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Volkswagen Automobile group history and ownership - The giant Octopus | CrissCrossTamizh - Karan

Introduction :

Volkswagen or VW was started by the inspiration of one man Ferdinand Porsche. His brainchild was the volkswagen[people’s car]. Ferdinand Porsche is an automotive engineer. He was born in 1875 in Austria- Hungary, the modern-day Czech Republic. He is the one who designed the first hybrid of gasoline-electric which is called as Lohner-Porsche.



Early days of Volkswagen:

During the 1900s the car was so luxurious thing and only 1 in 50 could afford it. So he tried to build a small car which is affordable to every family as it was already done in American company ford model -T. He tried to do that in Europe but it was not encouraged by any manufacturers so he started off his own. The car during those days was height so he tried differently but it wasn’t supported by his producers. During this time the chancellor Adolf Hitler came to power in Germany in 1933. He tried to enrich Germany so he believed that war wasn’t enough the other way is engineering. So he announced that the company that develop the best model in grand Prix motor racing had to design 3 prototypes for the German government. It was Ferdinand's model so he developed the prototype cars. The government said that speed was the main feature. In order to equip every requirement he built a car with an air-cooled rear engine, air cooling at the point was still an unproven feature in consumer cars. Also, he added torsion bar suspension for comfy riding. And he also added a round bonnet for good aerodynamics.


Relation between Nazi Germany and VW:

The Volkswagen factory inauguration function was done by Hitler in 1938 for car production.

Even though they got nearly 336000 orders they couldn’t deliver them due to the outbreak of world war -2. During the period of the war, the factory was used for war efforts such as the production of military vehicles. The VW cars they designed were modified and used for the war. During the war, the factory was destroyed because this was the main course for the production of military vehicles.





After the WW2:

After world war 2 in 1945, Ferdinand Porsche was imprisoned for working with Hitler. He was released at the age of 72 but he hasn’t given up the idea of designing a car. Porsche was also reportedly analyzed his ideas of the car with the employees of his factory. It was the time in Germany rehabilitation was taking place after the war and people in Germany suffered a lot for food and shelter. The factory was undertaken by British army officer Major Ivan Hirst and he tried to repair the “strength through joy” cars. The cars are now famously called beetle or the bug and started to sell them. First, a few hundred cars were sold to British service personnel and the German post office.

During this period of post-war recovery, the giant American car company Ford had an offer to undertake VW but the offer was neglected.

In 1948, the Porsche cars were designed and sold out. In 1951, the founder of VW Ferdinand Porsche died. He died at the age of 75.


The American relation of Volkswagen:

Even though VW- Beetle had a huge in Europe only sold 2 units in America in 1949 because the people in America liked only huge and powerful cars. After the days went by they too liked it because of its build quality and engineering standards. During the 1950s 10 million beetle cars were sold. From the 1950-the 1960s the sale was high and after the drop in sales in the 1970s VW golf, polo, and more other models were released.


The rise of Volkswagen Group:

In 1965 VW undertaken Audi company. In 1980 VW bought 75% of SEAT market share.in 1995 launched Sharan in Europe with a joint venture with ford. In 1998 it was undertaken by Bentley, Lamborgini, Bugatti. In 2 years it has also undertaken Skoda. In 2010 Italian company, Italdesign was brought under control it designed the most expensive cars like BMW, Ford. in 2012, Audi bought Ducati which increased the share of VW. in 2018, it built its 1 crore cars. It manufactures about 13%of the passenger cars of the world. It has about $278 billion US dollars. It has about 340 companies. VW has about 640k employees. It is higher than the military officers in Australia, Norway, and Italy. Volkswagen is currently valued well above 240 Billion Euros which is about 270 Billion American dollars. Volkswagen at its current state is not what its founder was aiming it to be.


Luxury Car brands owned by Volkswagen:

VW currently owns almost all the luxury performance car brands they include:

  1. Porsche,

  2. Audi,

  3. Lamborghini,

  4. Bentley,

  5. Bugatti and

  6. Ducati.



As you might know, Porsche is named after its founder’s name but the brand is completely opposite to his initial motto which is ‘People’s Car’. One can say that the future of Volkswagen might change but it won’t be drastic. What we need to understand from the case study of Volkswagen here is that the car brand or the VW cars might be affordable but clearly, the Volkswagen name tag is running on the shoulders of its luxury vehicles. Lambo, Audi, Porsche, Bently, Bugatti all have separate DNA and car culture history. The fact that the Volkswagen group is able to separate its brands without any mess. The VW case study is certainly one of the most fascinating stories when it comes to management and corporate ownership.


Ownership of Volkswagen Group:

Even though Mr.Porsche is the one who came up with the idea to start Volkswagen, the German Labour Front was the one who incorporated it as a Company. This means technically Volkswagen is a Nazi company. And since Hitler nationalized every nazi owned company when he became chancellor, VW group became a public-owned organization. So to avoid any foreign investors or stakeholders purchasing the stocks of the company, the German government enacted the famous Volkswagen Act. The Volkswagen act was passed by the German government in 1960 which gave a 20% stake in the company. But most importantly, the act gave the power of Veto to the State of Lower Saxony, Hanover. The veto power enabled the government to intervene in any administrative decisions over the Volkswagen group. The German government saw a potential threat to the economy if in any case Volkswagen might be moved out of Germany. The threat is still very real and it could topple the entire German economy. The very fact that the German economy is powerful because it virtually controls the whole automobile and any form of combustion engine economy. This is because of the fact that Germany is the home to the most powerful automobile companies such as Volkswagen AG, Benz AG, Daimler AG, Adam Opel AG. Germany's economy is the car garage of the world, losing Volkswagen will take away its monopoly in the car world. This is about to change in the upcoming years. During the 2000s the Porsche holding company, the holdings company owned by the Porsche family started purchasing lumps of Volkswagen AG stocks. That is Volkswagen group as a government-owned organization is started to fall. Porsche holdings took the german government to the European court and the court ruled in the favour of Porsche. This means now, Porsche with its 50.76% stake as of 2013 became the owner of the company dethroning the German government. The stake since has risen to 53.3% in favor of the Porsche but importantly the German government didn’t sell the 20% stake and which means still German government owns 20% of the Volkswagen Group. The other major owners include Qatar Holding with 17% stocks and 9.7% remains are publicly traded stocks.



Conclusion:

Volkswagen as a company not only represents the german engineering and the ecstatic cars that it made over the years but also its sheer power projection over the world of Cars is unmatched.

VW is still regarded as the pinnacle of Corporate management due to its history. Volkswagen is one of many companies that represent their country and people in form of business. You can learn about other automobile companies here, till then sayonara from me Karan.


References :

https://en.wikipedia.org/wiki/Volkswagen_Group#1937_to_1945

https://en.wikipedia.org/wiki/Royal_Electrical_and_Mechanical_Engineers

https://en.wikipedia.org/wiki/Volkswagen_Beetle

https://en.wikipedia.org/wiki/Porsche_SE

https://en.wikipedia.org/wiki/Volkswagen_Act

https://en.wikipedia.org/wiki/Bundestag

https://en.wikipedia.org/wiki/European_Court_of_Justice

https://www.volkswagenag.com/en/InvestorRelations/shares/shareholder-structure.html#

https://finance.yahoo.com/quote/VOW.DE/key-statistics/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHJrBmtz1mjlZh1A3hHT6AQygU8B81PnmGsLvMw6NZCsAeMjOcOXTQjpdCfS2IWUC0vBezrpC6M3ocrAtvtVwYh6EBc_O4bN_dptomeingP5FoyQL7A6xnF7L9Xl5szYTT-M3kQxryT_-pSre441yJap7WeNHFg8Lr7o33togP0u


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