With Volkswagen claiming the top auto industry spot in Fortune’s annual World’s Most Admired Companies list and The Economist highlighting the Germany automaker’s global ascent, it’s worth taking a look at the tremendous shifts in reputation the company has experienced over the course of its 75-year history.
An Unlikely Origin
It’s hard to imagine today, but VW began as a state-supported operation in Nazi Germany. While Hitler heralded the Beetle as an affordable “people’s car” (in German, volkswagen), VW’s early years did not live up to that reputation. “Only 630 Beetles were made there during World War II—and distributed to the privileged,” according to Der Spiegel.
A Reputation Reborn
Demand for Beetles during the occupation kept VW alive following World War II, but there was little international interest. After looking at the company as a possible acquisition, the CEO of Ford, for instance, famously concluded that VW wasn’t “worth a damn.” But over the coming years Beetle’s popularity made it a symbol of West Germany’s “economic miracle,” and VW’s success was “one of postwar Europe’s most glittering economic achievements,” according to a Time magazine article from 1963. By that year it was the world’s third largest automaker, and less than a decade later the Beetle’s total production count eclipsed Henry Ford’s Model-T.
Transformation: from “Hitler’s car” to “Beetlemania”
Upon its initial introduction in the United States, VW’s reputation couldn’t escape the Nazi association. “I even tried calling the VW the ‘Victory Wagon’ to take the curse off it, but the press referred to it only as ‘Hitler’s car,’” said Dutch car dealer Ben Pon, who shipped the first Beetles stateside in the late 1940s. Soon, though, New York agency Doyle Dane Bernbach wiped away that stigma with a string of unforgettable advertising campaigns, including “Think Small,” Advertising Age’s top campaign of the century. Emphasizing VW’s impact on an owner’s reputation and image instead of the traditional touting of features, these campaigns were an innovative and influential development in the history of advertising.
Post-Beetle: less risk, but no more mania
When Beetlemania subsided, the void left by such a defining model threatened to undo VW’s reputational gains. Not wanting to repeat the same mistake, the company unveiled a more diverse series of models, including the Passat, Golf and Polo. Influenced by the technology and luxurious reputation of Audi, which VW acquired in 1964, these cars prevented its image from flat lining but ushered in an extended period of mixed results. Things began to look brighter by the turn of the new millennium, as Audi’s jump to the luxury class occupied by BMW and Mercedes-Benz gave VW’s reputation a boost in the same direction.
Poised for a boom
Reputation continues to be a major factor in VW’s latest global endeavors. In many countries “it has been around long enough to be seen as a domestic firm, so protectionists usually leave it alone,” according to The Economist. Its longstanding reputation in China has also helped distinguish it from pack in the world’s largest auto market. “VW bet on China nearly 30 years ago,” The Economist notes. “A glut of cheap cars is hurting prices in China but VW’s premium models are doing well.”
Protecting its image will be crucial for the VW’s future success, and The Economist article highlights a variety of obstacles that could stand in its way. But VW isn’t standing on the sideline. Its crowdsourced “People’s Car Project” recently engaged China’s drivers, attracting 119,000 ideas and 33 million hits. With that virtual finger on the pulse of its largest market, VW seems well prepared to continue its climb.