Did you know that over 21.

5 million original Volkswagen Beetles were sold

since 1945, making one of the best-selling cars of the 20th century?

Regardless of the industry and type

of business, any company that
survives and thrives in the top ten for
nearly a century should be awarded
the respect it deserves. Volkswagen
is close to hitting a century in the top
tier of the auto industry.
While we can promise to build for you
a century-old business, we can at least give you some tools to chart your
entrepreneurial journey. With the wealth of expertise and experience, we
can learn a lot from analyzing Volkswagen’s strengths, weaknesses,
opportunities, and threats.
 Volkswagen’s Strengths
1. Excellent Brand Recognition
As one of the oldest automakers, Volkswagen is highly recognized globally.
For one, the company’s simple but iconic intertwined VW logo can be
picked out of a line by most consumers across the world.
2. Strong financial Performance
With immense financial capability comes flexibility and the ability to do
anything a company needs to do to beat the competition.
According to Forbes, as of May 2020, Volkswagen is ranked at the
following global position:
 #8 in sales revenue
 #37 in profitability
 #70 in terms of assets
 #133 in term of market value
3. World’s Best Employer
According to Forbes, Volkswagen is ranked at # 31 position in the World’s
best employers list of 2019.
4. Impressive Portfolio
From Lamborghini to Bugatti, Bentley, Audi,
Skoda, and Porsche, all these icons are
part of Volkswagen’s portfolio. Apart from
high-end sports cars and luxury brands, the
company also caters to the ordinary folks.
Volkswagen has something for everyone.

5. Diversified Brands
The Volkswagen group is highly diversified with two major divisions: the
Automotive division and the Financial Services Division.
 Automotive Division Financial
Services
Division
Passenger Cars Commercial Vehicle Power Engineering
Business Area Business Area Business Area
Volkswagen MAN Commercial Parts Dealer financing
Passenger Cars Vehicles
Ducati Scania Vehicles Engines Customer
financing
SKODA Leasing
Bentley Insurance
SEAT Fleet
Management
Porsche Mobility offerings
Volkswagen
Commercial
Vehicles

6. Vehicle Sales

Despite a very competitive landscape, Volkswagen sold 10.9

million vehicles in 2019, resulting in annual revenue of €252.63 billion.

7. Brand Value

According to the Interbrand, the brand value of the Volkswagen group

is $12.9 billion in 2019. [Source]

8. Strong Global Production Network

Volkswagen group operates a total of 124 production locations across

the globe. With the majority of production locations (72) in Europe.

From Europe to America, Asia, and Africa, the company has a substantial
market presence in both developed and developing economies.
 Regions Number of locations

Europe 72

North America 6

South America 9

Asia 33

Africa 4

Total 124

9. Strategic Restructuring and rebound strategy

After plunging drastically in the aftermath of the diesel emissions scandal in

2015, the company restructured strategically and rebounded within two
years.

Then CEO, Mattias Muller developed Volkswagen’s transformational

strategy “Transform 2025” in the following phases:

 The first phase (2016 – 2020): Develop new competencies – electric

vehicles and e-mobility
 The second phase (2020 – 2025): Become world’s leading, profitable
volume manufacturer
 The third phase (2025 onwards): the rapid expansion of electric vehicles
[Source]
10. Huge Investments in R&D
From industrial cloud to hybrid and electric cars, efficient combustion
engines,motorcycles, and many more technologies, Volkswagen invests
heavily in R&D.

This has enabled the auto manufacturer to deliver high performance and
quality cars consistently and maintain a technological advantage over the
competition.

11. Effective Management of Operations

While other companies struggle to manage suppliers, raw materials,

sales, capacity-demand ratio, and so on, Volkswagen is producing
over 30,000 cars per day. Effective management makes all this look so
easy.

12. Great Partnerships

Volkswagen’s partners are highly reliable and leaders in respective fields,

which has contributed to the success. In matters of technology,
Volkswagen has partnered with many leading technology companies such
as Microsoft, Siemens, Amazon (AWS), etc. to expand its e-mobility
services.

13. Closely-knit Teams

Manufacturing plants that work and live as a close family are highly
efficient. Volkswagen’s plants are designed as small towns with
technicians, welders, supervisors, team leaders, designers, and support
staff all living as a community.

Volkswagen’s Weaknesses
1. Emission Scandal – Tainted Reputation

In September 2015, Volkswagen’s reputation as one of the most trusted

auto manufacturers was tainted with the revelation that it installed software
in its cars to cheat emissions tests.
As a result of the diesel emissions scandal, Volkswagen was penalized
to pay over € 30 Billion in fines in various countries and has struggled to
regain the trust of consumers. [Source]

2. Lack of Diversification

While it has an impressive portfolio, the company is focused on producing

cars for sale. Millennials and Gen Z are the present and future, but they
prefer to rideshare, car share, and car rentals. This makes Volkswagen’s
lack of diversity a major weakness. [Source]

Millennials are not as crazy about buying cars as baby boomers were.

3. Weak Marketing Strategies outside Europe

Volkswagen does not market or promote its brands aggressively enough

outside Europe. In most cases, the company will collaborate with a
company already in the market. For example, it is collaborating with JAC to
produce low-cost electric cars in China. [Source]

Volkswagen’s Opportunities
1. Diversify Portfolio

As more and more millennials enter the marketplace, the demand for
simple, cheap, and flexible mobility will increase.

With Volkswagen already manufacturing great cars, all it has to do

is create an app for car share, rideshare, or car rental, and they can attract
millennials in droves. [Source]

2. Focus on Eco-friendly Cars:

The number of eco-conscious consumers is increasing rapidly across the

world. Volkswagen can invest more in the manufacture of hybrids and
electric cars to exploit the growing demand. In the next five years,
Volkswagen has set aside €60 Billion for the expansion of its electric cars.
[Source]

Volkswagen group estimates that by 2025, 20% (about 2.5 million) of all its
vehicles will be Battery Electric Vehicles (BEV).
In comparison, in 2019, BEV volume is about 1% of total group vehicle
deliveries. For example, some of its electric vehicles are e-tron, Taycan, e-
Bora, E-Lavida, etc.

3. Expand in Emerging Markets

The automobile market in the developed world is saturated with very little
gains to be made. It is time to tap into the growing purchasing power of the
middle-class in Asia, Africa, the Middle East, and Latin America.

4. Tap into Autonomous Market

Demand for self-driving cars is poised

to increase rapidly in the next few
years as technologies like 5G, AI, and
IoT deliver smarter cities and transport
networks.

Google, Tesla, and Uber are already

ahead, but Volkswagen can catch up
by increasing investment in
autonomous R&D.

To continue its efforts, Volkswagen

has partnered with Ford to
integrate Argo AI’s self-driving
capabilities [Source]

Volkswagen’s Threats
1. Ongoing Lawsuits

Volkswagen is engaged in emission lawsuits in several courts in the EU,

the UK, France, and the US. With each loss costing millions, Volkswagen’s
profits are threatened by impending court rulings. [Source]

2. Increasing Competition
The auto industry is highly competitive with new carmakers
like Tesla, Zorya, and Koenigsegg grabbing market share from
Volkswagen’s electric and high-end sports cars while fending off old rivals,
such as Toyota, Ford, Hyundai, and Nissan.

Also, now there is additional competition from ridesharing companies such

as Uber, Lyft, Ola, Didi, etc.

3. Stringent Environment Regulations

As the threat posed by climate increases, governments will increasingly

focus on reducing their greenhouse gas emission and carbon footprint with
stringent environmental regulations.

Just like a convicted criminal, Volkswagen’s emissions and operations will

be scrutinized more obsessively by compliance auditors. [Source]

4. Trade Negotiations

The US is renegotiating trade with the EU. As the biggest export out of the
EU, Volkswagen and other European cars are caught right in the middle of
these negotiations as bargaining chips.

Losses of up to $2.5 billion annually are projected as the worst-case

scenario. [Source]

5. Global Recession

With the looming recession in the aftermath of these uncertain times,

Volkswagen’s car sales are threatened. The outbreak slashed sales
revenue to drop 8% year over year in the first quarter of 2020.

6. Controversial Advertisement

Volkswagen was criticized for posting a racist advertisement video on its

Instagram channel. Later, this ad was removed, and Volkswagen sent out
an apology in a separate statement.