grown to become one of the largest car makers in the world. Renowned for its engineering
excellence and innovative designs, Volkswagen produces a diverse range of vehicles, from
compact cars to luxury sedans and SUVs. The company is headquartered in Wolfsburg,
Germany, and operates under the umbrella of the Volkswagen Group, which includes other
prestigious brands like Audi, Porsche, and Lamborghini. Volkswagen's commitment to quality,
technological advancement, and sustainability has solidified its reputation globally, making it a
leader in the automotive industry.

Volkswagen’s journey
Early years (1937-1945)
Volkswagen was founded in 1937 by the German Labor Front, which was a Nazi labor
organization. The company was originally called "Gesellschaft zur Vorbereitung des Deutschen
Volkswagens mbH" which translates to "Company for the Preparation of the German
Volkswagen Ltd." The initial goal of the company was to produce a "people's car" (Volkswagen
in German) that was affordable to the average German.
The first car that Volkswagen produced was the Volkswagen Beetle, which was designed by
Ferdinand Porsche during World War II in 1939. It quickly captured the hearts of millions
worldwide with its distinctive design and features, in addition to its uniquely innovative
marketing campaign. Its simple yet robust engineering and design made it a cultural icon in
Germany and also in other parts of the world. The Beetle’s popularity soared, and it soon became
one of the best-selling cars of all time.

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Post-war years (1945-1960)
After the war ended, in 1945, Volkswagen was taken over and run by the British military, until it
was returned to German control in 1949. It further expanded its model range with the
introduction of the Volkswagen Type 2 (Microbus or Kombi) in 1950, after the establishment of
several international production facilities and rise of exports following their international boom.

Global expansion (1960-1990)

Volkswagen went public in 1960, with the German government selling part of its stake. It
continued to expand its product line, introducing models like the Type 3 and Type 4. It marked
the beginning of its transition into a multi-brand group, by acquiring Audi in 1965. It introduced
the Golf in 1974, which became a major success as well. Volkswagen further expand globally
and entered the Chinese market in 1984, in which it holds a significant market presence.

Modern era (1990-2015)

The company acquired SEAT (1990) and Škoda (1991), and in 1998 purchased the luxury brands
Bentley, Bugatti, and Lamborghini, highlighting its position in the high-end automobile market.
In the 2000’s it started focusing on technological advancements, introducing fuel-efficient and
environmentally friendly technologies, including TDI diesel engines and BlueMotion models. In
2012, the year it acquired Porsche, it became the largest automaker in Europe.

Emissions scandal and recovery (2015-Present)

Volkswagen was hit by the "Dieselgate" scandal in 2015, which caused a severe blow to the
company’s reputation. Post-scandal, Volkswagen undertook major restructuring and a strategic
shift towards electric mobility by introducing Electric Vehicles (EVs), investing in battery
technology, autonomous driving, and digitalization, and also declared aims for carbon neutrality
by 2050.

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 Key Initiatives and Product Innovations

Electric Mobility: Volkswagen, as part of its initiative towards electromobility, launched an

entire range of fully-electric car models. The first production vehicle in this family is the
compact ID.3. All the models are based on the Modular Electric Drive Kit (MEB) – a platform
designed specifically for electric vehicles. These vehicles have high electric ranges, a quick-
charge function, new digital features, and are spacious.

Carbon Neutrality: Volkswagen is committed to the principles outlined in the Paris Climate
Agreement and aligns its own activities with the 1.5-degree target. They stand by their ultimate
goal of achieving net carbon neutrality by 2050. As part of this commitment, they have
set an interim target, which is a 30% reduction in the carbon footprint during the use phase of
their passenger cars and light commercial vehicles by 2030.

Connected Cars: In 2018, Volkswagen commenced a strategic partnership with Microsoft to

help accelerate the development of one of the largest dedicated automotive industry clouds,
known as Volkswagen Automotive Cloud. Designed to provide a smart, and scalable foundation
for connected vehicles, VW.AC handles data from millions of vehicles per day, with the goal of
delivering connected experiences to customers around the globe which started in 2022 – a key
part of Volkswagen’s strategy to become a leading automotive software innovator.

The Dieselgate Scandal

One of the biggest challenges the company faced and how it was navigated. The “Dieselgate”
scandal, also known as the Volkswagen emissions scandal, occurred in September 2015 when
the United States Environmental Protection Agency (EPA) revealed that Volkswagen was found
to have used a "defeat device" in its diesel engines to manipulate emissions tests. These devices
detected when the car was undergoing testing and activated emissions controls to reduce nitrogen
oxide emissions to compliant levels. However, during normal driving conditions, the cars
emitted pollutants up to 40 times above the legal limit. This led to significant legal, financial, and
reputational repercussions for Volkswagen.

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The scandal affected approximately 11 million vehicles worldwide, including around 500,000 in
the United States. It led to widespread outrage, regulatory investigations, legal actions, and
significant financial penalties.

To push through the public relations disaster and regain sales numbers, Volkswagen started a
journey of rebranding that used certain strategic elements which formed the basis of a newly
focused company and pushed it towards recovery. Some of them are:

1. Replacement of leadership: In the wake of the scandal, Volkswagen overhauled its top
management. Several senior executives resigned or were dismissed, and new leadership
was brought in to steer the company through the crisis.

2. Investment in Electric Vehicles (EVs): As part of its efforts to rebuild its reputation
and shift towards a more sustainable future, Volkswagen announced significant
investments in electric mobility. The company plans to spend €35 billion on electric
vehicles by 2025 and aims to produce around 22 million EVs over the next decade.

3. New Product Lines: VW introduced new electric models under the ID. series, such as
the ID.3 and ID.4, showcasing its commitment to becoming a leader in the EV market.
These models are based on the Modular Electric Drive Matrix (MEB) platform, which is
designed specifically for electric vehicles.

Famous Ad Campaigns

"Think Small" (1959)

First launched during the economic boom following WW2, the "Think Small" campaign was
revolutionary because it embraced the Beetle's compact size and turned it into a compelling
advantage when at the time American car buyers favored large, flashy vehicles. The ads featured
a simplistic, minimalist design with a lot of negative space, that contrasted sharply with the
colorful and extravagant ads of the era. The headline "Think Small" was followed by a concise,
witty, and honest copy that highlighted the car's practicality and affordability.

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The "Think Small" campaign proved to be a great success, as it increased Volkswagen's sales
dramatically and made the Beetle a beloved car in the US market. It also brought upon a change
in advertising, away from inflated promises and toward messages that was more truthful and
customer-focused.

"Lemon" (1960)

This ad featured a Volkswagen Beetle with the headline "Lemon", implying that the car in the
picture did not meet Volkswagen's rigorous quality standards and was thus rejected. The
complete tagline, which is “We pluck the lemons, you get the plums” is a metaphor which means
lemons (substandard cars) are rejected so that customers receive only plums (high-quality
vehicles). The ad's copy stated Volkswagen's extremely diligent inspection process, emphasizing
the brand's unwavering commitment to quality and reliability. This honesty and transparency
attracted consumers, reinforcing trust and increasing the brand's reputation for producing high-
quality vehicles.

"The Force" (2011)

This ad campaign, launched in 2011, featured a young boy dressed as the famous Star Wars
character Darth Vader attempting to use "The Force" to move objects around his house, resulting
in his successful "activation" of a Volkswagen Passat through the car's remote start system. This
television commercial, which was aired during the American Super Bowl, quickly became very
popular and beloved amongst the general public, and was praised for its emotional appeal,
humor, and clever use of pop culture, that significantly boosted Volkswagen's brand visibility
and engagement.

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 Evaluation of success in brand’s competition

Global market share

Volkswagen Group: It holds around 10-12% of the global market share, making it one of the
top automakers worldwide, and dominates the European market with a market share of around
25-30%, leading in several key regional markets such as Germany, Spain, and the UK. One of
its main competitors Toyota often leads the market with a global share of approximately 11-12%,
while it holds 14-15% of the market share in the US. Its other key competitor General Motors
maintains a significant global presence with about 8-10% of the market share, and being
particularly strong in the US, it leads with about 16-18% market share.

Financial performance

Volkswagen: Volkswagen consistently generates substantial revenue, benefiting from its diverse
brand portfolio (including Audi, Porsche, and Skoda) and strong market presence in Europe and
China.

 2023 Revenue: Approximately €279 billion.

 Revenue Growth: Over the past few years, Volkswagen has seen moderate growth,
driven by increased sales in key markets and a growing portfolio of electric vehicles.

Toyota: Toyota is often the largest automaker in the world by revenue, supported by its strong
brand reputation and extensive global reach.

 2023 Revenue: Approximately €230 billion.

 Revenue Growth: Toyota has experienced steady growth, emphasizing hybrid
technology and a growing electric vehicle lineup.

General Motors (GM): GM has a significant presence in North America and China, with brands
like Chevrolet, GMC, and Cadillac.

 2023 Revenue: Approximately $160 billion (around €145 billion).

 Revenue Growth: GM has seen variable growth, with recent emphasis on electric and
autonomous vehicle development.

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Global Presence:

Volkswagen:

VW dominates the European market, with strong market share in Germany, the UK, France, and
Italy. Models like the Golf and Passat are particularly popular in these countries. China is a key
market for Volkswagen, accounting for a significant portion of its global sales. It has a strong
presence through joint ventures with local companies like SAIC and FAW. Although in North
America it is not as dominant as in Europe and China but has a solid presence with popular
models like the Jetta and Tiguan.

Implications for Emerging Brands in Bangladesh

Brand Identity and Consistency

Volkswagen has maintained a consistent brand identity centered around reliability, innovation,
and sound engineering. Local brands in Bangladesh, such as Walton, Jamuna Electronics, Palki
Cars etc. should focus on creating a stronger, clearer brand identity that resonates with their
target market. They should also utilize using clean, straightforward designs and clear messaging
to stand out in today’s cluttered and overstimulated advertising environment. Also using bold,
eye-catching headlines can capture attention and provoke curiosity.

Strategic Marketing and Advertising

Effective and engaging marketing strategies, including storytelling, digital marketing, and social
media engagement, can help local brands reach and resonate with their audience, making them
stand out and become more recognizable to more people. They should leverage popular cultural
references and using humor and heartwarming elements to make ads memorable and create a
strong emotional connection with the audience, thus enhancing brand appeal.

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Strategic Partnerships and Alliances

Local brands can explore collaborations with other companies, both domestically and
internationally, to leverage additional expertise, resources, and market access, and to enhance its
market presence and technological capabilities through forming strategic partnerships and
alliances, as Volkswagen has done, by not only establishing alliances, but also through
diversifying their brand portfolio.

Conclusion

In conclusion, Volkswagen's journey is a testament to resilience, innovation, and adaptation to

challenges. From its humble beginnings as a manufacturer of an affordable "people's car" to its
current status as a global automotive powerhouse with a large brand portfolio and commitment to
sustainable practices and technologies, Volkswagen has navigated challenges and embraced
change like no other company. The company's focus on maintaining a consistent brand image,
ensuring quality and technological advancements in their products, and implementing strategic
marketing tactics has solidified its position as a leader in the industry, offering valuable insights
for emerging Bangladeshi car brands as they strive to establish themselves in the automotive
landscape.