Volkswagen is a German company that was founded in May 1937 by the German Labour Front. This was the National Socialist trade union organization that replaced independent trade unions after Adolf Hitler rose to power.
Volkswagen means “people’s car” in German and is pronounced by most of us in America as “Volks Wagon.”
Volkswagen designs, distributes, and manufacturers motorcycles, engines, commercial vehicles, and turbomachinery. They also offer services related to fleet management, financing, and leasing. In 2016, the company surpassed Toyota to become the largest automaker in the world by sales. It’s also held the largest market share for two decades in Europe.
The Group sells cars under the brands Bentley, Audi, Lamborghini, Bugatti, SEAT, Porsche, Škoda, and of course, Volkswagen. Motorcycles through the group are sold under the Ducati brand name. Currently, Volkswagen operates in 150 countries and heads up 100 production facilities located in 27 countries.
An Overview of VW History
When was Volkswagen Founded?
In 1933, very few Germans drove automobiles. That’s why Adolf Hitler approved the design of the “people’s car” from Ferdinand Porsche. The town of Stadt des KdF-Wagens (now known as Wolfsburg) was designated the headquarters for factory workers in 1938. The full-scale production of vehicles was originally scheduled to convene in September 1939, but war occurred instead.
During World War II, the Germans used the Volkswagen plant to produce vehicles for the military. This included the Schwimmwagen and Kübelwagen. By 1943, the Germans also had over 12,000 prisoners of war working at this factory. Many of them repaired damaged aircrafts or built V1 rockets used to bomb Britain.
In 1945, bombing occurred in the town of Stadt des KdF-Wagens and the U.S. captures it. Then, they handed it over to the British army. Major Ivan Hirst painted one of the Volkswagen models green and showed it to other British officials. The British place an order for 20,000 vehicles.
Volkswagen reorganizes under West German power as a trust. In 1948, they introduced the Volkswagen Type 2 van, camper and pickup, plus the Karmann Ghia sports car. Then, in 1949, the Type 1 Beetle is sold in the U.S. for the first time. In that first year, there were only two sales.
To handle the future sales in the United States, the Volkswagen Group of America was formed in 1955. They handled all sales and service occurring in the U.S. With their help, the production of the Type 1 Beetle skyrocketed to one million units.
The focus of ad campaigns from the company began luring in younger, sophisticated consumers.
The 60s Through 2000
In 1968, the Disney movie, “Love Bug” was released and wildly adored by many. It featured Herbie, who was a VW Beetle that had a mind of his own. This movie helped the brand to gain more popularity in the states.
Then, in 1969, VW merged two companies together: Auto Union, the owners of the then discontinued Audi brand, and NSU Motorenwerke. These two companies together create what we know today as the Audi luxury brand.
On February 17, 1972, the Type 1 Beetle reached its 15,007,034th production. This number surpasses the Ford Model T and becomes the single most produced model in history. In 1973, VW introduced the Type 181, otherwise known as “Thing” in the United States. It was military themed and sold for just two years.
This occurred at the same time that Volkswagen realized there was some trouble for the company. Beetle sales declined in the North American and European markets. With the thought of discontinuing the Beetle, they recognized the need to replace it with something else.
This is where the ownership of Audi came into play. Because they had expertise in water-cooled engines and front-wheel drive, the road was paved to produce future generations of models like the Passat, Golf, Polo, Scirocco and other vehicles of Volkswagen origin.
In 1975, the VW Polo was created. Later, it was re-badged as the Audi 50 which became quickly discontinued in 1978. The Polo was the base of the Volkswagen Derby, introduced in 1977, but was discontinued in 1985 after the second generation.
In 1978, Volkswagen opened its first factory in the United States. They placed it in New Stanton, Pennsylvania to produce the Rabbit, which was known as the Golf in Europe.
In 1993, the Jetta and Golf Mk3 arrived in the U.S. but popularity was slim. Unfortunately, less than 50,000 models were sold, making it a record low. To remedy this, VW releases the new incarnation of the Passat in 1996 as well as the New Beetle and fourth-generation Jetta in 1998. They also acquired Bugatti, Lamborghini and Bentley.
Volkswagen in the Modern Age
In 2002, Volkswagen released their Phaeton line to appeal to the luxury market. In addition, they released the Touareg, which was their first modern SUV. Then, in 2003, the last Type 1 Beetle was produced in Puebla, Mexico. The museum in Wolfsburg takes Car No. 21,529,464 for display.
In July of 2008, VW announced a plan to build a $1 billion plant located in Chattanooga, Tennessee. It did begin production in 2011 with the 2012 Volkswagen Passat NMS. The goal of this plant was to create midsize sedans that could compete with a Toyota Camry or Honda Accord.
In October 2008, Porsche revealed their plan to assume control over VW. They had been buying up the stock for some time. To work around this, Porsche and Volkswagen announced their merger in May 2009. VW took 49.9% stake in Porsche for $5.75 billion plus an additional 19.9% stake in Suzuki for $2.5 billion.
Alternative Propulsion Methods
Neat Ethanol Vehicles
In Brazil, Volkswagen sold neat ethanol-powered vehicles (E100) as a reaction to the 1979 energy crisis. They engineered the gasoline engines to support hydrous ethanol specifications. These changes included the amount of fuel injected, need for colder spark plugs, compression ratio adjustments, replacement of anything which could be corroded, and an auxiliary cold-start system. Within a six-year time span, almost 75% of the Brazilian cars were made with ethanol engines.
Beginning in 1987, sales and production of the neat ethanol vehicles started to plummet. This resulted from a decline in the price of gasoline and the shift in sugar prices. In 1989, there was a shortage of the ethanol fuel which forced many consumers to abandon their ethanol vehicles completely.
In 2003, the VW Gol 1.6 Total Flex was launched in Brazil as the first fully flexible-fuel vehicle created by VW. It ran on any blend of E100 and gasoline. Because of these innovations, Brazil quickly adopted the technology. To support the efforts, the country placed more than 30 thousand fueling stations throughout the country as part of the Pró-Álcool program.
Because of the success, in 2005, VW had sold a total of 293,523 flex-fuel light-duty trucks and cars compared to just 53,074 gasoline-only vehicles. In 2008, flex-fuel sales represented 96%of all new sales leading the company to stop selling gasoline-only vehicles. Any gasoline-only models that are sold in Brazil are now imported.
Sanyo worked with Volkswagen to develop a new battery system to use in hybrid vehicles. In 2007, the Golf 1.4 TSI received the “Auto Environment Certificate” from the Oko-Trend Institute for Environmental Research as one of the most environmentally friendly automobiles.
At the 2010 Geneva Motor Show, VW launched their 2012 Touareg Hybrid. Then, in 2012 the Jetta Hybrid set the world record by becoming the fastest hybrid car topping off at 187 mph.
Plug-in Electric Vehicles
In 2009, VW hired Karl-Thomas Neumann to be the group chief officer in charge of electric traction. In 2016, the VW Group had nine plug-in electric cars available. Three of them were all-electric: e-Golf, Audi R8 e-Tron and the e-Up!. Six were plug-in hybrids including the Golf GTE, Passat GTE, Porsche Panamera S E-Hybrid, Cayenne S E-Hybrid, Audi A3 Sportback e-Tron, and the Q7 e-Tron Quattro. There were also two limited production plug-in hybrids produced starting in 2013 by the VW Group: the Porsche 918 Spyder and the Volkswagen XL1.
To comply with the strict carbon dioxide emission limits in most markets, VW aims to reach a million plug-in hybrid and all-electric vehicles by 2025. They have the capacity to produce 75,000 plug-in hybrids and battery electric vehicles per year if the demand increases before then.
Volkswagen Safety and Crash Ratings
Many people wonder if Volkswagen cars are safe, and overall, they seem to be. The Volkswagen brand has scored fairly high with safety and crash ratings over the years. In 2016, this German manufacturer had a five-star overall safety rating from the NHTSA for 15.4 percent of all its vehicles. This was slightly higher than other German, non-luxury manufacturers.
With that said, it’s important to note that only 3.8 percent of those models were equipped with adaptive cruise control, which was slightly lower than other German brands. Other manufacturers average 33.8 percent of their vehicles containing this safety feature.
In 2017, six Volkswagen models were named as 2017 Insurance Institute of Highway Safety Top Safety Picks as long as they are equipped with Front Assist.
Volkswagen Safety Equipment
Volkswagen vehicles have come with numerous standard and optional safety features. Some of these include Front Assist with Pedestrian Monitoring, Parking Steering Assistant (Park Assist), Rear Traffic Alert, Lane Departure Warning (Lane Assist), Adaptive Cruise Control, Forward Collision Warning and Autonomous Emergency Braking (Front Assist), and Blind Spot Monitor.
Volkswagen Safety Recalls
Some of the largest safety recalls in the history of automobiles have occurred with the Volkswagen brand. In 1972, Volkswagen issued a recall for 3.7 million vehicles because the wiper blades malfunctioned. While that may not sound like a major issue, hit the interstates during the night under monsoon conditions while your wipers fail and you’ll see that it’s a disaster waiting to happen.
Not to mention, in the end of 2017, Volkswagen also recalled 281,000 cars due to defective fuel pumps. According to the notices posted with the NHTSA, vehicles may have contained a fuel filter flange susceptible to cracks. This could have led to the fuel leak thereby causing a major fire.
Volkswagen Environment Scandals
In 1974, VW paid out $120,000 to settle a complaint from the Environment Protection Agency about the use of defeat devices which disabled pollution-control systems. These devices were found to violate the U.S. Clean Air Act.
In the same way, Greenpeace also criticized VW in 2011 for their opposition to legislation for tighter controls over energy efficiency and CO2 emissions.
On September 18, 2015, the EPA accused Volkswagen of using a defeat device to scam emissions testing. They claimed that since 2008, the manufacturer installed ECU software that violated the Clean Air Act and circumvented environmental regulations. The focus of this scandal was based on the diesel engines of Volkswagen and Audi vehicles from 2009-2015.
The software detected when cars were subject to testing. During those times, it would enable the ECU emissions control to successfully pass the vehicle. Then, under normal driving conditions, this control software would shut off to attain additional power and better fuel economy. Overall, it resulted in up to 40 times more pollution in the environment than allowable by law.
Consumer Reports ran a test on a 2011 Jetta SportWagen TDI to see what the results would be. During emissions mode, the 0-60 mph time showed an increase of 0.6 seconds while fuel economy dropped to 46 mph from 50 mpg.
Volkswagen Gives In
Volkswagen acknowledged they used the defeat device after 15 months of denying the accusations. As a result, they ordered a recall of 482,000 cars powered by the four-cylinder 2.0-liter TDI engines. When the news first hit, Volkswagen’s stock price dropped 20% and then went down another 17% the next day.
That same month, dealers stopped selling all diesel models affected in both Canada and the United States. They also acknowledged that 11 million vehicles were equipped with the software worldwide.
Not only did VW’s chief executive officer Martin Winterkorn resign, but the company also retained the services of the Kirkland & Ellis law firm to be their defense. This was the same law firm that defended BP when the Deepwater Horizon oil spill occurred.
In March 2016, Volkswagen was sued by the US Federal Trade Commission for false advertising related to their “clean diesel” claims. In June 2016, VW agreed to a settlement of $15.3 billion. This was the largest auto-related consumer class-action lawsuit in the history of the United States.
Then, in November 2016, the EPA sent out a second violation against the diesel 3.0-liter V6 Volkswagen Touaregs, Porsche Cayennes and several Audi models. Since 2009, all of the vehicles powered by a V6 engine were found to be non-compliant.
Again, these vehicles had software that was enabled during pollution testing but disabled under normal driving conditions. Volkswagen once again denied the findings claiming that the software was legally allowed. Eventually, they issued a stop-sale on the disputed vehicles as well as several other models.
Fall Out From Scandal
As a result of the scandal, in November 2016, Volkswagen labor unions agreed it was necessary to reduce employees by 30,000 people. This was due in part to the violation costs. In January 2017, VW agreed they would plead guilty in the emissions-cheating scandal plus pay an additional $4.3 billion in penalties.
Throughout this period, six of the executives were charged and one was held without bail due to him being a flight risk. In fact, all the senior VW management was told they should not leave the US during this time.
The judge approved a $1.2 billion settlement to 650 US dealers. He claimed they were blindsided just like the consumer over the fraud and it wasn’t fair for them to lose out. Each Volkswagen dealership received an average of $1.85 million.
Volkswagen Consumer Satisfaction Reports & Dependability Ratings
Volkswagen was once seen as a leader in customer satisfaction and dependability, but much of their reputation was damaged after the diesel-emissions scandal. Their image took a hit and consumers weren’t satisfied with the brand after that.
One standard to measure customer’s views on a brand is through the American Customer Satisfaction Index (ACSI) Automobile Report. They charge consumers’ attitudes toward automotive brands. In their 2016 Automobile Report, Volkswagen scored 78 out of 100. This was down from the 80 they scored in 2015. It was also one of the lowest number scored by any brand in the survey.
The survey was used as a gauge to evaluate consumer experience with the brand. This included looking at individual cars. It also examined other factors like the buying experience, responsiveness to warranty claims. Finally, results are based on how easy it is to use the automaker’s websites.
These sentiments weren’t just found in one place. There’s been a clear stigma related to the VW brand in the minds of many consumers. That’s because Volkswagen once meant a premium brand of reliability, and they’ve failed to uphold that image in recent years. Further publications such as JD Power’s 2016 vehicle dependability survey; continue to show the brand has scored below the industry average.
In 1999, the Volkswagen Type 1 Beetle model was listed as the fourth most influential car of the 20th century in the Car of the Century competition. It only came after the Ford Model T (1st place), BMC Mini (2nd place) and Citroën DS (3rd place).
VW has also been named the winner three times in the European Car of the Year award:
1992 – VW Golf
2010 – VW Polo
2013 – VW Golf
In addition, they’ve had five winners for Motor Trend’s Car of the Year award:
1985 – VW GTI
1999 – VW New Beetle
2004 – VW Touareg
2012 – VW Passat
2015 – VW Golf line-up
Finally, the company has proudly won the World Car of the Year award four times:
2009 – VW Golf
2010 – VW Polo
2012 – VW up!
2013 – VW Golf
One of the most well-known advertising ideas from any automaker was VW’s “Think Small” campaign. The ad started in the late 50s under the direction of Doyle Dane Bernbach. The majority of cars sold during this time were big, stylish, and fast. This proved to be a difficult market for VW to get involved in. That’s because the average consumer held the perception that the Beetle was foreign, slow, small and ugly car.
The ad might have seemed confusing at first. That’s because it started off by discussing how slow the VW cars were. The reality is that this clever angle worked because it sucked people into learning more about the products. Then, the ad takes a turn into discussing while the engines are slow, they are the most advanced. The ad campaign went on to show that you wouldn’t need repair shops as often.
By showing consumers how the VW was different from other cars of the time, they effectively conveyed that it doesn’t burn through tires, won’t guzzle gas and doesn’t require frequent repairs. After that, people saw the benefit of owning a VW vehicle.
In just a minute, the consumer went from thinking their cars were socially unacceptable to consider the benefits of owning one. It was marketing genius at its best.
Snapshot of Volkswagen Company
The Volkswagen brand is the founder and namesake of the Volkswagen Group. Their global headquarters are located in Wolfsburg, Germany. The entire group is Europe’s largest automaker, and at times the company held over 20 percent of the market share.
They currently operate factories across the world. Some manufacturing facilities are located in Mexico, China, the US, Indonesia, Russia, Brazil, and others. As of March 2018, the VW Group of America had 20 Operational Facilities across the US. In addition, Volkswagen was also listed as one of the largest companies in the world by the Forbes Global 2000.
In 2011, the company passed a rule to improve the work-life balance for employees. This rule restricted e-mail capability on any company smartphones between the hours of 6:30 pm to 7:30 am. The goal was to reduce the complaints occurring related to high levels of stress. Out of the 190,000 employees, about 1,150 felt the affects of this rule.
In 2008, VW was the third largest automaker in the world. With 6.29 million vehicles sold, 2010 was a record-breaking year for the company. Then, in 2012, with 9.3 million vehicles sold, VW became the second largest manufacturer worldwide. The group’s core markets are in China and Germany.
Volkswagen Group Subsidiaries
The Volkswagen Group makes up several vehicle manufacturers plus their corresponding brands. Here is a list of the most famous companies owned by VW:
AUDI AG, otherwise known as the Audi Group –99.55% ownership
Automobili Lamborghini S.p.A. –100% ownership
Bentley Motors Ltd –100% ownership
Bugatti Automobiles S.A.S. –100% ownership
Dr. Ing. h.c. F. Porsche AG (usually just referred to as Porsche) – 100% ownership
Ducati Motor Holding S.p.A. – 100% ownership
MAN SE – 75.03% ownership
Scania AB – 100% ownership
SEAT – 100% ownership
Škoda Auto a.s., Škoda Auto – 100% ownership
Volkswagen Commercial Vehicles – 100% ownership
Volkswagen Passenger Cars – 100% ownership
In addition, the Group owns four marques managed by NSU GmbH and Auto Union GmbH. They are:
– Dampf-Kraft-Wagen (DKW)
– NSU Motorenwerke AG (NSU)
Other non-automobile related ownerships include:
IAV – 50% ownership
MOIA (mobility services) – 100% ownership
Navistar International – 16.6% ownership
Volkswagen and Porsche
There’s always been a close relationship between Volkswagen and Porsche. In fact, the company was co-founded in 1931 by Ferdinand Porsche. He was specifically hired by Adolf Hitler to work on the project.
Collaborations between the Companies
Porsche’s first car, the Porsche 64 of 1938, had many VW Beetle components on it. There have been several collaborations since then between the two companies:
1969 – VW-Porsche 914 and Porsche 914-6
1976 – Porsche 913-E and Porsche 924
2002 – Porsche Cayenne (shared a chassis with the Audi Q7 and Volkswagen Touareg)
Merger Between the Companies
In March 2005, the European Commission filed an action before the European Court of Justice against the Federal Republic of Germany. They claimed that the Volkswagen Law was illegally restricting capital flow. This law prevented shareholders from executing more than 20% off total voting rights in the company.
Porsche announced in September 2005 it would increase stake in Volkswagen to 20% to ensure a hostile takeover by investors wouldn’t be possible. Some possible suitors at the time included BMW, DaimlerChrysler, and Renault. Then, in July 2006, Porsche increased ownership to 25.1%
In February 2007, the Advocate General submitted support of the legal proceedings. This opened the hostile takeover possibility back up, so Porsche increased holding shares to 30.9%. They were clear through the entire process that they had no interest in taking over Volkswagen but simply wanted to stop competitors from taking a larger stake and dismantling VW.
In October 2007 the law was struck down by the European Court of Justice. At the time, Porsche possessed 31% of shares, but less voting rights because of the law. Shortly after, the German government wrote a new Volkswagen law and was sued again. In spite of these legal proceedings, in October 2013, it was ruled by the EU Court of Justice that the law complied with EU regulations.
In October 2008, Porsche announced that it wanted to take control of the company. At that time, it held 42.6% of the shares plus stock options totaling another 31.5%. At this time, only 5.8% of shares remained after the state of Lower Saxony’s 20.1%. By January 2009, Porsche held 50.76% in the group, but the Volkswagen Law still prevented them from taking over.
In May 2009, the companies opted to merge together.
Volkswagen boasts of a long history in motorsports, starting in 1963 when the Formula Vee circuit race cars were built with Beetle parts. Then, in 1971, the Formula Super Vee became a famous outlet for VW of America to showcase new talent. In 11 years of racing, the circuit produced several world-famous Formula One drivers including Jochen Mass, Jochen Rindt, Keke Rosberg, and Niki Lauda.
In 1981, VW switched directions into rallying. They won the World Rally Championship four years in a row starting in 2013 with drivers Sébastien Ogier and Julien Ingrassia in their Polo R WRC.
As far as the Dakar Rally, VW placed 1st in 1980 with the Iltis. Then, in 2003, they entered a 2WD buggy and won 1st in the Diesel and 2WD class. In, 2005 and 2006, the updated Race-Touareg took 1st in the Diesel class.
For three consecutive years, 2009 – 2011, VW won the Dakar Rally held in South America.
The company founded races and participated in them throughout the world. Here’s the list of races that VW started or participated in, plus the year they started.
Europe – ADAC Volkswagen Lupo Cup (1998), ADAC New Beetle Cup (2000), Polo Cup (2003), European Truck Racing series (2004), Volkswagen Scirocco R-Cup (2010).
They were the champion of the European Truck Racing series in 2004 and 2005 with the Titan truck.
United States – Trans-Am Series (1976), Jetta TDI Cup (2008)
They were the winner in the under 2000cc Trans-Am Series in 1976 with their Scirocco.
Argentina – TC 2000(1980, 1983, and 1994 champions)
Australia – F2 Australian Rally Championship (1999 and 2000 champions)
Finland – Finnish Rally Championship (1999, 2000, 2001, and 2002 champions)
Volkswagen enthusiasts also have the AutoMuseum in Wolfsburg when they desire to explore the deeper history of the company. Since 1985, this museum stands as a dedication to all things Volkswagen. Inside the museum, there are rare concept vehicles, prototypes, and mass-produced vehicles. Moreover, you’ll also find Herbie, a wooden Beetle, and the See Golf which was a seafaring vehicle containing hydraulic pontoons.
For visitors unable to visit the museum in person, there are other options. Receiving a “Birth Certificate” for a nominal fee is one option. This Zertifikat, as it’s referred to, contains basic information about a specified vehicle including the options, port of destination, colors, etc.
The VW company offers financial services in-house through the Volkswagen Financial Services company. On the website, there are various tools including the VW Emissions Modification Lookup, inventory search capability, and lease vs. financing information. Additionally, Volkswagen Financial Services provides numerous services to consumers including various protection plans, VW insurance, online bill payment, lease-end options and financing options.
Volkswagen Finance offers several types of protection plans. These plans fall under the Drive Easy Program suite from the company. The Vehicle Service Protection covers unexpected expenses while the Term Protection covers everyday wear. The Certified Pre-Owned Service Protection covers used vehicles while the Lease-End Protection covers consumers when the lease ends. In addition, they have Guaranteed Asset Protection (GAP), Tire and Wheel Protection with Optional Cosmetic Coverage, Multi-Coverage Protection, Theft Protection and Key Protection.
There are currently over 10,000 Volkswagen dealerships in the world with about 650 franchises selling in the U.S. This is the highest number since 1993. In 2017, VW dealers in America sold 339,676 vehicles while the company delivered 625,100 vehicles to the dealers that year.
In 2015, two dealerships from the States received accolades as part of the the top 50 dealers by VW AG. One of these dealerships was Dick Hannah Volkswagen located in Vancouver, Washington.
When looking for a Volkswagen dealer, it helps to judge the awards given from the company. The Group gives several awards to top dealerships across the country. One of the most prestigious is the Diamond Pin award. Only dealers who display operational excellence in service, sales, parts sales and customer satisfaction receive this honor.
Check to see if the dealership earned the Wolfsburg Crest Club Award as well. This prestigious recognition goes to dealers providing incredible sales plus service to the customers. They also offer the Customer First Club Award, the Consumer Satisfaction Award, and the Dealer of the Year Award to those who deserve the accolades.
J.D. Power also keeps a comprehensive list of power dealers, but there are currently no dedicated Volkswagen dealers listed on their website.
10 Interesting Facts about Volkswagen
1 – Volkswagen vehicles have names based on prevailing winds or oceanic currents
2 – The Guinness record for most people in a Beetle is 57 people. It took a group of trained climbers to use each inch of the cabin.
3 – At one time, the company gave financial compensation for any babies born inside a Beetle.
4 – They’ve receive nominations for the International Engine of the Year Awards more times than any other company. In fact, the 1.4-liter TSI Twincharger engine won several times.
5 –James Monaghan, the co-founder of Domino’s, traded 50% stake in his company to his brother in exchange for a used Volkswagen. Later, Tom sold his 93% of the company for $1 billion.
6 – After the emission scandal, VW’s share fell 35% over the course of two days.
7 – The VW Beetle was the first mass-produced vehicle imported into the U.S. market.
8 – The Bugatti Veyron Super Sport is the fastest car on earth and sold by the VW Group. This car is capable of hitting 267 mph, plus goes 0-60 mph in a mere 2.4 seconds. The downside is that VW loses $5 million on every Bugatti Veyron sold.
9 – In 2016, a couple in Texas held a VW-themed wedding. It even included toy GTIs as reception favors.
10 – At the end of 2014, the VW Group had almost 600,000 employees. This made it one of the largest employers in the world. More than a third of the employees are based at German locations.