Volkswagen or VW, is an automobile manufacturer based in Wolfsburg, Germany. It forms the core of Volkswagen Group and is the world's fourth largest car producer after GM, Toyota and Ford, respectively.
The name means "people's car" in German. Its German tagline is "Aus Liebe zum Automobil", which is translated as "For the love of the car" - or, "For Love of the People's Cars", as translated by VW in other languages, though in direct translation it reads "Out of love for the car."
Origins in 1930s Germany
Adolf Hitler had a keen interest in cars even though he did not drive. In 1933, he demanded that Ferdinand Porsche make changes to his original 1931 design to make it more suited for the working man. Hans Ledwinka discussed his ideas with Ferdinand Porsche who used many Tatra design features in the 1938 Kdf-Wagen, later known as the VW Käfer - or Beetle.
Changes included better fuel efficiency, reliability, ease of use, and economically efficient repairs and parts. 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" - "Save five Marks a week, if you want to drive your own car") which around 336,000 people eventually paid into. Volkswagen honoured its savings agreements after World War II; Ford, which had a similar "coupon" savings system, reportedly did not. Prototypes of the car called the "Kdf-Wagen" (German: Kraft durch Freude -- "strength through joy"), appeared from 1936 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 programmes which included things such as tours and outings.
Erwin Komenda, the longstanding Porsche chief designer, developed the car body of the prototype, which was recognizably the Beetle we know today. It was one of the first to be designed with the aid of a wind tunnel; unlike the Chrysler Airflow, it would be a success.
The new factory in the new town of KdF-Stadt, now called Wolfsburg, purpose-built for the factory workers, only produced a handful of cars by the time war started in 1939. None were actually delivered to holders of the completed saving stamp books, though one Type 1 Cabriolet was presented to Hitler on his birthday in 1938.
War meant production changed to military vehicles, the Type 81 Kübelwagen (Bucket car) utility vehicle (VW's most common wartime model) and the amphibious Schwimmwagen.
1945: British Army and Ivan Hirst, unclear future
The company owes its postwar existence largely to one man, British Army officer Major Ivan Hirst. 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 factory was placed under the control of Oldham-born Hirst. At first, the plan was to use it for military vehicle maintenance. Since it had been used for military production, and had been in Hirst's words a "political animal" rather than a commercial enterprise, the equipment was in time intended to be salvaged as war reparations.
Hirst painted one of the factory's cars 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. The first few hundred cars went to personnel from the occupying forces, and to the German Post Office.
Some UK service personnel were allowed to take their Beetles back to the UK when they were demobilized, and one of the very first Beetles brought back in that way (UK registration index JLT 420) is still owned by the original proprietor of the UK's first official VW Importer, Colborne Carages of Ripley in Surrey. By 1946 the factory was producing 1,000 cars a month, a remarkable feat considering the factory was still in disrepair: the damaged roof and windows meant rain stopped production; the steel to make the cars had to be bartered for new vehicles.
The car and its town changed their Second World War-era names to Volkswagen and Wolfsburg respectively, and production was increasing. It was still unclear what was to become of the factory. It was offered to representatives from the British, American 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." VW later bought British car makers Bentleys and Rolls Royce. (In a bizarre twist of fate, Volkswagen would manufacture a locally built version of Rootes' Hillman Avenger in Argentina in the 1980s, long after Rootes went bust at the hands of Chrysler in 1978-the Beetle outliving the Avenger by over 30 years)
Ford representatives were equally critical: the car was "not worth a damn." Henry Ford II, the son of Edsel Ford, did reportedly look at the possibility of taking over the VW factory but dismissed the idea as soon as he looked up Wolfsburg on the map. . . and found it to be too close for comfort to the East German border. In France, Citroën started the 2CV on a similar marketing concept. In Italy, it was the Fiat 500.
1948-1974: Icon For German Regeneration
From 1948, Volkswagen became a very 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 Hirst left the company, now re-formed as a trust controlled by the West German government. Apart from the introduction of the Type 2 commercial vehicle (van, pickup and camper) and the 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. It only sold two units in America that first year. On its entry to the U.S. market, the VW was briefly sold as a "Victory Wagon". Volkswagen of America was formed in April 1955 to standardize sales and service in the U.S. Production of the Type 1 Volkswagen Beetle increased dramatically over the years, the total reaching one million in 1955.
Sales soared - due in part to the famous advertising campaigns by New York advertising agency, Doyle, Dane and Bernbach. Led by art director Helmut Krone and copywriters Julian Koenig and Bob Levinson, Volkswagen ads became as popular as the car, using crisp layouts and witty copy to lure the younger, sophisticated consumers with whom the car became associated. Despite the fact it was almost universally known as the Beetle, it was never officially labeled as such, instead referred to as the Type 1. The first reference to the name Beetle occurred in U.S. advertising in 1968, but not until 1998 and the Golf-based New Beetle would the name be adopted by Wolfsburg.
During the 1960s and early 1970s, although the car was becoming outdated, American exports, innovative advertising and a growing reputation for reliability helped production figures to surpass the levels of the previous record holder, the Ford Model T. By 1973, total production was over 16 million.
VW expanded their product line in 1961 with the introduction of several Type 3 models, which were essentially body style variations (Fastback, Notchback, Squareback) based on Type 1 mechanical underpinnings, and again in 1969 with the relatively unpopular Type 4 (also known as the 411 and 412) models, which differed substantially from previous models with the notable introduction of unibody construction, a fully automatic transmission, electronic fuel injection, and a sturdier powerplant. Volkswagen added a "Super Beetle" (the Type 113) to its lineup in 1971. The Type 113 differed from the standard Beetle in its use of a McPherson strut front suspension instead of the usual torsion bars. Also the nose of the car was stretched 2 inches to allow the spare tire to lay down flat, and the combination of these two features significantly increased the useable trunk space. Despite the Super Beetle's popularity with Volkswagen customers, purists preferred the standard Beetle with its less pronounced nose and its original torsion bar suspension. In 1973, Volkswagen introduced the military-themed Thing (Type 181) in America, recalling the wartime Type 81. The military version was produced for the NATO-era German army (Bundeswehr) during the cold war years of 1970 to 1979. The US Thing version only lasted two years, 1973 and 1974, due at least in part to Ralph Nader's automobile safety campaigns.
1974: From Beetle to Rabbit
Volkswagen was in serious trouble by the end of the 1960s. The Type 3 and Type 4 models had been comparative flops, and the NSU-based K70 also failed to woo buyers. The company knew that Beetle production had to end one day, but the conundrum of replacing it had been a never-ending nightmare. The key to the solution was the 1964 acquisition of Audi/Auto Union. The Ingolstadt-based firm had the necessary expertise in front wheel drive and water-cooled engines that Volkswagen so desperately needed to produce a credible Beetle successor. Audi influences paved the way for this new generation of Volkswagens, known as the Polo, Golf and Passat.
The VW Polo was in fact simply a re-badging of the short-lived Audi 50, which had been hastily developed from a saloon design, the Audi 60, which never reached production as an Audi vehicle. However, VW produced it shortly after the introduction of the Polo as the VW Derby. In the rear of the car can plainly be seen that panels are added to the Polo structure to make a "three-box" design of saloon or sedan with a boot or trunk.
The Passat (Dasher in the U.S.), introduced in 1973, was again simply a fastback (available as either a hatchback or with separate boot) version of the Audi 80, using identical body and mechanical parts, and the Audi 80 was later produced on the same line in Wolfsburg as the VW Passat. Wagon versions were offered for overseas markets, however, for two years, if European customers wanted an estate or wagon version, they had to go considerably up-market and buy the Audi 80GL estate.
Production of the Beetle at the Wolfsburg factory switched to the VW Golf in 1974, marketed in the United States and Canada as the Volkswagen Rabbit until 1985 and as the Golf until 2006, when the Rabbit name was re-introduced. This was a car unlike its predecessor in most significant ways, both mechanically as well as visually (its angular styling was designed by the Italian Giorgetto Giugiaro). Its design followed trends for small family cars set by the 1959 Mini and 1972 Renault 5-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 continued in smaller numbers at other German factories (Essen and Emden) until 1978, but mainstream production shifted to Brazil and Mexico.
Volkswagen from 1974 to 1990
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 five generations of the Volkswagen Golf, the first of which was produced from the summer of 1974 until the end of 1983, sold as the Rabbit in the United States and Canada and as the Caribe in Latin America. Its chassis also spawned the Scirocco sport coupe, Jetta sedan, Cabriolet convertible, and Caddy pickup. North American production of the Rabbit commenced at a factory in Pennsylvania in 1978. The production numbers of the first-generation Golf has continued to grow annually in South Africa with only slight modifications to the interior, engine and chassis. 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 late 1983 to late 1991, and a North American version produced in Pennsylvania went on sale at the start of the 1985 model year.
In the eighties, Volkswagen's sales in the United States and Canada fell dramatically, despite the success of models like the Golf elsewhere. The problems had stemmed from the Rabbit, which had developed a reputation for bad electrical systems and oil burning. 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, and the Pennsylvania factory closed on July 14, 1988. Meanwhile, Hahn expanded the company by purchasing a greater share of the Spanish car maker SEAT, which VW bought outright in 1990; the Czech car maker Skoda was acquired the following year.
Volkswagen From 1991 to 2000
In 1991, Volkswagen launched the third-generation Golf, garnering the European Car of the Year for 1992 (the previous two generations were nominated but lost to the Citroën CX in 1975 and the Fiat Uno in 1984). (The Mark 3 Golf and Jetta arrived in North America just before the start of 1994 model year, first appearing in southern California in the late spring of 1993.) The sedan version of the Golf was badged Vento in Europe (but remained Jetta in the USA, where its popularity outstripped the Golf).
The late 1990's saw a gradual change in perception of the company's products - with Audi having elevated itself into same league as BMW and Mercedes-Benz, Volkswagen moved upmarket to fill the void left by Audi; with Seat and Skoda now occupying what was once VW's core market. The first tangible evidence of this was the fifth-generation Passat in 1996 with its high-quality interior trim and standards of build quality which were demonstrably a cut above contemporary products from Ford and Opel.
This move upmarket was continued with the Mark 4 Golf, 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, still called Jetta in the USA), VW New Beetle, SEAT Toledo, SEAT León, Audi A3, Audi TT and Skoda Octavia. However, it was beaten into third place for the 1998 European Car of the Year award by the winning Alfa Romeo 156 and runner-up Audi A6.
The other main models have been the Polo, a smaller car than the Golf, and the larger Passat for the segment above the Golf. The Scirocco and Corrado were both Golf-based coupés.
By the early nineties, Volkswagen's sales in the United States were below 100,000, and many car buyers found the company's products to be lacking in value. Some automotive journalists believed that Volkswagen would have to quit the North American market altogether. VW eventually realized that the Beetle was the heart and soul of the brand in North America, and the firm quickly set about creating a new Beetle for American and Canadian showrooms.
In 1994, Volkswagen unveiled the J Mays-designed Concept One, a "retro"-themed car with a resemblance to the original Beetle but based on the Polo chassis. Its genesis was secret and in opposition to VW management, who felt it was too backward-looking. Management could not deny the positive public response to the concept car and gave the green-light to its development as the New Beetle. The production car would be based on the Golf rather than the Polo, because the Polo chassis was too small for the car to pass crash test standards in the U.S. It has been quite popular in the North America, less so in Europe.
Volkswagen's fortunes in North America improved once the third-generation Golf and Jetta models became available there. Sharp advertising and savvy promotional stunts, like including Trek bicycles and accompanying bike racks with a limited ediiton of the 1996 Jetta sedan, were credited for the firm's recovery in the U.S. and Canada, but the introductions of the New Beetle and the fifth-generation Passat were a major boost to the brand.
Volkswagen in the Twenty-First Century
Volkswagen began introducing an array of new models after Bernd Pischetsrieder became Volkswagen Group CEO (responsible for all Group brands) in 2002. The fifth generation Volkswagen Golf was launched in 2004, came runner-up to the Fiat Panda in the 2004 European Car of the Year, and has spawned several cousins: SEAT Toledo, Skoda Octavia and Audi A3 hatchback ranges as well as a new mini-MPV, the Seat Altea. The GTI, a "hot hatchback" performance version of the Golf, boasts a 2.0 L Turbocharged direct injection engine. VW began marketing the Golf under the Rabbit name once again in the U.S. and Canada in June 2006. (The GTI had arrived to North America four months earlier.) The fifth-generation Jetta, and the performance version, the GLI, are also available in the United States and Canada. 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 Scirocco by 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. Winterkorn is credited with making Audi a challenger to the dominance of BMW and Mercedes and his design-led strategy has led to Audi being considered one of the most important brands in the world. It remains to be seen how Winterkorn's focus on design shapes the Volkswagen brand's future. Nevertheless, Volkswagen continues to have complicated relations with both unions and shareholders. The German state of Lower Saxony owns significant stock in VW, as does sportscar manufacturer Porsche.
In North America, VW faced many of challenges. After rising significantly between 1998 and 2001, VW's North American sales began to fall sharply leading to a 2005 loss of roughly $1 billion (U.S.) for its operations in the U.S. and Canada. Profitablility has not been strong, and the reliability of the company's South American and Latin American-produced cars appears to bear some of the responsibility for this situation. By 2005, its models sat near the bottom of Consumer Reports reliability ratings, and J.D. Power and Associates ranked VW 35th out of 37 bands in its initial quality survey. Attempts to enter a new market segment also compromised Volkswagen's standing in North America. In 2002, Volkswagen announced the debut of its Phaeton luxury car, which was critically acclaimed but not well received in the marketplace. VW announced its discontinuance in the U.S. market for the 2007 model year due to the disappointing sales.
Volkswagen in 2005, despite challenges, still maintained North American sales of 224,195 -- a dramatic increase from the low in 1993 when US sales totaled only 49,533 vehicles. 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. VW plans to close out the decade with the release on several new vehicles worldwide and a barrage of advertising. In conjunction with the introduction of new models, production location of Volkswagen vehicles also underwent great change. The 2007 Eos, a hardtop convertible, is produced in a new facility in Portugal. All Golf/Rabbit 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 principally 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 magazines "10 Best" for 2007, and Automobile Magazine's 2007 Car of the Year. J.D. Power and Associates 2006 Automotive Performance, Execution and Layout (APEAL) Study scored Volkswagen fourteenth overall with strong performances by its new Jetta and Passat models.
Volkswagen is recognized as one of the leading small diesel engine manufacturers, and is partnering with Mercedes and other companies to market BlueTec clean diesel technology. Volkswagen has offered a number of its vehicles with a TDI (Turbo Direct Injection) engine, which lends class-leading fuel economy to several models. According to the U.S. Environmental Protection Agency, four of the ten most fuel efficient vehicles available for sale in the U.S. in 2004 were powered by Volkswagen diesel engines. They were a three-way tie for 8th (TDI Beetle, TDI Golf, TDI Jetta) and ninth, the TDI Jetta Wagon. As of 2007, VW has not yet offered a gas-electric hybrid powertrain such as that in the Toyota Prius (though a diesel-electric hybrid 5th generation Jetta was produced as a test vehicle). In addition, all VAG TDI diesel engines produced since 1996 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 are due for 2008.
Volkswagen long resisted adding an utility vehicle to its lineup, but it finally relented with the introduction of the Touareg in the early 2000s, sharing major components with the Porsche Cayenne sport utility vehicle. Though acclaimed as a fine handling vehicle, the Touareg has been a modest seller at best. Some automotive analysts blame the Touraeg's absence of a third-row seat, the relatively poor fuel economy, and the high vehicle mass. VW plans to add a compact SUV with styling influences from its "Concept A" concept vehicle. On July 20, 2006, VW announced that the new vehicle would be called the Tiguan. One major irony of Volkswagen's current North American lineup is the absence of a minivan, considering that VW is credited for inventing the minivan with its original Transporter, but the firm is currently devloping just such a vehicle for the U.S. and Canadian markets with DaimlerChrysler, with current plans to introduce it in 2008. Volkswagen is also considering a new entry-level model for the North American lineup. A venture with DaimlerChrysler to produce such a vehicle was considered but dropped as of September 2006. Due to technical difficulty adapting the Polo to meet North American vehicle regulations, VW presented in 2006 the "Iroc" as a concept of the proposed 2009 Scirocco as a potential new small model.
In September 2006, Volkswagen began offering the City Golf and City Jetta only for the Canadian market. Both models are basically the Mk.IV Golf and Jetta, making them smaller than the current Rabbit and Jetta and competing directly to the Toyota Yaris and Honda Fit. 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.
When Martin Winterkorn became the eighth postwar CEO of Volkswagen, the company made several personnel changes in Wolfsburg. Other key personnel changes were made at Volkswagen of America in Auburn Hills, Michigan, as VW tries to continue increasing U.S. sales while trying to return the American operations to profitability.
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