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Volkswagen brand

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Volkswagen is the core brand in the portfolio of Europe's largest automotive manufacturer, whose portfolio now houses more than eight other international passenger car marques. VW still dominates the Volkswagen Group, accounting for more than half of total sales, but a much smaller proportion of profits than premium brands Audi and Porsche. The brand has proved far more long-lived than its origins as a concept car for the Third Reich might have suggested. Reintroduced after World War II by Germany's post-war occupying authority, it was subsequently adopted as a symbol of the counter-culture revolution of the 1960s. Since then, VW has successfully modified its appeal to become arguably the most "classless" car of the modern age, with a broad appeal to all levels of society, underpinned by a reputation for fine engineering and consistently effective advertising, which features regularly among the winners at awards ceremonies around the globe. As a result, it remains well and truly the "people's car" it was originally designed to be. The brand's reputation took a sizeable hit in the key US market in 2015 as a result of the "Dieselgate" emissions-cheating scandal, but its most important territory is now China, which accounts for more than half of global unit sales.

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Volkswagen is the biggest passenger car brand within the eponymous Volkswagen Group, delivering another year of dynamic performance in 2016. After a decline in 2015, total registrations rose in 2016 by almost 2% to a 6.35m vehicles, according to industry watcher Focus2move (including branded sales in China). Volkswagen itself declared deliveries of 5.98m vehicles, up almost 3%.

The brand's worldwide marketing has been consolidated for several years under the banner slogan of "Volkswagen. Das Auto". Its advertising is generally of an exceptionally high standard, widely admired for its wit and creativity. The group perceives the Volkswagen brand to offer three core values of affordable innovation, enduring value and responsibility.

The key motor for growth for several years has been China, where where VW has long-established joint ventures with Shanghai Automotive and FAW. Year-on-year growth there has been slowing steadily, but it's still better than most other countries. VW remains the country's top-selling brand by far, with registrations topping 3m vehicles for the first time in 2016, more than double its closest rivals, ChangAn and Wuling. That continuing global growth has encouraged Volkswagen to set itself a target of worldwide sales of 6.6m units a year by 2020. The figure looks well within reach, providing China contributes to develop.

Volkswagen remains the best-selling brand by far in its domestic market, but sales have been under pressure for several years as a result of economic challenges, with deliveries slipping below 600,000 units in 2011 and 2012. For 2016, German registrations slipped by over 4% to 656k. However that's still more than its two biggest competitors - Mercedes and Audi in 2016 - combined. In the UK, the next largest European market, VW ranks 3rd behind Ford and Vauxhall, with 207k units. For a while, Russia was shaping up to threaten the UK's position as the brand's most significant European market after Germany. However sales there have collapsed there since 2013. Another key global market is Brazil, but here too sales have been severely dented by economic troubles. Volumes have declined sharply since highs of over 660,000 units in 2012, slipping by more than a third in 2016 alone to 228k vehicles.

Despite its strong performance in countries like Germany, the UK and especially China, the world's most valuable car market - the US - has been one of the brand's weaker territories. In 1970, at the peak of America's love affair with the original Beetle, the company sold almost 570,000 VW-brand cars in the country, making it the single-biggest imported brand. Over the next 20 years, however, sales steadily fell, reaching an all-time low of well under 100,000 in the early 1990s, before rising again to over 300,000 by 2001. After that came another steep decline, with unit sales falling by 40% over the next three years.

Until recently, Volkswagen had done little to consistently develop its presence in that region, which has for some reason been regarded for many years as a secondary market. The 5th generation of the Golf, for example, was introduced in Europe in 2003, but took another three years to be launched in the US. In addition, few concessions were made to the subtly different requirements of US car buyers. Since 2007, the company has begun to take steps to correct these errors, for example with the launch of the Routan MPV, designed specifically for the US market. A new factory in Chattanooga introduced a US-specific version of the Passat in 2011, and sales were boosted by strong marketing, not least the widely celebrated "The Force" ad, aired during the Super Bowl, and featuring a junior Darth Vader. That proved to be one of the stand-out ads for the whole year.

Sales responded accordingly. In 2010, Volkswagen of America reported its best sales in the US since 2003, with a total of almost 257k vehicles, up 20% year-on-year. The following two years saw further strong growth to a high of 438k vehicles in 2012. Then, again, collapse. As the US market shifted towards midsize SUVS, an area where Volkswagen was weak, the company lost almost all of its gains back to rivals. By 2014 it was back outside the US Top Ten. The "Dieselgate" scandal of 2015 and 2016 prompted yet another slump to just under 323k units in the latter year. The group is hoping to turn around performance in the US with the new Atlas SUV model, launched in 2017 and specifically designed for the American market.

The range of passenger models now targets all categories of car, ranging from the entry-level Fox to the Phaeton luxury saloon, based on the company's redesigned Rolls-Royce. (The group's two-year license on the Rolls-Royce name lapsed at the end of 2002, at which point it transferred to BMW). Primarily however, VW remains true to its heritage positioning as a classless car for "the people", and it has struggled to establish a niche at the top end of the market. (The Phaeton sells around 6,000 cars a year, considerably less than the 20,000 originally targeted). Like most other major manufacturers, Volkswagen has developed its own electric vehicle technology; it launched the first Golf with TwinDrive petrol-electric hybrid engine in 2010. All VW's fuel-saving and emission-reducing technologies are now marketed under the BlueMotion Technologies umbrella.

The group's best-selling model has traditionally been the Golf, which celebrated its 35th anniversary in 2009, and its 7th generation redesign in 2012. Originally launched in 1974 as a successor to the old "Beetle", the Golf has now sold more than 30m units since inception. In 2016, according to market watcher Focus2move, it was the world's #2 top-selling model by registrations (behind Toyota Corolla), although sales slipped back from 2015's record 1.06m registrations to 995k units. The majority of sales, though, are in Europe, where it is the local top-seller by some margin. Not far behind globally was the Polo (the global #8 model in 2016 with 701k units), followed by the Jetta (611k). The Volkswagen Lavida, made only for the Chinese market, was the group's #4 best-seller at 548k units. The Passat was just inside the global Top 20 at 538k units; the Tiguan SUV was just outside at 523k. Other key models by sales were the Sagitar (another China-only model), Santana and Bora, all featured among the global top 100.

The latest China-only model is the Phideon premium saloon, launched in 2016. The newest addition to the mass-production portfolio is the Up! small city car introduced in 2011, some versions of which are powered by compressed natural gas. A new electric-only version of the Up! launched in 2013. In Europe the group also manufactures the Galaxy minivan under contract for Ford. In 2000, Volkswagen opened Autostadt, a combined museum and state of the art vehicle showroom, alongside its headquarters in Wolfsburg. The facility now attracts around 2m visitors a year from all over Europe.

Combined revenues for the Volkswagen passenger cars business (excluding China) hit a record €106.24bn in 2015, before slipping back in 2016 to €105.65bn. Operating profit has fallen by more than a third since 2013, including another 11% in 2016 to €1.87bn.

Volkswagen Commercial Vehicles operates separately from the passenger car division. Its range extends from leisure and utility vehicles through to heavy trucks, and was bolstered in 2004 with the launch of the new Caddy urban delivery van. In 2010, the group entered the worldwide pick-up sector, a key market in the US, with the introduction of the Amarok. (It already produced the Saveiro, a lower-spec pick-up, in Brazil). Unit sales more than doubled between 2003 and 2008, reaching 439,000 vehicles in the latter year, before plunging in 2009. Another surge in 2012 was followed by further declines. Deliveries for 2016 recovered by 5% to 478,000 units, with combined revenues of €11.1bn. Biggest sellers are the Caddy, the Caravelle and Transporter. Despite the longstanding rivalry between Volkswagen and Daimler, the two companies cooperate on technology development for their Crafter and Sprinter light truck models. The Crafter is actually manufactured by Daimler under contract.

Background

see Volkswagen Group profile for history

Last full revision 31st July 2017

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