A

Project Report

On

“The Study of THE MARKETING STRATEGIES OF

VOLKSWAGEN”

Submitted to:

As a Partial Fulfillment of the Requirement for the Award of Bachelor of Business

Administration Programme BBA (Class of 2016-2019)

Under the Guidance& Supervision

Of

.
/Dr VV Krishna Reddy
Faculty Guide
AGBS Hyderabad

Summer Assignment Project

Submitted by:

Student Name: Adarsh Gilada

Enrollment No: 50

AMITY GLOBAL BUSINESS SCHOOL

HYDERABAD
 College Certificate

This is to certify that Mr. Adarsh Gilada student of Semester II Class of BBA 2016-
2019 has completed the Summer Assignment Project titled “The Study of the
marketing strategies of Volkswagen" under my guidance has worked sincerely for
the partial fulfillment of Bachelor of Business Administration for the year 2016 to
2019 to the best of my knowledge and wish him/her success for the future
endeavors.

Dr. VV Krishna Reddy

AGBS Hyderabad

Date: - 1.8.17
Place: - Hyderabad
 AMITY GLOBAL BUSINESS SCHOOL
HYDERABAD

DECLARATION

I Adarsh Gilada, Student of Amity Global Business School, Hyderabad hereby declare
that the Project titled “The Study of THE MARKETING STRATEGIES OF
VOLKSWAGEN “is the record of authentic work done by me for submission of the
Summer Assignment Project as a partial fulfillment and has not been submitted in any
other university or Institute for the award of any other Degree.

An attempt has been made by me to provide all relevant and important details regarding
the topic to support the theoretical aspect and practical evidence related to the topic.

Adarsh Gilada - A30606416050

Date:-1.8.17

Hyderabad
 Acknowledgment
My heartfelt sincere Thanks to Dr P Prasad Rao, Director General, Amity Global
Business School Hyderabad for giving me this opportunity for doing my project on
Volkswagen

My sincere & grateful thanks to my Faculty Guide Prof/Dr.VV Krishna Reddy for
guiding me throughout my Project.

My sincere thanks to my Family members who stood by me motivating me to complete

my project successfully.

Adarsh Gilada - A30606416050

Date:-1.8.17

Hyderabad
 TABLE OF CONTENTS
Contents Page Nos

1 Executive Summary 1
2 Objectives of the study 2
3 Research Methodology 3

4 Literature Review 4-11

Chapter I Topic Name-An Introduction 12-14

Chapter Company Name—A Profile 15-37

II

Chapter Competitor Analysis 38-43

III

Chapter Data Analysis and Interpretation 44-55

IV

Chapter Findings, Recommendations or Learnings and 56-57

V Conclusion
ANNEXURE 58-65
Bibliography 66
Executive summary

Volkswagen AG known internationally as Volkswagen Group, is a

German multinational automotive manufacturing company headquartered
in Wolfsburg, Lower Saxony, Germany. It designs, manufactures and distributes
passenger and commercial vehicles, motorcycles, engines, and turbomachinery and
offers related services including financing, leasing and fleet management. In 2016, it was
the world's largest automaker by sales, overtaking Toyota. It has maintained the largest
market share in Europe for over two decades. According to the Organization
Internationale des Constructeurs d'Automobiles, in 2016 the Volkswagen Group was
the second biggest automaker in the world by production volume, behind Toyota. It
ranked seventh in the 2016 Fortune Global 500 list of the world's largest companies.
Volkswagen Group sells passenger cars under
the Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda and Volkswagen marqu
es; motorcycles under the Ducati brand; and commercial vehicles under the
marques MAN, Scania, and Volkswagen Commercial Vehicles. It is divided into two
primary divisions, the Automotive Division and the Financial Services Division, and has
approximately 340 subsidiary companies. VW also has two major joint-ventures in China
(FAW-Volkswagen and SAIC Volkswagen). The company has operations in
approximately 150 countries and operates 100 production facilities across 27 countries.
Volkswagen was founded in 1937 to manufacture the car which would become known as
the Beetle. The company's production grew rapidly in the 1950s and 1960s, and in 1965
it acquired Auto Union, which subsequently produced the first post-war Audi models.
Volkswagen launched a new generation of front-wheel drive vehicles in the 1970s,
including the Passat, Polo and Golf; the latter became its bestseller. Volkswagen
acquired a controlling stake in SEAT in 1986, making it the first non-German marque of
the company, and acquired control of Škoda in 1994, of Bentley, Lamborghini and
Bugatti in 1998, Scania in 2008 and of Ducati, MAN and Porsche in 2012. The
company's operations in China have grown rapidly in the past decade with the country
becoming its largest market.
Volkswagen Aktiengesellschaft is a public company and has a primary listing on
the Frankfurt Stock Exchange, where it is a constituent of the Euro Stoxx 50 stock
market index, and secondary listings on the Luxembourg Stock Exchange, SIX Swiss
Exchange. It has been traded in the United States via American depositary receipts since
1988, currently on the OTC Marketplace. Volkswagen delisted from the London Stock
Exchange in 2013. The state of Lower Saxony holds 12.7% of the company's shares,
granting it 20% of the voting rights.

1
 OBJECTIVES OF THE STUDY

1. To study the marketing strategies of Volkswagen.

2. To study the strategies of sales.
3. Comparative study of Volkswagen and its competitors.
4. Analyse customer satisfaction.
5. Analyse sales promotion and advertising strategies.

2
 Research Methodology
The Research is a careful analysis of both scientific and systematic information. The
research has helped to develop disciplined thinking or a bent of mind to objectively
observe the information.

The research design used in the study is both descriptive and explanatory.

 Primary Data: - Primary data is the information which I collected specifically for
the purpose of the research project. An advantage of primary data is that it is
specifically tailored our research needs. The data was collected by a means of
questionnaire containing 12 questions which was handed over to 50 people
(sample size) to which their answers were noted and analysed.
 Secondary Data: - The secondary data was collected from websites, books,
journals, magazines, newspapers and the World Wide Web.
 Sampling Design:-Sampling is a process used in statistical analysis in which a
predetermined number of observations are taken from a larger population. The
methodology used to sample from a larger population depends on the type of
analysis being performed, but may include simple random sampling or systematic
sampling. Sampling can be used to determine the accuracy of account balances in
the financial statements, and managers’ use sampling to assess the success of the
firm’s marketing efforts. To collect the effective data the sampling is constrained
to mature users like people above the age of 20.The sampling size is 50.

 Data collections tools/instruments: - The data was mainly collected with the help
of questionnaires.

 Limitations of the study:-

1.) The research offers suggestions and not decisions.
2.) The questionnaire was limited to a scarce number of people.
3.) The answers given by the consumers may not be reliable.
4.) There was a large number of secondary data, and all the information might not be
accurate and reliable.
5.) Time constraint.

3
 Literature Review

Karen Post
For more than 30 years, Karen Post has been developing solutions and implementing
methods that make things happen. She started her first business at the age of 22, and built
two successful companies: an award-winning ad agency and a legal communication firm
specializing in high-stakes litigation that she led for over twenty years.

Her life and business journey has included ups and downs, victories and defeats all
adding to her success and unique experience-rich perspective.

Throughout her career, her work has benefited diverse industries, from start-ups to
Fortune 500 companies including: ACNielsen, Celanese, Choice International, Cox
Cable and Media, Saudi Arabian Airlines, Chevron, Johnson & Johnson, Bank of
America, Xerox, Sara Lee, Pepsi, and Procter & Gamble along with many emerging
businesses, trade associations, professional athletes, entertainers, and politicians.

She’s unorthodox, optimistic, intense, spontaneous and full of wit.

4
 Jennifer Aaker
Dr. Jennifer Aaker is a behavioural psychologist, author, and the General Atlantic
Professor at Stanford Graduate School of Business. Her research focuses on the
psychology of time, money and happiness — specifically how people choose to spend
their time and money and how those choices drive lasting happiness. She is the recipient
of the Distinguished Scientific Achievement Award from the Society for Consumer
Psychology and the Stanford Distinguished Teaching Award. Noted for her early work
on the dimensions of brand personality, Dr. Aaker's current research focuses on the
differences between happiness and meaning, the power of story in decision making, and
how to build global brands across cultures. At Stanford, she teaches The Innovation
Playbook, Power of Story, Designing for VR/AR: Scaling Empathy in an Immersive
World, and Rethinking Purpose. More recently, she has begun to teach Humour: Serious
Business. Unanimously voted the least funny person in her family, she is definitely not
teaching this class out of spite.

 Aaker and her husband, startup advisor Andy Smith, authored the book The Dragonfly
Effect: Quick, Effective and Powerful Ways to Use Social Media to Drive Social
Change. With a title inspired by the dragonfly’s unique ability to propel itself in any
direction when its four wings worked in concert, the book examined the manner in which
synchronized ideas can be used to create rapid transformations through social media. A
literary award winner, The Dragonfly Effect has been translated into over 10 languages.

5
 Marsha Collier
Before her online career began, Collier owned and operated her own marketing and
advertising firm, The Collier Company, and won numerous awards including “Small
Businessperson of the Year” accolades from several organizations. Collier got started on
eBay during the site’s early years and became one of the site’s first successful sellers. As
of 2016, she is currently an eBay Top Rated Seller [11] and a member of the Professional
eBay Sellers Alliance (PESA).
The first edition of eBay For Dummies was published in 1999 (the first unofficial book
on eBay). She co-authored that edition with Roland Woerner and Stephanie Becker and
became sole author of the series on the second edition. In 2001, Collier authored the first
book targeting individuals interested in making eBay their full-time profession, starting
an eBay Business for Dummies.
She was a lead instructor at numerous stops on the “eBay University” tour as well as at
the eBay’s annual “eBay Live” conference. Collier made her debut as a DVD trainer on
the eBay University Business Builders Workshop Home Study Kit, a product created in
partnership with Auction Advisor and eBay.
In December 2005, Collier hosted the Public Broadcasting Service (PBS) Public
television program Making Your Fortune Online, a complete guide to starting and
operating an online business. The two-hour program, shot in front of a live studio
audience in San Francisco, was a full seminar on conceiving a business idea, finding
products or services to sell, finding the best sites for your products, and understanding
the legal, operational and tax issues related to having a successful online business.
In 2008, Collier was named one of twenty iCitizens in the book, The Open Brand: When
Push Comes to Pull in a Web-Made World by Kelly Mooney. She also gives keynotes at
e-commerce events such as Online Market World in San Francisco, organized by founder
Jeff Chase and EVP Christopher Matthew Spencer. More recently at PayPalX
Developer's Conference in November 2009, October 2010 and ThinkGlobal Retail in
2016.

6
 Joel Comm
Joel Comm began his career as a radio personality, where he played music and was a
weatherman. He later became a mobile disc jockey and then moved to Internet marketing
because he knew he could become wealthier with an online career.
He created ClassicGames, a family-friendly multiplayer gaming website that offers
widely played card games and board
games like bridge, checkers, chess, Euchre, Go, hearts, poker, and spades. In 1997, he
sold ClassicGames to Yahoo! for $1 million. Yahoo! used the acquisition as a basis for
starting the website Yahoo! Games in April 1998.
In 2007, Joel Comm conceived of the show The Next Internet Millionaire with Eric
Holmlund.  Based on the NBC show The Apprentice, it was the first Internet reality
show. Hosted by Comm, the show pitted 12 contestants against each other who vied for
the $25,000 finalist prize and the opportunity to join Comm on a project with the goal of
earning $1 million.
Comm in 2008 created iFart Mobile, a best-selling app that he sold on iTunes Store. The
app plays a fart noise when triggered. It has a "stealth" addition that enables people to set
a timer for when the app will emit the fart sound. iFart further has a "security" feature
that triggers a fart sound if the phone's position changes. The $0.99 app was ranked first
on Apple Inc.'s App Store after its initial 14 days, having been bought 100,000 times. It
used to be in the 20 most downloaded iPhone apps ever and in October 2010 had 20,000
reviews. VentureBeat in December 2008 noted that the app was making Comm almost
$10,000 daily.

7
 John Jantsch
In 2007, Jantsch published Duct Tape Marketing: The World's Most Practical Small
Business Marketing Guide, which outlines his systematic approach to marketing. The
book is divided into three parts. Part I is titled "The Duct Tape Foundation—The Way to
Sticky Marketing" and deals with laying the groundwork for a successful marketing
system.  Part II is titled "The Duct Tape Lead Generation Machine—Turning Stickiness
into a System That Works for You" and it focuses on implementing the strategies of Part
I. Part III is titled "Getting on a Roll!" and it serves as a conclusion meant to ground the
preceding two parts.

In 2010, Jantsch published The Referral Engine: Teaching Your Business to Market

Itself. The book outlines an approach to marketing that moves away from complicated
marketing campaigns and instead focuses on personal interactions with customers
through outlets such as social media and friend-to-friend word of mouth. The idea,
Jantsch writes, is that a business should always focus on and understand the importance
of referrals.

The Commitment Engine: Making Work Worth It is directed at helping business owners
establish lasting commitment in their employees, customers, and businesses and
examines what makes some businesses worth referring. The book diagnosis the key
qualities of successful, "effortless" business approaches.

In 2016 John Jantsch and co-author Phil Singleton published SEO for Growth - The
Ultimate Guide for Marketers, Web Designers, and Entrepreneurs. The book is aimed at
teaching marketers, designers and entrepreneurs the strategic nature of search engine
optimization as well as the SEO forces at play in web design and social media.

8
 Guy Kawasaki
Guy Kawasaki is an American marketing specialist, author, and Silicon Valley venture
capitalist. He was one of the Apple employees originally responsible for marketing
their Macintosh computer line in 1984. He popularized the word evangelist in marketing
the Macintosh and the concepts of evangelism marketing and technology evangelism.
From March 2015 until December 2016, Kawasaki sat on the Wikimedia
Foundation Board of Trustees, the non-profit operating entity of Wikipedia.
Kawasaki has also written a number of books including The Art of Social Media
and Database 101.
In 1983, Kawasaki got a job at Apple through his Stanford roommate, Mike Boich. He
was Apple's chief evangelist for four years. In a 2006 podcast interview on the online site
Venture Voice, Kawasaki said, "What got me to leave is basically I started listening to
my own hype, and I wanted to start a software company and really make big bucks. In
1987 he was hired to lead ACIUS, the U.S. subsidiary of France-based ACI, which
published an Apple database software system called 4th Dimension.
Kawasaki left ACIUS in 1989 to further his writing and speaking career. In the early
1990s he wrote columns that were featured in Forbes and MacUsermagazines. He also
founded another company, Fog City Software, which created Emailer, an email client
that sold to Claris.
He returned to Apple as an Apple Fellow in 1995. In 1998, he was a co-founder of
Garage Technology Ventures, a venture capital firm that has made investments
in Pandora Radio, Tripwire, The Motley Fool and Delight Design. In 2007, he
founded Truemors, a free-flow rumor mill that sold to Now Public. He is also a founder
at Alltop, an online magazine rack.
In March 2013 Kawasaki announced he would be joining Google as an advisor
to Motorola. His role was to create a Google+ mobile device community.
In April 2014, Kawasaki became the chief evangelist of Canva. It is a free graphic-
design website, for non-designers as well as professionals, founded in 2012.
On March 24, 2015, the Wikimedia Foundation announced Kawasaki had joined the
foundation's board of trustees. He stood down at the end of December 2016.
On April 25, 2017, Jimmy Wales' new Wikitribune mentioned him as an adviser.

9
 Seth Godin

What are some of the key changes in the current state of marketing that a small-
business owner should be aware of?

If you own a small business, you’ve made a commitment of time and money that few
ever do. It’s tempting, but a near-fatal error, to believe that the world you built your
business in is going to stay stable.

Not only is the way we produce things changing, but the way that messages spread has
shifted forever. Facebook and YouTube are not effective ways to market average goods
to average people. Garnering likes, counting Twitter followers, playing endless social
media games is a distraction.

Your market demands two things:

1. Remarkable goods and services. Stories worth sharing. Things worth talking about.
Something they would miss if you were gone. Because they have options, more than ever
before.

2. That you earn permission to talk to them. No spam, but the privilege of delivering
anticipated, personal and relevant messages.

10
 Robert Cialdini
Six key principles of influence

1. Reciprocity – People tend to return a favour, thus the pervasiveness of free

samples in marketing. In his conferences, he often uses the example
of Ethiopia providing thousands of dollars in humanitarian aid to Mexico just
after the 1985 earthquake, despite Ethiopia suffering from a crippling famine and
civil war at the time. Ethiopia had been reciprocating for the diplomatic support
Mexico provided when Italy invaded Ethiopia in 1935. The good cop/bad
cop strategy is also based on this principle.
2. Commitment and Consistency – If people commit, orally or in writing, to an idea
or goal, they are more likely to honour that commitment because of establishing
that idea or goal as being congruent with their self-image. Even if the original
incentive or motivation is removed after they have already agreed, they will
continue to honour the agreement. Cialdini notes Chinese brainwashing of
American prisoners of war to rewrite their self-image and gain automatic
unenforced compliance. Another example is children being made to repeat
the Pledge of Allegiance each morning.
3. Social Proof – People will do things that they see other people are doing. For
example, in one experiment, one or more confederates would look up into the
sky; bystanders would then look up into the sky to see what they were seeing. At
one point this experiment aborted, as so many people were looking up that they
stopped traffic. See conformity, and the Asch conformity experiments.
4. Authority – People will tend to obey authority figures, even if they are asked to
perform objectionable acts. Cialdini cites incidents such as the Milgram
experiments in the early 1960s and the My Lai massacre.
5. Liking – People are easily persuaded by other people that they like. Cialdini cites
the marketing of Tupperware in what might now be called viral marketing.
People were more likely to buy if they liked the person selling it to them. Some
of the many biases favouring more attractive people are discussed. See physical
attractiveness stereotype.
6. Scarcity – Perceived scarcity will generate demand. For example, saying offers
are available for a "limited time only" encourages sales.

11
 Chapter 1
Marketing strategy is the comprehensive plan formulated particularly for achieving
the marketing objectives of the organization. It provides a blueprint for attaining these
marketing objectives. It is the building block of a marketing plan. It is designed after
detailed marketing research. A marketing strategy helps an organization to concentrate
its scarce resources on the best possible opportunities so as to increase the sales.

A marketing strategy is designed by:

1. Choosing the target market: By target market we mean to whom the

organization wants to sell its products. Not all the market segments are fruitful to
an organization. There are certain market segments which guarantee quick
profits, there are certain segments which may be having great potential but there
may be high barriers to entry. A careful choice has to be made by the
organization. An in depth marketing research has to be done of the traits of the
buyers and the particular needs of the buyers in the target market.
2. Gathering the marketing mix: By marketing mix we mean how the
organization proposes to sell its products. The organization has to gather the four
P’s of marketing in appropriate combination. Gathering the marketing mix is a
crucial part of marketing task. Various decisions have to be made such as -
 What is the most appropriate mix of the four P’s in a given situation
 What distribution channels are available and which one should be used
 What developmental strategy should be used in the target market
 How should the price structure be designed

Importance of Marketing Strategy

 Marketing strategy provides an organization an edge over its competitors.

 Strategy helps in developing goods and services with best profit making potential.
 Marketing strategy helps in discovering the areas affected by organizational
growth and thereby helps in creating an organizational plan to cater to the
customer needs.
 It helps in fixing the right price for organization’s goods and services based on
information collected by market research.
 Strategy ensures effective departmental co-ordination.
 It helps an organization to make optimum utilization of its resources so as to
provide a sales message to its target market.
 A marketing strategy helps to fix the advertising budget in advance, and it also
develops a method which determines the scope of the plan, i.e., it determines the
revenue generated by the advertising plan.

In short, a marketing strategy clearly explains how an organization reaches its

predetermined objectives.

12
 SWOT ANALYSIS

Strengths of Volkswagen

1. Volkswagen has a wide range of cars which provides enough options to choose from.
2. Volkswagen has a high brand presence and recall.
3. One of the oldest car manufacturers, resulting into increased reach to masses.
4. Owner of Audi, Bentley, Bugatti, Lamborghini, Skoda which gives a wide and large
customer base.
5. Has over 350,000 employees globally.
6. Volkswagen has manufacturing or assembly plants in Germany, Slovakia, China,
India, Indonesia, Russia, Brazil, Argentina, Portugal, Spain, Poland, Bosnia and
Herzegovina, and South Africa.
7. Volkswagen also has presence in hybrid cars and motorsports.
8. Excellent advertising and marketing through TVCs, print media, online ads, hoardings
etc.
9. The company has been rewarded for its cars and services to customers.

Weaknesses of Volkswagen

1. Negative publicity weakening the whole Volkswagen brand

2. The highest recall rate in the U.S. market
3. Low market share in the U.S. automotive market
4. Little expertise and no competence in making battery driven vehicles

Opportunities of Volkswagen

1. Fuel prices are expected to rise in the near future

2. Acquire skills and competences through acquisitions
3. Demand for autonomous vehicles
4. Weakening euro exchange rate
5. Focus on significantly improving sustainability policies to remedy damaged
brand reputation

13
Threats of Volkswagen

1. Innovative features included by competitors can affect market share of Volkswagen

2. Increasing fuel costs can reduce purchase of cars

3. Government regulations and policies to protect interest of local car manufacturers e.g.
TATA in India

14
 Chapter 2

A STUDY ON THE MARKETING STRATEGIES OF VOLKSWAGEN

Company profile
History
1932–1938: People's Car project
Volkswagen was originally established in 1937 by the German Labour Front (Deutsche
Arbeitsfront) in Berlin. In the early 1930s, the German auto industry was still largely
composed of luxury models, and the average German could rarely afford anything more
than a motorcycle. As a result, only one German out of 50 owned a car. Seeking a
potential new market, some car makers began independent "people's car" projects –
the Mercedes 170H, Adler AutoBahn, Steyr 55, and Hanomag 1.3L, among others.
The trend was not new, as Béla Barényi is credited with having conceived the basic
design in the mid-1920s. Josef Ganz developed the Standard Superior (going as far as
advertising it as the "German Volkswagen"). In Germany, the company Hanomag mass-
produced the 2/10 PS "Komissbrot", a small, cheap rear engined car, from 1925 to 1928.
Also, in Czechoslovakia, the Hans Ledwinka's penned Tatra T77, a very popular car
amongst the German elite, was becoming smaller and more affordable at each
revision. Ferdinand Porsche, a well-known designer for high-end vehicles and race cars,
had been trying for years to get a manufacturer interested in a small car suitable for a
family. He felt the small cars at the time were just stripped down big cars. Instead he
built a car he called the "Volksauto" from the ground up in 1933, using many of the ideas
floating around at the time and several of his own, putting together a car with an air-
cooled rear engine, torsion bar suspension, and a "beetle" shape, the front hood rounded
for better aerodynamics (necessary as it had a small engine).
In 1934, with many of the above projects still in development or early stages of
production, Adolf Hitler became involved, ordering the production of a basic vehicle
capable of transporting two adults and three children at 100 km/h (62 mph). He wanted
his German citizens to have the same access to a car as the Americans. The "People's
Car" would be available to citizens of the Third Reich through a savings plan at
990 Reichsmark ($396 in 1930s U.S. dollars)—about the price of a small motorcycle (the
average income being around 32 RM a week).
Despite heavy lobbying in favor of one of the existing projects, it soon became apparent
that private industry could not turn out a car for only 990 RM. Thus, Hitler chose to
sponsor an all-new, state-owned factory using Ferdinand Porsche's design (with some of
Hitler's design constraints, including an air-cooled engine so nothing could freeze). The
intention was that ordinary Germans would buy the car by means of a savings scheme
("Fünf Mark die Woche musst du sparen, willst du im eigenen Wagen fahren" – "Five

15
marks a week you must put aside, if you want to drive your own car"), which around
336,000 people eventually paid into. However, the entire project was financially
unsound, and only the corruption and lack of accountability of the Nazi regime made it
possible.
Prototypes of the car called the "KdF-Wagen" (German: Kraft durch Freude – "Strength
through Joy"), appeared from 1938 onwards (the first cars had been produced
in Stuttgart). The car already had its distinctive round shape and air-cooled, flat-
four, rear-mounted engine. The VW car was just one of many KdF programs, which
included things such as tours and outings. The prefix Volks— ("People's") was not just
applied to cars, but also to other products in Germany; the "Volksempfänger" radio
receiver for instance. On May 28, 1937, Gesellschaft zur Vorbereitung des Deutschen
Volkswagens mbH ("Company for the Preparation of the German Volkswagen Ltd."),
or Gezuvor for short, was established by the Deutsche Arbeitsfront in Berlin. More than a
year later, on September 16, 1938, it was renamed to Volkswagenwerk GmbH.
Erwin Komenda, the longstanding Auto Union chief designer, part of Ferdinand
Porsche's hand-picked team, developed the car body of the prototype, which was
recognizably the Beetle known today. It was one of the first cars designed with the aid of
a wind tunnel—a method used for German aircraft design since the early 1920s. The car
designs were put through rigorous tests, and achieved a record-breaking million miles of
testing before being deemed finished.
The construction of the new factory started in May 1938 in the new town of "Stadt des
KdF-Wagens" (modern-day Wolfsburg), which had been purpose-built for the factory
workers. This factory had only produced a handful of cars by the time war started in
1939. None were actually delivered to any holder of the completed saving stamp books,
though one Type 1 Cabriolet was presented to Hitler on 20 April 1944 (his 55th
birthday).
War changed production to military vehicles—the Type 82 Kübelwagen ("Bucket car")
utility vehicle (VW's most common wartime model), and the amphibiousSchwimmwagen
—manufactured for German forces. As was common with much of the production
in Nazi Germany during the war, slave labor was utilized in the Volkswagen plant, e.g.
from Arbeitsdorf concentration camp. The company would admit in 1998 that it used
15,000 slaves during the war effort. German historians estimated that 80% of
Volkswagen's wartime workforce was slave labor. Many of the slaves were reported to
have been supplied from the concentration camps upon request from plant managers. A
lawsuit was filed in 1998 by survivors for restitution for the forced labor. Volkswagen
would set up a voluntary restitution fund.
1945–1948: British Army intervention, unclear future
The company owes its post-war existence largely to one man, War-time British
Army officer Major Ivan Hirst, REME. In April 1945, KdF-Stadt and its heavily bombed
factory were captured by the Americans, and subsequently handed over to the British,
within whose occupation zone the town and factory fell. The factories were placed under
the control of Oldham-born Hirst, by then a civilian Military Governor with the
occupying forces. At first, one plan was to use it for military vehicle maintenance, and
possibly dismantle and ship it to Britain. Since it had been used for military production,
(though not of KdF-Wagens) and had been in Hirst's words, a "political animal" rather
16
than a commercial enterprise — technically making it liable for destruction under the
terms of the Potsdam Agreement — the equipment could have been salvaged as war
reparations. (Allied dismantling policy changed in late 1946 to mid-1947, though heavy
industry continued to be dismantled until 1951.)
One of the factory's War-time 'KdF-Wagen' cars had been taken to the factory for repairs
and abandoned there. Hirst had it repainted green and demonstrated it to British Army
headquarters. Short of light transport, in September 1945 the British Army was
persuaded to place a vital order for 20,000 cars. However, production facilities had been
massively disrupted, there was a refugee crisis at and around the factory and some parts
(such as carburetors) were unavailable. With striking humanity and great engineering and
management ingenuity, Hirst and his German assistant Heinrich Nordhoff (who went on
to run the Wolfsburg facility after Military Government ended in 1949) helped to
stabilize the acute social situation while simultaneously re-establishing production. Hirst,
for example, used his fine engineering experience to arrange the manufacture of
carburetors, the original producers being effectively 'lost' in the Russian zone. The first
few hundred cars went to personnel from the occupying forces, and to the German Post
Office. Some British Service personnel were allowed to take their Beetles back to the
United Kingdom when they were demobilised.
In 1986, Hirst explained how it was commonly misunderstood that he had run Wolfsburg
as a British Army Major. The defeated German staff, he said, were initially sullen and
unresponsive, having been conditioned by many years of Nazism and they were
sometimes unresponsive to orders. At Nordhoff's suggestion, he sent back to England for
his officer's uniform and from then on, had no difficulty in having his instructions
followed. Hirst can be seen photographed at Wolfsburg in his uniform, although he was
not actually a soldier at the time but a civilian member of the Military Government. The
title of 'Major' was sometimes used by someone who had left the Army as a courtesy
title. In fact, Hirst chose not to do so.
The post-war Industrial plans for Germany set out rules that governed which industries
Germany was allowed to retain. These rules set German car production at a maximum of
10% of 1936 car production. By 1946, the factory produced 1,000 cars a month—a
remarkable feat considering it was still in disrepair. Owing to roof and window damage,
production had to stop when it rained, and the company had to barter new vehicles for
steel for production.
The car and its town changed their Second World War-era names to "Volkswagen" and
"Wolfsburg" respectively, and production increased. It was still unclear what was to
become of the factory. It was offered to representatives from the American, Australian,
British, and French motor industries. Famously, all rejected it. After an inspection of the
plant, Sir William Rootes, head of the British Rootes Group, told Hirst the project would
fail within two years, and that the car "...is quite unattractive to the average motorcar
buyer, is too ugly and too noisy ... If you think you're going to build cars in this place,
you're a bloody fool, young man. The official report said "To build the car commercially
would be a completely uneconomic enterprise. In an ironic twist of fate, Volkswagen
manufactured a locally built version of Rootes's Hillman Avenger in Argentina in the
1980s, long after Rootes had gone bankrupt at the hands of Chrysler in 1978—the Beetle
outliving the Avenger by over 30 years.

17
Ford representatives were equally critical. In March 1948, the British offered the
Volkswagen Company to Ford, free of charge. Henry Ford II, the son of Edsel Ford,
traveled to West Germany for discussions. Heinz Nordhoff was also present, and Ernest
Breech, chairman of the board for Ford Motor Company. Henry Ford II looked to Ernest
Breech for his opinion, and Breech said, "Mr. Ford, I don't think what we're being
offered here is worth a dime! Ford passed on the offer, leaving Volkswagen to rebuild
itself under Nordhoff's leadership.
1948–1961: Icon of post war West German regeneration
From 1948, Volkswagen became an important element, symbolically and economically,
of West German regeneration. Heinrich Nordhoff (1899–1968), a former senior manager
at Opel who had overseen civilian and military vehicle production in the 1930s and
1940s, was recruited to run the factory in 1948. In 1949, Major Hirst left the company—
now re-formed as a trust controlled by the West German government and government of
the State of Lower Saxony. Apart from the introduction of the Volkswagen Type
2 commercial vehicle (van, pick-up and camper), and the VW Karmann Ghia sports car,
Nordhoff pursued the one-model policy until shortly before his death in 1968.
Volkswagens were first exhibited and sold in the United States in 1949, but sold only
two units in America that first year. On entry to the U.S. market, the VW was briefly
sold as a Victory Wagon. Volkswagen of America was formed in April 1955 to
standardise sales and service in the United States. Production of the Type 1 Volkswagen
Beetle increased dramatically over the years, the total reaching one million in 1955.
The UK's first official Volkswagen Importer, Colborne Garages of Ripley, Surrey,
started with parts for the models brought home by soldiers returning from Germany.
Canadian Motors, Limited brought in Canada's first shipment of Volkswagens on 10 July
1952 (shipping order 143075). The order consisted of 12 vehicles, (3) model 11C, a
black, green, and sand color (3) 11GS, a chestnut brown and two azure blue, (2) 24A-
M51 in red, (1)21A in blue, (1) 23A in blue, (1) 22A beige color, and one ambulance.
Volkswagens were seen in Canada for the first time at the Canadian National Exhibition
in August 1952 and were accepted enthusiastically. (At least one Type 2 bus from this
order still exists, and is currently in France undergoing restoration). The first shipment
for Volkswagen Canada reached Toronto in early December 1952. (At least one Type 1
from this first shipment still exists, and was driven on a nationwide tour for Volkswagen
Canada's 60th year of business festivities in 2012). By 1955, sales were on a basis that
warranted the building of the Volkswagen plant on a 32-acre (130,000 m2) site on
Scarboro's Golden Mile. To this, a 60,000-square-foot (5,600 m2) building with
administration, showrooms, service, repairs and parts was built in 1957, with storage for
$4,000,000 of parts. On August 22, 1960, Volkswagenwerk GmbH was renamed
to Volkswagenwerk AG.
Sales soared—thanks in part to the famous advertising campaigns by New York
advertising agency Doyle, Dane Bernbach. Led by art director Helmut Krone, and
copywriters Julian Koenig and Bob Levinson, Volkswagen advertisements became as
popular as the car, using crisp layouts and witty copy to lure the younger, sophisticated
consumers with whom the car became associated. Even though it was almost universally
known as the Beetle (or the Bug), it was never officially labelled as such by the
manufacturer, instead referred to as the Type 1.
18
Although the car was becoming outdated, during the 1960s and early 1970s, American
exports, innovative advertising, and a growing reputation for reliability helped
production figures surpass the levels of the previous record holder, the Ford Model T. On
17 February 1972 the 15,007,034th Beetle was sold. Volkswagen could now claim the
world production record for the most-produced, single make of car in history. By 1973,
total production was over 16 million.
To commemorate it’s passing the Ford Model T's record sales mark and its victories in
the Baja 1000 Mexican races from 1967 to 1971, Volkswagen produced its first limited-
edition Beetle. It was marketed as the "Baja Champion SE in the United States and the
"Marathon" Superbeetle in the rest of the world. It featured unique "Marathon Blau"
metallic blue paint, steel-pressed 10-spoke 15-inch (38 cm) magnesium-alloy wheels, a
commemorative metal plate mounted on the glovebox and a certificate of authenticity
presented to the original purchaser. Dealer-installed options for this limited-edition
Superbeetle included the following: white stripes running the length of the rocker-panel,
a special shifter knob, bumper overriders, tapered exhaust tips, fake walnut inserts in the
dashboard (behind the steering wheel and the glovebox cover) as well as Bosch fog lights
mounted on the front bumper.
1961–1973: Beetle to Golf
VW expanded its product line in 1961 with the introduction of four Type 3 models
(Karmann Ghia, Notchback, Fastback, and Variant) based on the new Type 3 mechanical
underpinnings. The name 'Squareback' was used in the U.S.A for the Variant.
In 1969 the larger Type 4 (411 and 412) models were introduced. These differed
substantially from previous vehicles, with the notable introduction
of monocoque/unibody construction, the option of a fully automatic transmission,
electronic fuel injection, and a sturdier powerplant.
Volkswagen added a "Super Beetle"(the Type 131) to its lineup in 1971. The Type 131
differed from the standard Beetle in its use of a MacPherson
strut front suspension instead of the usual torsion bars. The Super Beetle featured a new
hooded, padded dash and curved windshield (from 1973 model year on up). Rack and
pinion steering replaced recirculating ball steering gears in model year 1974 and up. The
front of the car was stretched 2 inches (51 mm) to allow the spare tire to lie flat, and the
combination of these two features increased the usable front luggage space.
In 1973, Volkswagen introduced the military-themed Type 181, or "Trekker" in Europe,
"Thing" in America, recalling the wartime Type 82. The military version was produced
for the NATO-era German Army during the Cold War years of 1970 to 1979. The U.S.
Thing version only sold for two years, 1973 and 1974.
In 1964, Volkswagen acquired Auto Union, and in 1969, NSU Motorenwerke
AG (NSU). The former company owned the historic Audi brand, which had disappeared
after the Second World War. VW ultimately merged Auto Union and NSU to create the
modern Audi Company, and would go on to develop it as its luxury vehicle marque. The
purchase of Auto Union and NSU was a pivotal point in Volkswagen's history, as both
companies yielded the technological expertise that proved necessary for VW to survive
when demand for its air-cooled models went into decline.

19
By late 1972, Volkswagen had decided to cancel the nearly finished type 266, a project
for a mid-engine car to replace the Beetle, and to focus on front-wheel-drive, water-
cooled cars. Rudolf Leiding, recently made head of Volkswagen, cited noise, heat, and
servicing problems with the mid-engine layout, as well as the difficulty of making it a
station wagon.
Volkswagen was in serious trouble by 1973. The Type 3 and Type 4 models had sold in
much smaller numbers than the Beetle and the NSU-based K70 also failed to woo
buyers. Beetle sales had started to decline rapidly in European and North American
markets. The company knew that Beetle production had to end, but faced a conundrum
of how to replace it. VW's ownership of Audi/Auto Union proved beneficial. Its
expertise in front-wheel drive, and water-cooled engines would help Volkswagen
produce a credible Beetle successor. Audi influences paved the way for this new
generation of Volkswagens: the Passat, Scirocco, Golf, and Polo.
First in the series was the Volkswagen Passat (Dasher in the US), introduced in 1973,
a fastback version of the Audi 80, using many identical body and mechanical parts.
Estate/wagon versions were available in many markets. In Europe, the estate/wagon
version dominated in market share for many years.
In spring 1974, the Scirocco followed. The coupe was designed by Giorgetto Giugiaro.
Based on the platform of the not yet released Golf, it was built at Karmann due to
capacity constraints at Volkswagen.
The pivotal model emerged as the Volkswagen Golf in 1974, marketed in the United
States and Canada as the Rabbit for the 1st generation (1975–1985) and 5th generation
(2006–2009). Its angular styling was designed by the Italian Giorgetto Giugiaro). Its
design followed trends for small family cars set by the 1959 Mini – the Golf had
a transversely mounted, water-cooled engine in the front, driving the front wheels, and
had a hatchback, a format that has dominated the market segment ever since. Beetle
production at Wolfsburg ended upon the Golf's introduction. It continued in smaller
numbers at other German factories (Hanover and Emden) until 1978, but mainstream
production shifted to Brazil and Mexico.
In 1975, the Volkswagen Polo followed. It was a re-badged Audi 50, which was soon
discontinued in 1978. The Polo became the base of the Volkswagen Derby, which was
introduced 1977. The Derby was for all intents and purposes a three-box design of the
Polo. After a second model generation, the Derby was discontinued in 1985, although the
bodystyle lived on in the form of the polo classic/polo saloon until 1991.
Passat, Scirocco, Golf, and Polo shared many character defining features, as well as parts
and engines. They built the basis for Volkswagen's turn-around.

1974–1990: Product line expansion

While Volkswagen's range of cars soon became similar to that of other large European
automakers, the Golf has been the mainstay of the Volkswagen lineup since its
introduction, and the mechanical basis for several other cars of the company. There have
been seven generations of the Volkswagen Golf, the first of which was produced from
the summer of 1974 until the autumn of 1983 (sold as the Rabbit in the United States and
Canada and as the Caribe in Latin America). Its chassis also spawned the Volkswagen
20
Scirocco sport coupe, Volkswagen Jetta saloon/sedan, Volkswagen
Golf Cabriolet convertible, and Volkswagen Caddy pick-up. North American production
of the Rabbit commenced at the Volkswagen Westmoreland Assembly Plant near New
Stanton, Pennsylvania in 1978. It would be produced in the United States as the Rabbit
until the spring of 1984. The second-generation Golf hatchback/Jetta sedan ran from
October 1983 until the autumn of 1991, and a North American version produced at
Westmoreland Assembly went on sale at the start of the 1985 model year. The
production numbers of the first-generation Golf has continued to grow annually in South
Africa as the Citi Golf, with only minor modifications to the interior, engine and chassis,
using tooling relocated from the New Stanton, Pennsylvania plant when that site began to
build the Second Generation car.
In the 1980s, Volkswagen's sales in the United States and Canada fell dramatically,
despite the success of models like the Golf elsewhere. The Japanese and the Americans
were able to compete with similar products at lower prices. Sales in the United States
were 293,595 in 1980, but by 1984 they were down to 177,709. The introduction of the
second-generation Golf, GTI and Jetta models helped Volkswagen briefly in North
America. Motor Trend named the GTI its Car of the Year for 1985, and Volkswagen rose
in the J.D. Power buyer satisfaction ratings to eighth place in 1985, up from 22nd a year
earlier. VW's American sales broke 200,000 in 1985 and 1986 before resuming the
downward trend from earlier in the decade. Chairman Carl Hahn decided to expand the
company elsewhere (mostly in developing countries), and the New Stanton,
Pennsylvania factory closed on 14 July 1988. Meanwhile, four years after signing a
cooperation agreement with the Spanish car maker SEAT in 1982, Hahn expanded the
company by purchasing a majority share of SEAT up to 75% by the end of 1986, which
VW bought outright in 1990. On July 4, 1985, Volkswagenwerk AG was renamed
to Volkswagen AG.
Volkswagen had entered the supermini market in 1975 with the Volkswagen Polo, a
stylish and spacious three-door hatchback designed by Bertone. It was a strong seller in
West Germany and most of the rest of Western Europe, being one of the first foreign
small cars to prove popular in Britain. It had started out in 1974 as the Audi 50, which
was only available in certain markets and was less popular. The Polo entered a market
sector already being dominated by the Fiat 127 and Renault 5, and which before long
would also include the Austin Metro and Ford Fiesta.
The second-generation Polo, launched in 1981 and sold as a hatchback and "coupe" (with
the hatchback resembling a small estate car and the coupe being similar to a conventional
hatchback), was an even greater success for Volkswagen. Its practicality, despite the lack
of a five-door version, helped ensure even stronger sales than its predecessor, and it
continued to sell well after a makeover in 1990, finally being replaced by an all-new
version in 1994.
Also arriving in 1981 were the second generation of the larger Passat and a second
generation of the Volkswagen Scirocco coupe. The original Scirocco had been launched
in 1974 to compete with affordable four-seater coupes like the Ford Capri.
After the launch of the MK2 Golf in 1983, the next major car launch was the third
generation Passat at the beginning of 1988. Perhaps surprisingly, Volkswagen did not
produce a hatchback version of this Passat, despite the rising popularity of the hatchback
21
bodystyle throughout Europe. Just after launching the B3 Passat, Volkswagen launched
the Corrado, replacement for the Scirocco, although the Scirocco remained in production
until 1992.
1991–1999
In 1991, Volkswagen launched the third-generation Golf, which was European Car of the
Year for 1992. The Golf Mk3 and Jetta arrived in North America in 1993. The sedan
version of the Golf was badged Vento in Europe, but remained Jetta in the U.S.
The Scirocco and the later Corrado were both Golf-based coupés.
In 1994, Volkswagen unveiled the J Mays-designed Concept One, a "retro"-
themed concept car with a resemblance to the original Beetle, based on the platform of
the Polo. Due to a positive response to the concept, a production version was developed
as the New Beetle, based on the Golf's larger platform.
In 1995 the Sharan was launched in Europe, the result of a joint venture with Ford, which
also resulted in the Ford Galaxy and SEAT Alhambra.
The company's evolution of its model range was continued with the Golf Mk4,
introduced at the end of 1997 (and in North America in 1999), its chassis spawned a host
of other cars within the Volkswagen Group; the Volkswagen Bora (the sedan called Jetta
in the U.S.), SEAT Toledo, SEAT León, Audi A3, Audi TT, and Škoda Octavia. Other
main models during the decade include the Polo, a smaller car than the Golf, and the
larger Passat for the segment above the Golf.
In 1998 the company launched the new Lupo city car. In 1999 they announced the first
"3-litre" car, a lightweight version of the Lupo that could travel 100 km with only 3-litres
of diesel—making it the world's most fuel efficient car at the time.
2000–present: Further expansion
Volkswagen began introducing an array of new models after Bernd
Pischetsrieder became Volkswagen Group CEO (responsible for all Group brands) in
2002. The sixth-generation VW Golf was launched in 2008, came runner-up to
the Opel/Vauxhall Insignia in the 2009 European Car of the Year, and has spawned
several cousins: VW Jetta, VW Scirocco, SEAT León, SEAT Toledo, Škoda Octavia and
Audi A3 hatchback ranges, as well as a new mini-MPV, the SEAT Altea. The GTI, a
"hot hatch" performance version of the Golf, boasts a 2.0 L Turbocharged Fuel Stratified
Injection (FSI) direct injection engine. VW began marketing the Golf under the Rabbit
name once again in the U.S. and Canada in 2006.
The sixth-generation Passat and the fifth-generation Jetta both debuted in 2005, and VW
has announced plans to expand its lineup further by bringing back the Sciroccoby 2008.
Other models in Wolfgang Bernhard's (Volkswagen brand CEO) "product offensive"
include the Tiguan mid-sized SUV in 2008 and a Passat Coupé. In November 2006
Bernd Pischetsrieder announced his resignation as Volkswagen Group CEO, and was
replaced by Audi worldwide CEO Martin Winterkorn at the beginning of 2007.
Volkswagen in 2005 maintained North American sales of 224,195. Momentum
continued for fiscal 2006, as VW's North American sales for the year were 235,140
vehicles, a 4.9 percent increase over 2005, despite a slump in domestic North American
manufacturer's sales. In conjunction with the introduction of new models, production
22
location of Volkswagen vehicles also underwent great change. The 2007 Eos, a hardtop
convertible, is produced in a new facility in Portugal. All Golfs/Rabbits and GTIs as of
2006 are manufactured in Wolfsburg, Germany, rather than VW's Mexican factory
in Puebla, where Golfs and GTIs for the North American market were produced from
1989 to 1998, and the Brazilian factory in Curitiba, where Golfs and GTIs were produced
from 1999 to 2006 (the Jetta has primarily been made in Mexico since 1989). VW is also
in the process of reconfiguring an automotive assembly plant in Belgium. The new
models and investments in manufacturing improvements were noticed immediately by
automotive critics. Favorable reviews for VW's newest cars include the GTI being named
by Consumer Reports as the top sporty car under $25,000, one of Car and
Driver magazine's "10 Best" for 2007, Automobile Magazine's 2007 Car of the Year, as
well as a 2008 Motor Trend comparison ranking the mid-size Passat first in its class.
Volkswagen partnered with Daimler AG and other companies to market
the BlueTec clean diesel technology on cars and trucks from Mercedes-Benz,
Volkswagen, and other companies and brands. According to the United States
Environmental Protection Agency, four of the ten most fuel-efficient vehicles available
for sale in the U.S. are powered by Volkswagen diesel engines. Volkswagen has offered
a number of its vehicles with a TDI (Turbocharged Direct Injection) engine, which lends
class-leading fuel economy to several models. They were a three-way tie for 8th (TDI
Beetle, TDI Golf, TDI Jetta) and ninth, the TDI Jetta Wagon. In addition, all
Volkswagen TDI diesel engines produced from 1996 to 2006 can be driven on
100% biodiesel fuel. For the 2007 model year, however, strict U.S. government
emissions regulations have forced VW to drop most diesels from their U.S. engine
lineup, but a new lineup of diesel engines compatible to U.S. standards returned to the
American market starting with Model Year 2009. These post-2009 Clean Diesel engines
are limited to running on 5% (B5) biodiesel only to maintain Volkswagen's warranty.
Volkswagen long resisted adding a SUV to its lineup, but relented with the introduction
of the Touareg, made in partnership with Porsche, while they worked on the Porsche
Cayenne and later the Audi Q7. Though acclaimed as a fine handling vehicle, the
Touareg has been a modest seller at best, and it has been criticised by auto reviewers for
its absence of a third-row seat, the relatively poor fuel economy, and the high vehicle
mass. VW set plans to add a compact SUV with styling influences from the "Concept A"
concept vehicle introduced at the 2006 Geneva Auto Show, and on 20 July 2006, VW
announced that the new vehicle, called the Tiguan.
Since the discontinuance of the T4 in 2003 and decision not to bring the T5 to the US
market, Volkswagen, ironically, lacked a van in its North American lineup. To change
this, Volkswagen launched the Volkswagen Routan, a badge-engineered Dodge Grand
Caravan made for the American and Canadian markets, in 2008.
In September 2006, Volkswagen began offering the City Golf and City Jetta only for the
Canadian market. Both models were originally the Mk4 Golf and Jetta but were later
replaced with the Brazilian versions of the Golf Mk4 and Bora. Volkswagen's
introduction of such models is seen as a test of the market for a subcompact and, if
successful, may be the beginnings of a thriving subcompact market for Volkswagen.
In May 2011, Volkswagen completed Chattanooga Assembly in the US state of
Tennessee. The facility has produced Volkswagen cars and SUVs specifically designed

23
for North American markets, beginning with the Passat B7 in 2011. The company
recently announced plans to expand further by investing $900 million to add floor space
to the factory.
The VW XL1 began a limited production run in 2013. The XL1 is a lightweight and fuel
efficient two-person vehicle (only 795 kg).
The Volkswagen Atlas (a large crossover SUV) begins production in late 2016, and aims
to help end several years of losses for Volkswagen in the US, the world's second-largest
auto market.
On September 14, 2016, Volkswagen announced its partnership with three Israeli
cybersecurity experts to create a new company, Cymotive, dedicated to automotive
security.
VW calls their shift towards electric vehicles "Transform 2025+". As part of the strategy,
VW aims to launch more than 30 electric vehicles until 2025, and is anticipating yearly
sales of 2 to 3 million electric VW cars by 2025, which would make up 20 to 25 percent
of their total yearly sales volume.

Operations
Volkswagen is the founding and namesake member of the Volkswagen Group, a large
international corporation in charge of multiple car and truck brands, including Audi,
SEAT, Lamborghini, Bentley, Bugatti, Scania, MAN, and Škoda. Volkswagen Group's
global headquarters are located in Volkswagen's historic home of Wolfsburg, Germany.
Volkswagen Group, as a unit, is currently Europe's largest automaker. For a long time,
Volkswagen has had a market share over 20 percent.
In 2010, Volkswagen posted record sales of 6.29 million vehicles, with its global market
share at 11.4%. In 2008, Volkswagen became the third largest automaker in the
world, and, as of 2012, Volkswagen is the second largest manufacturer
worldwide. Volkswagen has aimed to double its US market share from 2% to 4% in
2014, and is aiming to become, sustainably, the world's largest car maker by
2018. Volkswagen Group's core markets include Germany and China.
Worldwide presence
Volkswagen has factories in many parts of the world, manufacturing or assembling
vehicles for local markets. In addition to plants in Germany, Volkswagen has
manufacturing or assembly facilities in Mexico, the US, Slovakia, China, India,
Indonesia, Russia, Malaysia, Brazil, Argentina, Portugal, Spain, Poland, the Czech
Republic, Bosnia and Herzegovina, Kenya and South Africa. In 2011, Volkswagen was
named in the top 25 largest companies in the world by the Forbes Global 2000.
Volkswagen is setting up a new factory in West Java, Indonesia, which started
construction in mid-2013, the investment into the new plant, which will produce large
transporters and multivans, is valued at $140 million.
As of May 2014, Volkswagen is planning to start assembling certain engines in India to
increase localisation from 70% to 90%.

24
In January 2016, Volkswagen announced launching a new factory in Algeria during a
summit between Angela Merkel and Algerian Prime minister Abdelmalek Sellal.
Work–life balance
Volkswagen agreed in December 2011 to implement a rule passed by the
company's works council aimed at improving work–life balance by restricting company
email functionality on the firm's BlackBerrysmartphones from 6:30 pm to 7:30 am. The
change was a response to employees' complaints about high stress levels at work and the
expectation that employees would immediately answer after-hours email from home.
About 1,150 of Volkswagen's more than 190,000 employees are affected by the email
restriction.
Relationship with Porsche and the Volkswagen Law
Volkswagen has always had a close relationship with Porsche, the Zuffenhausen-based
sports car manufacturer founded in 1931 by Ferdinand Porsche, the original Volkswagen
designer and Volkswagen company co-founder, hired by Adolf Hitler for the project. The
first Porsche car, the Porsche 64 of 1938, used many components from the Volkswagen
Beetle. The 1948 Porsche 356 continued using many Volkswagen components, including
a tuned engine, gearbox and suspension.
The two companies continued their collaboration in 1969 to make the VW-Porsche 914
and Porsche 914-6. (The 914-6 had a 6-cylinder Porsche engine, and the standard 914
had a Volkswagen engine.) Volkswagen and Porsche would collaborate again in 1976 on
the Porsche 912-E (USA only) and the Porsche 924, which used many Audi components
and was built at Audi's Neckarsulm facilities. The 924 was originally designated for
AUDI. Most Porsche 944 models were built there, although they used far fewer VW
components.
The Porsche Cayenne, introduced in 2002, shares its entire chassis with the Volkswagen
Touareg and Audi Q7, and is built at the same Volkswagen factory in Bratislava that the
other SUV's are built.
In September 2005, Porsche announced it would increase its 5% stake in Volkswagen to
20% at a cost of €3 billion, with the intention that the combined stakes of Porsche and
the government of Lower Saxony would ensure that any hostile takeover by foreign
investors would be impossible. Speculated suitors included DaimlerChrysler, BMW,
and Renault. In July 2006, Porsche increased their ownership again to 25.1%.
On 4 March 2005, the European Commission brought an action against the Federal
Republic of Germany before the European Court of Justice, claiming that
the Volkswagen Law, which prevents any shareholder in Volkswagen from executing
more than 20% of the total voting rights in the firm, was illegally restricting the flow of
capital in Europe. On 13 February 2007, Advocate General Dámaso Ruiz-Jarabo
Colomer submitted an opinion to the court in support of the action. This again opened the
possibility of a hostile takeover of VW and so on 26 March of the same year Porsche
took its holding of Volkswagen shares to 30.9%. Porsche formally announced in a press
statement that it did not intend to take over Volkswagen, but intended the move to avoid
a competitor's taking a large stake and to stop hedge funds from dismantling VW. As
expected, on 22 October 2007, the European Court of Justice ruled in agreement with
Ruiz-Jarabo and the law was struck down. In October 2007, the European Court of
25
Justice ruled that the VW law was illegal because it was protectionist. At that
time, Porsche held 31% of VW shares — although a smaller proportion of voting rights,
due to the Volkswagen Law — and there had been speculation that Porsche would be
interested in taking over VW if the law did not stand in its way. The court also prevented
the government from appointing Volkswagen board members. The German government
then rewrote the Volkswagen law, only to be sued again.  In October 2013, the EU Court
of Justice in Luxembourg ruled that the rewritten Volkswagen law "complied in full"
with EU rules.
On 26 October 2008, Porsche revealed its plan to assume control of VW. As of that day,
it held 42.6% of Volkswagen's ordinary shares and stock options on another 31.5%.
Combined with the state of Lower Saxony's 20.1% stake, this left only 5.8% of shares on
the market—mostly with index funds that could not legally sell. Hedge funds desperate
to cover their short positions forced Volkswagen stock above one thousand euros per
share, briefly making it the world's largest company by market capitalisation on 28
October 2008. By January 2009, Porsche had a 50.76% holding in Volkswagen AG,
although the "Volkswagen Law" prevented it from taking control of the company.
On 6 May 2009, the two companies decided to join together, in a merger.
On 13 August, Volkswagen Aktiengesellschaft's Supervisory Board signed the
agreement to create an integrated automotive group with Porsche led by Volkswagen.
The initial decision was for Volkswagen to take a 42.0% stake in Porsche AG by the end
of 2009, and it would also see the family shareholders selling the automobile trading
business of Porsche Holding Salzburg to Volkswagen. In October 2009 however,
Volkswagen announced that its percentage in Porsche would be 49.9% for a cost of
€3.9 billion (the 42.0% deal would have cost €3.3 billion). On 1 March 2011,
Volkswagen has finalized the purchase of Porsche Holding Salzburg (PHS), Germany's
leading specialty automobile distributor, for €3.3 billion ($4.55 billion).
Auto Museum
Since 1985, Volkswagen has run the Volkswagen AutoMuseum in Wolfsburg, a museum
dedicated specifically to the history of Volkswagen. In addition to visiting exhibits in
person, owners of vintage Volkswagens anywhere in the world may order what the
museum refers to as a "Birth Certificate" for a set fee of €50—this formal "Zertifikat"
indicates basic information known at the time of manufacture (colors, options, port of
destination, etc.).

26
Global sales figures

Yea
Global sales (in millions)
r

2006 5.7

2007 6.2

2008 6.3

2009 6.3

2010 7.3

2011 8.4

2012 9.3

2013 9.7

2014 10.2

2015 10.0

27
2016 10.3

Current models

Up! City car  Hatchback

 Hatchback
Gol City car  Sedan
 coupé utility

Ameo City car  Sedan

Fox (South Supermini  Hatchback

America)  Estate

 Hatchback
Polo Supermini  Coupé
 Estate

Vento Subcompact car  Sedan

Small family car  Hatchback

Beetle
 Convertible

 Hatchback
Golf Small family car  Estate
 Convertible

Jetta Small family car  Sedan

Arteon Large family car  Sedan

28
  Sedan
Large family car  Estate
Passat
 Crossover
(Alltrack)

Scirocco Compact sports car  Coupe

Touran Compact MPV  MPV

Sharan Large MPV  MPV

Tiguan Small crossover SUV  SUV

Midsize crossover
Atlas SUV  SUV

Touareg Large crossover SUV  SUV

GTI models

Polo  Hatch
Supermini
GTI back

Golf Small family car  Hatch

GTI back

29
Electric models
GTE models
1.4-liter and an electric
Golf Small  Hatch motor;
GTE family car back can travel for a full 50 km on
electricity only.[76]

Passat Large
GTE family car  Estate 

E-models
VW e-models are all-electric vehicles.

e-up!

e-Golf

R models
R models are exotic and sport vehicles.

Small sports  Hatchb

Golf R
car ack

Scirocco Small sports

car  Coupé
R

Historic models

Kübelwagen 1940–1945

30
Schwimmwage
1942–1944
n

Karmann Ghia 1955–1974

1500/1600 1961–1973

181 1969–1983

Country Buggy 1967–1969

411 1968–1972

K70 1970–1974

412 1972–1974

31
Scirocco 1974–1981

Derby 1977–1981

Corrado 1988–1995

Lupo 1998–2004

New Beetle 1998–2010

Golf + 2004-2009

Routan 2009-2013

Eos 2006-2015

Phaeton 2003-2016

32
 CC 2008-2017

Electric and alternative fuel vehicles

Neat ethanol vehicles
Volkswagen do Brasil produced and sold neat ethanol-powered, (E100 only), vehicles in
Brazil, and production was discontinued only after they were supplanted by more
modern Flex Fuel technology. As a response to the 1973 oil crisis, the Brazilian
government began promoting bioethanol as a fuel, and the National Alcohol Program -
Pró-Álcool- (Portuguese: Programa Nacional do Álcool) was launched in
1975. Compelled by the 1979 energy crisis, and after development and testing with
government fleets by the CTA at São José dos Campos, and further testing of several
prototypes developed by the four local carmakers, including Volkswagen do Brasil, neat
ethanol vehicles were launched in the Brazilian market.[78][79] Gasoline engines were
modified to support hydrous ethanol characteristics and changes included compression
ratio, amount of fuel injected, replacement of materials that would get corroded by the
contact with ethanol, use of colder spark plugssuitable for dissipating heat due to higher
flame temperatures, and an auxiliary cold-start system that injects gasoline from a small
tank in the engine compartment to help starting when cold. Within six years, around 75%
of all Brazilian passenger cars were manufactured with ethanol engines.
Production and sales of neat ethanol vehicles tumbled beginning in 1987 owing to
several factors, including a sharp decline in gasoline prices as a result of the 1980s oil
glut, and high sugar prices in the world market, shifting sugarcane ethanol production
from fuel to sugar. By mid-1989, a shortage of ethanol fuel supply in the local market
left thousands of vehicles in line at gas stations or out of fuel in their garages, forcing
consumers to abandon ethanol vehicles.
Flexible-fuel vehicles
The 2003 VW Gol 1.6 Total Flex was the first full flexible-fuel vehicle launched in
Brazil, capable of running on any blend of gasoline and E100. In March of that year, on
its fiftieth anniversary, Volkswagen do Brasil launched in the local market the Gol 1.6
Total Flex, the first Brazilian commercial flexible fuel vehicle capable of running on any
mix of E20-E25 gasoline and up to 100% hydrous ethanol fuel (E100). After the neat
ethanol fiasco, consumer confidence in ethanol-powered vehicles was restored, allowing
a rapid adoption of the flex technology. This was facilitated by the fuel distribution
infrastructure already in place throughout Brazil, with more than 30 thousand fueling
stations, a heritage of the Pró-Álcool program
Owing to the success and rapid consumer acceptance of the flex-fuel versions, by 2005
VW had sold 293,523 flex-fuel cars and light-duty trucks, and only 53,074 gasoline-only
automobiles, jumping to 525,838 flex-fuel vehicles and only 13,572 gasoline-only cars
and 248 gasoline-only light trucks in 2007, and reaching new car sales of 564,959 flex-
fuel vehicles in 2008, representing 96% of all new cars and light-duty trucks sold in that
year. VW do Brasil stopped manufacturing gasoline-only vehicles models for the local
33
market in 2006, and all of the remaining gasoline-only Volkswagen models sold in Brazil
are imported. The flex-fuel models currently produced for the local market are the Gol,
Fox, CrossFox, Parati, Polo Hatch, Polo Sedan, Saveiro, Golf, and Kombi. By March
2009, Volkswagen do Brasil had attained the milestone mark of two million flex-fuel
vehicles produced since 2003.
Hybrid vehicles
Volkswagen and Sanyo have teamed up to develop a battery system for hybrid
cars. Volkswagen head Martin Winterkorn has confirmed the company plans to build
compact hybrid electric vehicles. He has stated "There will definitely be compact hybrid
models, such as Polo and Golf, and without any great delay", with gasoline
and diesel power. For example, Golf is the ideal model to go hybrid as the Golf 1.4 TSI
was recently awarded the "Auto Environment Certificate" by the Oko-Trend Institute for
Environmental Research, and was considered as one of the most environmentally
friendly vehicles of 2007. Also underway at Volkswagen's Braunschweig R&Dfacilities
in Northern Germany is a hybrid version of the next-generation Touareg.
VW intends all future models to have the hybrid option. "Future VW models will
fundamentally also be constructed with hybrid concepts," VW head of development
Ulrich Hackenberg told Automobilwoche in an interview. Hackenberg mentioned that the
car based on the Up! Concept seen at Frankfurt Motor Show, as well as all future models,
could be offered with either full or partial hybrid options. The rear-engine up! Will go
into production in 2011. Nothing has been said about plug-in hybridoptions.
Volkswagen announced at the 2010 Geneva Motor Show the launch of the 2012 Touareg
Hybrid, scheduled for 2011. VW also announced plans to introduce diesel-electric hybrid
versions of its most popular models in 2012, beginning with the new Jetta, followed by
the Golf Hybrid in 2013 together with hybrid versions of the Passat. In 2012, the
Volkswagen Jetta Hybrid set the world record to become the fastest hybrid car at
187 mph.
Plug-in electric vehicles
In November 2009, Volkswagen announced it has hired Karl-Thomas Neumann as its
group chief officer for electric traction.[104] VW's Chief of research, Jürgen Leohold, said
in 2010 the company has concluded hydrogen fuel-cell cars are not a viable option.
As of May 2016, the Volkswagen Group offers for retails customers nine plug-in electric
cars, of which, three are all-electric cars: the Volkswagen e-Up!, e-Golf and Audi R8 e-
tron, and six are plug-in hybrids: the Volkswagen Golf GTE, Passat GTE, Audi A3
Sportback e-tron, Q7 e-tron quattro, Porsche Panamera S E-Hybrid and Cayenne S E-
Hybrid. Also two limited production plug-in hybrids were manufactured beginning in
2013, the Volkswagen XL1 (250 units) and the Porsche 918 Spyder (918 units). Total
cumulative sales of all Volkswagen brand electrified cars since the start of their
respective production is expected to reach about 103,000 by the end of 2016.
In order to comply with increasingly strict carbon dioxide emission limits in major
markets, the VW Group expects to sell about one million all-electric and plug-in hybrid
vehicles a year worldwide by 2025. The Group plans to expand its plug-in range with 20
new pure electric and plug-in hybrid cars, including two cars to compete with Tesla
Motors, the Porsche Mission E all-electric car and the Audi e-tron quattro, which is
34
expected to become the brand's first mass production electric vehicle. According to
Thomas Ulbrich, VW brand production chief, the carmaker has capacitty to build as
many as 75,000 battery electric and plug-in hybrids a year if demand rises. Volkswagen
announced in October 2015 that "it will develop a modular architecture for battery
electric cars, called the MEB. The standardized system will be designed for all body
structures and vehicle types and will allow the company to build emotionally appealing
EVs with a range of up to 310 mi (500 km)." In June 2016, VW launched a program to
develop 30 all-electric cars in 10 years, and sell 2-3 million electric cars per year by
2025. Due to lower manpower requirements for electric motors than for piston engines,
VW expects a gradual workforce reduction as numbers of electric cars increase. VW
considers battery factory ownership as too expensive.

Environmental record
In 1974 Volkswagen paid a $120,000 fine to settle a complaint filed by the
Environmental Protection Agency over the use of so-called "defeat devices" that disabled
certain pollution-control systems. The complaint said the use of the devices violated the
U.S. Clean Air Act. 
Volkswagen first implemented its seven environmental goals in Technical Development
in 1996. The plan contains themes involving climate protection, resource conservation,
and healthcare, through objectives such as reducing greenhouse emissions and fuel
consumption, enabling the use of alternative fuels, and avoiding the use of hazardous
materials. The original 1996 goals have since been revised in 2002 and 2007.
Volkswagen was the first car manufacturer to apply ISO 14000, during its drafting stage
and was re-certified under the standards in September 2005. In 2011 Greenpeace began
criticising Volkswagen's opposition to legislation requiring tighter controls on CO2
emissions and energy efficiency, and an advertising campaign was launched parodying
VW's recent series of Star Wars-based commercials.
In 2013, the Volkswagen XL1 became the most fuel-efficient production car in the
world, with a claimed combined fuel consumption of 261 mpg (0.90 liter/100 km).
Driving style has huge impact on this result - "normal" driving produces mileage in the
120 mpg range (1.96 liter/100 km) 
As of 2014, VW is registered with a Corporate Average Fuel Economy (CAFE) of 34-38
mpg in USA.
Diesel emission violations
On Friday, 18 September 2015, the United States Environmental Protection
Agency (EPA) said beginning in 2008 the automaker improperly installed engine control
unit(ECU) software determined to be a "defeat device", in violation of the Clean Air
Act to circumvent environmental regulations of NOx emissions by diesel engine 2009-
2015 model year Volkswagen and Audi cars. The software detects when the cars were
being subject to emissions testing, and then fully enabled ECU emission controls to
successfully pass. However, during normal driving conditions, emission control software
was shut off in order to attain greater fuel economy and additional power, resulting in as
much as 40 times more pollution than allowed by law. Consumer Reports tested a 2011
Jetta SportWagen TDI and found in emissions mode its 0-60 mph time increased by 0.6

35
seconds and its highway fuel economy dropped from 50 mpg to 46 mpg.Volkswagen
admitted to using the defeat device, and has been ordered to recall approximately
482,000 cars with four-cylinder 2.0-liter TDI engines. United States federal penalties
may include fines ranging up to US$18 billion, and possibly criminal charges. On June
28, 2016, Volkswagen agreed to pay a settlement of $15.3 billion, the largest auto-related
consumer class-action lawsuit in the United States history.
The EPA was first alerted to the issue by the International Council on Clean
Transportation (ICCT), reporting results of research commissioned for them by West
Virginia University's Center for Alternative Fuels, Engines and Emissions (CAFEE). In
May 2014, CAFEE published their ICCT sponsored research. After 15 months of
denying the emissions control systems were deliberately gamed and instead claiming
discrepancies due to "technical" reasons, on August 21 Volkswagen acknowledged to the
EPA and California Air Resources Board (CARB) their emission controls systems were
rigged. This was followed by a formal announcement of admission to regulators on
September 3 which took place immediately after the EPA threatened to withhold
approval for their 2016 cars. Volkswagen's initial public response came on 20 September,
when a spokesman said they would stop all US sales of the diesel models affected.
Chairman Martin Winterkorn issued an apology and said Volkswagen would cooperate
with investigators. Since emission standards in Canada are close to those in the US,
Volkswagen Canada also halted sales of the affected diesel models. Tuesday, 22
September Volkswagen spokesman admit that the defeat device is installed in ~11
million vehicles with Type EA 189 diesel engines worldwide.
On the first business day after the news, Volkswagen's stock price declined 20% and
declined another 17% on Tuesday, that same day a social media advertisement
with Wired about "how diesel was re-engineered" was removed as well as a series
of YouTube ads titled "Diesel Old Wives’ Tales". On Wednesday, 23 September,
Volkswagen chief executive officer Martin Winterkorn resigned.Volkswagen
hired Kirkland & Ellis law firm for defense, the same firm that defended BP during
the Deepwater Horizon oil spill.
On November 2, the EPA issued a second notice of violation (NOV) pertaining to certain
diesel 3.0-liter V6 equipped Audi, Volkswagen Touareg and Porsche
Cayenne vehicles.The EPA found beginning with the 2009 model year all vehicles
powered by the V6 were non-compliant. During testing the EPA, CARB and Transport
Canada discovered software that activates pollution reduction systems when the
automobiles are being driven under federal test conditions, otherwise during real world
driving these devices are inactive. Volkswagen disputed the EPA's findings stating their
software is legally permitted, however shortly after Volkswagen issued a stop-sale for
the EPA's disputed vehicles and additional models the EPA did not question. In
November 2016, Volkswagen and its labour unions agreed to reduce the workforce by
30,000 people until 2021 as a result of the costs from the violations. However, 9,000 new
jobs would come by producing more electric cars. Volkswagen also announced plans to
become the world leader in electric cars, producing 1 million VW-EVs by 2025 and 3
million by the group, and a VW manager stated that its diesel cars would not become
available in USA.

36
On Wednesday, 11 January 2017, Volkswagen agreed to plead guilty to the emissions-
cheating scandal and to pay $4.3 billion in penalties. Six Volkswagen executives were
charged. The following day, one of the indicted executives was ordered to be held
without bail pending trial as it was feared that he would flee to Germany and extradition
would be impossible. For this reason, senior VW management staff were warned not to
travel to the US. On 23 January 2017, a US judge approved a $1.2 billion settlement in
which 650 American dealers, "who, like consumers, were blindsided by the brazen fraud
that VW perpetrated," would receive an average of $1.85 million.

CHAPTER 3- COMPETITOR ANALYSIS

37
  Toyota and General Motors are the major competitors on a global scale with Ford
following closely.

 Sales (as of 2009): Toyota – 7.3 million units

General Motors – 6.5 million units

Volkswagen – 6.29 million units.

Ford – 5.73 million units

 Major Markets: Toyota - Japan and North America

General Motors – United States and

China

Volkswagen – Europe and China

Ford – United States and Europe

Sales

Toyota 12%
12%
GM 11%
11% Toyota 12%
Volkswagen 10% GM 11%
10% Volkswagen 10%
Others
Ford 8%
60% Others
Ford 8%
8%

38
 200

150
volkswagen
100 GM
Ford
50

0
2014 2015 2016

Volkswagen versus Toyota

Volkswagen is affected by the economic slowdown as well, with the operating profit fell
26% from a year in 2013. Nevertheless, some main strategies of Volkswagen are as
follow:

 Volkswagen main strategy has been to offer smaller car.

 Despite the slowdown in sales, Volkswagen is still making heavy investment in
factories, technology, acquisitions and new models development in 2013.
 Volkswagen focus on export more, especially looking at the market of China.

Toyota
Toyota is currently the market leader in the world, and has good presence in Europe
region as well. Despite that, Toyota is also affected badly by industry-wide slump due to
financial crisis in 2008. Nevertheless, some strategies employed by Toyota in recent
years include:

 Focus on offering smaller and more efficient car.

 Focus on quality. Indeed, the advertisement by Toyota in Europe is done with the
core messages to be delivered is that Toyota emphasize a lot on quality. Example, the
tagline used by Toyota is “Your Toyota is my Toyota”.

39
 Cost reduction is also one of the priority of Toyota, whereby the firm offshore the
manufacturing to developing countries such as Thailand and China.
 Other than that, Toyota had also suspended production at its factories – due to
over-capacity.
 To continuously enhance efficiencies of production.
 Develop of petrol-electric hybrids vehicle (perhaps most famous is its Prius
model). [Remark: with help of hindsight, hybrid is actually driving growth of Toyota in
Europe.
 Being customer oriented and meeting the needs of the consumer; to make sexier
product for the European market and via greater degree of localisation.
 Collaborate with other players, such as BMW and PSA.

Can Volkswagen or Toyota gain Competitive Advantage?

 Both Volkswagen and Toyota focus on small car segment

 The strategies by both Volkswagen and Toyota make sense
 
For example, to cut costs is a useful short term strategy to cut losses. Then, focus on
smaller cars (as for both Volkswagen and Toyota) will benefit from the trends of
sluggish economy, austerity budget, dampening consumer demands, and frugal
consumers. (They are pursuing a low cost strategy (without neglecting the importance of
quality), but that is somewhat challenging because both Volkswagen and Toyota are of
quite equal competitiveness).
 
Toyota had focus on customer needs, such as to make more appealing cars is rational. In
a similar way, Volkswagen had also focus on new model development. Such strategies is
necessary to keep them on top of the industry (but would not likely contribute much to
Volkswagen to win over Toyota, or vice versa – as both the companies are also
constantly improving their competitive position on similar dimension, thereby at the end
of the day, they have no advantage over the other).
40
 
However, will these strategies assist the firm to gain competitive advantage is not very
convincing, except that the Toyota decision to focus on hybrid cars. This is because
when people become more environmental friendly, they would make purchase on ‘green
vehicles’. Hybrid car market is the only possible growth market amongst the sluggish or
saturated car industry. Nevertheless, Volkswagen decision to expand and focus on
emerging countries such as China, is also strategic, as that would enable it to seek growth
in the most populous market.
 
Overall, it is valid to argue that without breakthrough in technology (or creating a Blue
Ocean in the car industry), the ability to gain competitive advantage would rely if Toyota
or Volkswagen able to emerge as the dominant cost leader in the industry.

In the first quarter this year VW worldwide sales closed the gap on No. 1 automaker
Toyota. VW sales of 1.4 million fell 11%, while Toyota’s 1.8 million dropped 27%–
narrowing the first-quarter sales gap to 363,000 vehicles from 840,000.

VW said it would build its new series of small cars in Slovakia, the now-independent
half of once-Czechoslovakia. Production starts in 2011, and VW expects at least 500,000
global sales a year.

VW says it expects to be profitable this year. First-quarter profit was $403 million, but
that quarter stayed black because of the sale of its heavy truck business in Brazil to an
ally.

Plus there is the major expansion in the U.S. with a new plant in Tennessee. A new car is
to be built there to challenge Toyota’s and Honda‘s dominance of the family sedan
market. VW hopes to sell 1 million VWs and Audis here by 2018, which is enormously
ambitious considering sales last year were 315,000.

VW has nine brands worldwide; the best known are VW, Audi,Skoda and SEAT–and
don’t forget the luxury Bentley. VW is the No. 1 seller in Europe; No. 1 in China; and
No. 1 or 2 in Brazil. But it is weak in U.S.

And we mustn’t forget the takeover by Porsche, which now owns 51% of VW and
apparently aims for 75% ownership, which may have ramifications that we cannot now
predict. There has been a historical relationship between Porsche and Volkswagen that is
ending with the Mighty Mouse swallowing the cat.

41
A bit of history: The original Volkswagen, which we in the U.S. call the Bug or the
Beetle and the Germans called the Type 1, was designed by Ferdinand Porsche in the
1930s at the request of Adolph Hitler. The Fuhrer wanted a small inexpensive car for the
German masses, thus the name Volkswagen, or “people’s car.” The factory was built, but
the war came before any were really sold. After the war the bombed-out plant was put
under control of Heinz Nordoff, who had worked for GM’s German company. It was
Nordoff who turned VW around and created the modern company.

Porsche, meanwhile, had no part of this post-war VW and had started his own sports-car
company. But there were soon two sides of the family: the Porsche side, descendants of
the Ferdinand’s son, and the Piech side, descendants of his daughter. They didn’t get
along, and for the sake of peace they were bounced from operations. Ferdinand Piech,
grandson of the original Porsche and a domineering but brilliant engineer and executive,
joined Audi/VW, eventually rising to VW’s chief executive. He retired from active
management but was chairman of the board, and he really never let go. It is Piech who
pushed VW upscale, building up Audi and adding Bentley, Lamborghini and Bugatti
nameplates.

Today there are technological questions about the future of the automobile, and VW and
Toyota disagree.

Toyota is a firm believer in hybrid technology, that is, two engines, including a set of
batteries, to push the car electrically for a bit. This could lead into “plug-in” hybrids or
even pure electrics someday.

VW believes that the best answers lie in the diesel engine and improvements in the
gasoline engines. This may not sound as adventuresome, but as a practical matter VW
has a point. VW will be getting 50 miles per gallon or more in its small cars in a few
years, and its adoption of dual-clutch transmissions and turbo- or super-charging is being
followed by many around the world. The VW Jetta TDI (turbo diesel) is a huge hit with
car testers in this country.

What’s clear is that the German Volkswagen and Japanese Toyota are in a battle for
world leadership in this industry. Maybe someday the Chinese will be challenging.
Maybe someday Ford will be there. But right now it’s Toyota in the lead with an
ambitious Volkswagen nipping at its heels.

42
 CHAPTER 4- DATA ANALYSIS AND INTERPRETATION

QUESTIONNAIRE

Ques1: Do you have a car?

Options Yes No Total

Respondent 80 20 100
Percentage 80 20 100

Do you have a car?

Yes no

20%

43
 80%

Analysis: It is clear from the above diagram that 80% of the people have car.

44
 Ques.2: why you bought your present car?

Options Respondent Percentage

Increase in disposable 35
income 35
Better safety at roads 22 22
Family needs 16 16
Suits your lifestyle 15 15
Increase in family size 12 12
Total 100 100

Motives for buying car

Increase in disposable income Better safety at roads

Family needs Suits your lifestyle
Increase in family size

12%
35%
15%
16%
22%

Analysis: from the above we can analyse that 35% of persons motive for buyins car is Increase in
their disposable income,22%’s better safety at roads, 16%’s family needs,15%’s suits their
lifestyle, 12%’s increase in family size.

45
Ques.3: Brands of cars that customers having?

Options Respondent Percentage

Maruti 40 40
Tata Motors 35 35
Volkswagen 15 15
Any Other 10 10
Total 100 100

Brands of car that customer have

Maruti Tata Motors Volkswagen Any Other

10%
15%
40%

35%

Analysis: From the above table and diagram we can analyse that most of the persons
prefer Maruti after that Tata only 10% of the person prefer Volkswagen.

46
Ques4: which modal of Volkswagen do you have?

Modal of Car No. respondent percentage

Polo 45 45
Jetta 25 25
Vento 20 20
Passat 10 10
Total 100 100

Modal Preferred

Polo Jetta Vento Passat

10%
20%
45%

25%

Analysis: it is cleared from above table and diagram most customer prefer small car instead of
luxury ones.

47
Ques. 5: what is your Motivating Factor to buy the car?

Factor No. of Respondent Percentage

Your family 36 36
Society 28 28
Life style 12 12
Culture 10 10
Any other 14 14
Total 100 100

Motivating Factor

Your family Society Life style Culture any other

14%
10% 36%

12%

28%

Analysis: as it is clear from the above diagram that most people are motivated
by family and society to by the car.

48
Ques.6: what feature you like in the car?

Product features No. of Respondent Percentage

Fuel efficiency 30 30
Style 12 12
Comfort 18 18
Engine power 18 18
Resale value 12 12
Any other 10 10
Total 100 100

Motivating features

Fuel efficiency Style Comfort

Any
Engine power Resale value other

12% 10% 30%

18%
12%
18%

Analysis: as it clear from the above diagram that most of the people see
features like fuel efficiency, comfort and engine power.

49
Ques7: what are offers which motivate you to buy the car?

Offers Respondents Percentage

Free insurance 16 16
Special discount 14 14
Extending service 40 40
period
Finance availability with 30 30
0% interest
Total 100 100

Motivational offer

Free insurance
Special discount
Extending service period
Finance availability with 0% interest

16%
30%
14%

40%

Analysis: extending service period, availability of finance at 0% interest are the offers which
motivates most of the customers to buy the car.

50
Ques8: which variant of the fuel motivates you to buy the car?

Variant Respondents Percentage

Petrol 20 20
Gas 50 50
Diesel 30 30
Total 100 100

Fuel variant preffered

Petrol Gas Diesel

20%
30%

50%

Analysis: from the above table and diagram we can analyse that gas variant of the car is
preferred by most of the customers after that and finally diesel.

51
QUES9: Are you satisfied with service level of authorized dealer of the company?

Satisfaction level Respondents Percentage

Very much satisfied 10 10
Satisfied 60 60
Ok 18 18
Not satisfied 12 12
Total 100 100

Satisfaction from authorised dealer

Very much
satisfied Satisfied

Not
Ok satisfied

12% 10%
18%

60%

Analysis: from the above we can analyse that mostly the customers are satisfied by the services
of authorized dealers.

52
Ques10: weather the company is providing better after sale service?

Options Respondents percentage

Yes 65 65
No 25 25
No response 10 10
Total 100 100

Satisfaction from after sale service

Yes No No response

10%

25%
65%

Analysis: From the above we can analyse the 65% of the customers are satisfied 25% are not
satisfied and left 10%not responded.

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QUES11: What’s your opinion on a Brand Ambassador for the cars?

a) Very necessary
b) Not needed
c) Waste of money for manufacturer

Data Analysis:

Customer Opinion On Ambassador Number Of Customers

Very necessary 85
Not needed 14
Waste of money for manufacturer 1

14% 1%

Very necessary
Not Needed
Waste of money
85%

Interpretation: This question is meant to know about the importance of Brand Ambassador for a
car in the customer’s point of view. Most of the VOLKSWAGEN customers think that a Brand
Ambassador is very necessary for promoting a car.

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QUES12: What’s your opinion on the price list of Volkswagen cars?
A) Affordable by common man
B) Affordable only by rich man
C) Can’t say.

Data Analysis:

Customers Opinion Number Of Customers

Affordable by common man 12
Affordable only by rich man 84
Can’t say. 4

Sales

4% 12%

Affordable by common man

Affordable by rich man
Cannot say

84%

Interpretations: More than 80% of customers think that VOLKSWAGEN cars are affordable
only by rich men. These cars are too expensive for an economic/common man of the society.

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 Chapter - 5
Findings, Learning's & Conclusion

It has been a great job of the research to present the results in the immaculate way so that the
purpose for which whole of the research has been must be fulfilled.
In the light of the specified objectives of the research study and above discussion along with the
analysis of the data collected following was interpreted from the data found from the study
undertaken:
In India most of the car users are of small cars. The customers of
India prefer family car than luxury car.
Car have shown an increase in craze and trends in the recent past owing to the marketing
strategies, mileage factors, price and ease in handling as may be clear from the data
analysed.

The advertisement plays a major role in communicating to the customer

information/specification about the product. Among the supporters of advertising the most
preferred media of advertising in case of cars is the TV followed by the print-media
together. This is clearly sign of increasing materialism and consumer due to the invasion
of science in public life.

From the study, it was found that people are mostly motivated by user life style, culture,
society and family to buy the product.

It was found that company is providing better after sales services which is useful for
improving market share and providing satisfaction to the customers.

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It was found that company is satisfying its customers by providing various offers like:
1. 0% interest finance schemes
2. Special discounts on sale of car
3. Free insurance
4. By extending the service period

It was also found that company is satisfying its customers on the basis of features like:
1. Fuel efficiency
2. Safety mostly
3. Sound quality

It was also found that most of the customers gives priority to the gas fuel variant of the
car.

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 Chapter - 6

ANNEXURE

QUESTIONNAIRE

NAME: ____________________ AGE: ___________________

GENDER: __________________ OCCUPATION: __________

ANNUAL INCOME: __________ E-mail: __________________

Ques1: Do you have a car?

A) Yes
B) No

Ques.2: why you bought your present car?

A) Increase in disposable income

B) Better safety at roads
C) Family needs
D) Suits your lifestyle
E) Increase in family size

Ques.3: Brands of cars that customers having?

A) Maruti
B) Tata Motors
C) Volkswagen
D) Any Other

Ques4: which modal of Volkswagen do you have?

A) Polo
B) Jetta
C) Vento
D) Passat

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Ques. 5: what is your Motivating Factor to buy the car?

A) Family
B) Society
C) Life Style
D) Culture
E) Any other

Ques.6: what feature you like in the car?

A) Fuel efficiency
B) Style
C) Comfort
D) Engine Power
E) Resale Value
F) Any other

Ques7: what are offers which motivate you to buy the car?

A) Free Insurance
B) Special Discount
C) Extending Service Period
D) Finance availability with 0% interest

Ques8: which variant of the fuel motivates you to buy the car?

A) Petrol
B) Gas
C) Diesel

QUES9: Are you satisfied with service level of authorized dealer of the company?

C) Very much satisfied

D) Satisfied
E) Ok
F) Not Satisfied

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Ques10: weather the company is providing better after sale service?

A) Yes
B) No
C) No Response

QUES11: What’s your opinion on a Brand Ambassador for the cars?

A) Very necessary
B) Not needed
C) Waste of money for manufacturer

QUES12: What’s your opinion on the price list of Volkswagen cars?

A) Affordable by common man

B) Affordable only by rich man
C) Can’t say.

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 Case Study on Marketing Strategy of Volkswagen

Volkswagen is well-known auto importer of the United States. In 1960s it auto important of
the united states than all other auto imports combined. Despite of growing foreign
competition in 1970. V W sales reached 300000 units annually. But the 1980 and early 1990,
its annually sales in the U.S market was down to 150000 units. In effect, its market share had
dropped 3 percent to under 1.5 percent.

V W is now trying to regain its standing and to increase market share in both Europe and the
United States .To do so, it has acquired SEAT, the Spanish car maker and SKODA, The
Czechoslovakian auto manufacture. So, it is now much more competitive worldwide than a
few years ago.

Another current V W strategy is to customize its product so that they appeal to various
specific international markets. In the United States, management of V W has discovered the
reason of declining sales that the car it had made looks ‘too American’. But U.S people
preferred the cars, which have European styling and German Engineering. This mistake is
being corrected. The same strategy is used in Europe where VW offerings are customized to
meet driver expectations.

At the same time, the company is putting renewed emphasis on its major strength
engineering. VW is convinced that this market advantage will help it to reach new sales
height over the last decade. In support of this belief, management Argus that the European
market responds well to cars that offer better handling and styling, and this is why it has been
so successful on the continent as well as the United States. The big challenge will be for the
firm to gain market share in an extremely competitive worldwide industry that is able to
produce far more cars each year than the market demand.

FINDINGS

1. How would Volkswagen use market assessment to evaluate sales potential for its
cars in the United States?

Ans:

As a multinational enterprise, Volkswagen can take a number of steps to evaluate sales

potential for its cars in the United States.

Firstly, it can examine the current import policies of other countries and identify the cars that
are now being purchased from abroad. Besides these, the Volkswagen can determine local
production and can examine the demographic changes that are taking place in the United
States. These cursory efforts help the Volkswagen to provide important information
regarding current product supply.

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Another would be to find out the number of auto registrations, and how fast this number is
growing annually because this would be useful in predicting new sales potential.

Thirdly, Volkswagen can use quantitative techniques such as trend analysis to estimate future
demand either by extrapolating the growth over the last 3 to 5 years and assuming that this
trend will continue or by using some form of average growth rate over the recent past.

Finally, the Volkswagen would compare the strength of cars produced by itself to the
strength of the cars produced by the other competitors and to make an evaluation of how the
company can position its offering for maximum market penetration.

2. Does Volkswagen need to modify its cars for the U. S. market? Why or why not?

Ans:

According to the case data, Volkswagen needs some modification of its produced cars in the
part of the styling and engineering, because its cars became a mature product and we know
that in the maturity stage of any product, there is needed some modification for continuing it
in the market.

The another reason of modifying its cars is that, with the time being Americans will start to
buy cars that offers German engineering and quality. But in the past, Volkswagen has made
the mistake of producing cars that look “Too American”. Because of this, many people of
America bought cars from ford, General Motors, and Chrysler because there were no
distinctive qualities that Volkswagen could use in attracting these buyers.

For the above reasons, by modifying the style and design of its cars and putting it into the
European styling and German engineering, the Volkswagen can gain a better competitive
advantage. As a result, it will be able to bounce back its previous position in the United
States.

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3. Would the nature of Volkswagen’s products allow the company to use an identical
promotional message worldwide or would the company have to develop a country-by-
country promotion strategy?

Ans:

Whether the features of Volkswagen’s products allow the company to use as identical
promotional message worldwide or to develop a country-by-country promotion strategy will
depend on where Volkswagen is selling its product. For a under developed country, the
message should be made on the basis of the purchasing power of the people of this country.

But for a developed country, the message should be focused on styling, handling,
engineering, and non-economic factors. As a result, the Volkswagen needs to develop the
different message for its identical product. Because Volkswagen is going to launch its
products in different countries. So an identical message may not convey the same meanings
to the different nations.

4. How would currency fluctuations affect Volkswagen’s profit in the U. S. market?

Ans:

At the time of doing business in the United States, the Volkswagen may face a risk
associated with currency fluctuations. This risk is particularly important when it has a return
on investment target because this objective can become unattainable if the local currency is
devalued.

For example, if Volkswagen incurs cost $30,000 to manufacture a car and ship a particular
model to the United States and the company sells the car to its dealer for $40,000
Volkswagen is making a 33 percent profit on the sale ($ 10,000/$ 30,000). However, if the
dollar decreases in value by 10 percent against the German Mark, then the company’s profit
percentage will decline. Because these dollars would buy more marks, of course, if the value
of the dollar increased against the mark, The Volkswagen would have profited accordingly
and might have lowered the price in order to generate additional sales.

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5. What type of distribution system would be most effective for Volkswagen in the
United States?

Ans:

The Volkswagen would select the most effective distribution system to reach its product to
the people in the United States. To do so, first thing it has to do that finding out the best
possible distributors to carry their product. At the time of selecting the distributors, the
Volkswagen should select those distributors, which are financially strong and will be able to
survive the company in the long run. Since United States in a developed country, its car
markets are full of well-established auto dealerships, but the Volkswagen should look for
successful dealers who would be willing to carry the Volkswagen line as well as its current
offerings.

Article

Volkswagen brand chief Herbert Diess presented his plan for the next ten years, and for the
first time in many years, I saw something that wasn’t a collection of platitudes and fluff. The
press conference took place in Volkswagen’s “Markenhochhaus,” the totally rebuilt brick
tower at the Wolfsburg factory, and only a few sentences into the presentation, when Diess
talked of a “diesel crisis” instead of the euphemistic “diesel issue,” it became clear that it
isn’t just the building that has seen a total revamp.

The product strategy of Volkswagen’s core brand can be put into four short words: More
SUVs, more EVs.

19 SUVs by 2020.

“We have slept through a few trends, especially when it comes to the SUV boom,” Diess
said, and he announced that the Volkswagen brand alone will go from two SUVs today to 19
by 2020. A lack of SUVs, not dieselgate, was why Volkswagen blew its chances to become

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world’s largest automaker last year. For decades, Volkswagen insisted to tell the market what
it needs, instead of developing a feel of what the market wants.

1 million EVs by 2025.

By 2025, Volkswagen wants to “sell one million electric vehicles per year, and become the
worldwide market leader in electro-mobility,” Diess announced. This target is for the
Volkswagen brand only, other Volkswagen Group brands will launch their electric models,
all based on a joint modular electric kit called MEB, and bringing the EV volume to about
30% of Volkswagen Group’s total volume. Tesla should take note. "Our goals are high and
our strategy is very ambitious," said Diess, and if he thinks a million EVs by 2025 will make
Volkswagen the market leader, Tesla's plans to make a million electric cars five years earlier
raise a few questions. “We want to be the first OEM to reach that number,” Diess added, in
case the message wasn’t received.

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 BIBLIOGRAPHY

1. Google.com
2. Wikipedia.com
3. Volkswagen.com
4. Economic Times
5. Times of India
6. https://hub.jhu.edu/2015/12/07/volkswagen-scandal-
explained-sylvia-long-tolbert/
7. https://www.coursehero.com/file/8088025/Recommendation-
for-Volkswagen-Case/

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