Vw in China

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Student Research Projects/Outputs

         No.052

VW in China

Elisenda Pujol MBA 2010
 

China Europe International Business School  699, Hong feng Road   Pudong, Shanghai  People’s Republic of China 

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1. Overview of VW. a. History of the group b. The company today 2. China’s car industry 3. 4. 5. 6. 7. VW in China Recent Market car industry in China The fight for the market share VW current performance and future plans. Sources

1. Overview of VW History of the group VW Company was founded in 1937 during the Nazi dictatorship in Germany. In the early 1930s German auto industry was still largely composed of luxury models, and the average German rarely could afford anything more than a motorcycle. In 1933, Adolf Hitler declared his intentions for a state-sponsored "Volkswagen" program (Volkswagen literally means the car of the people). Hitler required a basic vehicle capable of transporting two adults and three children at 100 km/h (62 mph). The new vehicle was designed by Ferdinand Porsche. During Second World War, production changed to military vehicles. The company used 15000 slaves as a workforce. After the War, the British Army took control of the town of Wolfsburg, where the VW factory was; Ivan Hirst came from Britain and landed in Germany in the summer of 1945, where he had the original intention to scrap the factory and use the proceeds as war reparations. But Hirst found a pre-war prototype Volkswagen in a remote workshop on the site and realized that the factory could be used for producing cars for the British Army. He persuaded the British Army to place a vital order of 20000 cars. That saved the company. From 1948, Volkswagen became a very important element, symbolically and economically, of West German regeneration. In the 1950s and 1960s, the famous Beetle and the Volkswagen Bus helped turn the company into an international success story. On the 70s, Volkswagen broke the world car production record: the Beetle surpassed the legendary Model T of Ford, with 15,007,034 units assembled. New models emerged: in 1974 the iconic Golf, then Polo, Passat, etc. Other successful products followed: the Scirocco, the Golf GTI, the Lupo and the Touareg. The company today In 2008, Volkswagen became the third largest automaker in the world. Organizationally, Volkswagen Group consists of two divisions: the automotive division and the financial services division. Under the automotive division, there are several brands: Audi and Seat, which joined the Group in 1986; Škoda, acquired in 1991; Bentley, Lamborghini and Bugatti, exclusive elite brands, and Scania, a brand of trucks and buses. Hence, the product ranges is very wide; it covers nearly all classes of cars, from low-consumption small cars to luxury class vehicles. VW cars are positioned as innovative, responsible, providing enduring value. Customers from all over the world associate this brand with quality, reliability and German engineering skills. The financial Services Division combines dealer and customer financing, leasing, banking and insurance activities, and fleet management.

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Within the group, sales revenue and operating profits are broken down into four geographic regions: North America, South America, Asia/ Pacific and Europe/Remaining markets. By regions, its strongest position has historically been Western Europe, where its current market share is 21%. China has been the second largest market for VW, only after Germany. Its lowest market share is in North America with 3.9 percent. Although it still described itself as a “European oriented company”, in 1990 VW sold two-thirds of its cars outside Germany, and produced 40 per cent of its units overseas.

In terms of operations, VW has 40 locations worldwide, 6 locations if which are in Asia.

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The group employs almost 400.000 employees worldwide, 45% of which are German, but this rate is likely to decrease, as a reflection of Volkswagen global expansion and the...
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