Josiah Caldwell
ECON 230
Regent University
Professor Jeff Bajah
November 4, 2021
Milestone 1
The Volkswagen Auto-Group:
On May 28, 1937, a German company set out to build “The People’s Car Company” (History, 2021, para 1). This company now goes by the name of Volkswagen. Volkswagen has soared a long way from its beginnings to becoming a multi-billion-dollar empire. “Globally, Volkswagen Group employed around 665,000 people in 2020, down from 668,000 in 2019” (Carlier M. 2021, para 1).
The Volkswagen group is not only the owner of Volkswagen but many other popular brands. Brands such as Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania, and MAN. Owning these companies makes Volkswagen have an extreme advantage over other car companies just because they build some of the most luxurious and sought-after vehicles in the world. Although Volkswagen does not have a technical monopoly, they have an amazing opportunity to put themselves farther ahead of the competition.
Does Volkswagen have an advantage over other car brands?
Simply put yes, they do. “Volkswagen AG is a leading global automotive company with a strong presence in all the leading automobile markets including the US and China” (Pratap A. 2020, para 1). Becoming increasingly popular with the production of fuel-efficient vehicles, as well as debuting an all-new electric car has increased Volkswagen's lead over other companies.
“As an automobile brand, Volkswagen has maintained a strong brand image by focusing on product quality, innovation, and customer satisfaction. This has led to higher popularity and stronger sales worldwide” (Pratap A. 2020, para 3). Volkswagen has always been known to have some of the coolest looking, best driving, comfortable and fuel-efficient vehicles on the market.
On top of everything, Volkswagen tends to keep customers and customers tend to stay loyal to Volkswagen. “Apart from marketing, brands also need to focus on technology, passenger safety as well as the overall riding experience. If Volkswagen has managed a high level of customer loyalty, then it is because the company focuses on all these specific areas simultaneously” (Pratap A. 2020 para 4). Volkswagen has become a very trustworthy brand, partly because buyers can buy a car knowing it will last, and keep them safe.
Volkswagen’s supply and demand.
Volkswagen’s popularity has greatly increased from its start, thus making the supply and demand grow with it. Along with the supply and demand increasing, the need to become more sustainable has become a focus for the company. Volkswagen uses various raw and recycled materials that are put into manufacturing.
“By the time a raw material has been transformed into a component installed in a Volkswagen, it will have passed through some 15,000 stations in the course of its production, treatment, finishing and transportation” (Volkswagen AG, 2021). Furthermore, the Volkswagen supply chain does not only do this for “Volkswagen” but they also do so for their other brands. This, in turn, keeps the “demand” for the products (vehicles and parts) soaring sky high.
With Volkswagen having so many different brands under their name, they can supply things for all different types of “classes” of people. “A large product portfolio offers a distinct and unique advantage and helps maintain demand and sales even during difficult times. It also helps VW serve several customer segments including the average consumer and the premium segment” (Pratap A. 2020). Whether you are looking to sport an Audi R8 or a simple Volkswagen Jetta, Volkswagen has got you covered.
Ever since the start of Volkswagen, the company wanted to be “the people’s car company” and they have done a magnificent job in doing so. “As an automobile brand, Volkswagen has maintained a strong brand image by focusing on product quality, innovation, and customer satisfaction. This has led to higher popularity and stronger sales worldwide” (Pratap A. 2020 para 3). The brand image Volkswagen has created is truly unmatched.
Provide the GDP of its home country and a key market (country).
Volkswagen’s home country is Germany. “Germany’s GDP continued to grow in 2019 on the back of the strong labor market, though momentum diminished markedly year-on-year to 0.5 (1.5) %. Both business and consumer sentiment darkened further as the year progressed” (Volkswagen AG, 2020).
In key market countries like North America, especially in the USA numbers declined. “Economic growth in the USA declined in the reporting period, reaching 2.3 (2.9) %. The economy was supported mainly by domestic consumer demand. The unemployment rate in the United States was at 3.7 (3.9) %. Given the global uncertainty, the US Federal Reserve lowered its key rate amid relatively steady inflation, thus reversing the tightening of monetary policy it had initiated in the meantime. The US dollar gained strength against the euro in the course of the year. Growth in Canada decreased to 1.6 (2.0) %, while the Mexican economy stagnated at a rate of 0.1 (2.1) %” (Volkswagen AG, 2020).
Below is a chart that shows the Economic Growth and percentage changes in GDP.
The image above is taken from the Volkswagen 2019 annual report.
“The Volkswagen Group produced 10,823,378 vehicles worldwide in fiscal year 2019, 1.8% less than in the previous year. In total, our Chinese joint ventures manufactured 4.1% fewer units than in the year before. In Germany, the production declined by 8.3%, mainly due to numerous new vehicle start-ups as well as the transition to electric vehicles. The percentage of the Group’s total production accounted for by Germany was lower than in 2018, at 19.5 (20.9)%” (Volkswagen AG, 2020).
On top of all the fluctuations from year to year within the Volkswagen Auto Group, the global pandemic also would affect economic growth and investments. Likewise, with electric cars increasing in popularity, Volkswagen has had to explore places that they had not yet explored to find new customers, or rather satisfy existing ones.
Volkswagen is undoubtedly one of the biggest automobile producers in the world and has faced adversity many times in the past, however, they are still Volkswagen. After the end of the 2021 year, I expect to see huge amounts of growth within the organization globally.
Page Break
Bibliography
Carlier, M. (2021, August 04). Volkswagen - number of employees worldwide 2020. Retrieved November 06, 2021, from https://fr.statista.com/statistics/272052/worldwide-number-of-volkswagen-group-employees/
Pratap Abhijeet Volkswagen Sources of Competitive Advantage. Retrieved November 06, 2021, from https://notesmatic.com/volkswagen-sources-of-competitive-advantage-/
Sustainability in the Supply Chain. (n.d.). Retrieved November 06, 2021, from https://www.volkswagenag.com/en/sustainability/sustainability-in-the-supply-chain.html
Volkswagen Konzern - AR 2019 - Production. (n.d.). Retrieved November 06, 2021, from https://annualreport2019.volkswagenag.com/group-management-report/business-development/production.html
Volkswagen is founded. (2009, November 13). Retrieved November 06, 2021, from https://www.history.com/this-day-in-history/volkswagen-is-founded