I grew up watching the cartoon series “Scooby-Doo,” and they used a Volkswagen minivan there, and I still remember that after all these years. Of course, I didn’t know about the company, but the logo remained a childhood memory.
We all have known or seen the Volkswagen car, minivan, or the logo somewhere. It took the company many years to reach this place with many strengths, weaknesses, opportunities, and threats, which we will learn in this Volkswagen swot analysis.
Volkswagen: Company Overview
| Company | Volkswagen |
| Industry | Automobile |
| Founded | 28 May, 1937 |
| Founder | German Labour Front |
| CEO | Oliver Blume |
| Headquarter | Wolfsburg, Germany |
| No. of Employees | 672,789+ |
| Annual Revenue | €250.200 billion (FY 2021) |
| Website | volkswagen.com |
If we go back in history, the founding history of the Volkswagen company was directly related to the infamous “Adolf Hitler,” who wanted a “People’s Car” and a family car combined just before WWII in 1937.
After 86 years, Volkswagen is one of the largest automotive manufacturers in the world, with 12 brands under its umbrella, including Volkswagen, Audi, Porsche, and Skoda. The company’s portfolio is filled with history and memorable stories, from making numerous economical and famous cars to producing the fastest car globally.
As of 2022, Volkswagen had over 667,647 employees and generated total revenues of €279.2 B. The company operates 130 production plants worldwide, producing over 4.56 M vehicles annually. Volkswagen is also investing heavily in electric and hybrid cars, with plans to become carbon-neutral by 2050 and reduce its carbon footprint by 30% by 2025.
Product & Services of Volkswagen
Automobiles | Commercial Vehicles | Internal Combustion Engines | Motorcycles | Turbomachinery
Volkswagen Competitors
Toyota | General Motors | Ford | Nissan | Hyundai | BMW | Chevrolet | Honda | Daimler
Did You Know?
The Volkswagen Beetle was first introduced in 1938, and production continued until 2019; and was in production for 81 years, with over 23M units sold worldwide.
Strengths – Volkswagen SWOT Analysis
High Brand Value: The company’s strong brand image, innovative products, and wide range of offerings have contributed to its high brand value and strong reputation in the industry. In 2022, Volkswagen stood 8th in the most valuable automotive brand globally, valued at $14.819 B and consistently ranking among the top 10 automotive brands in the world.
Strong R&D: To stay at the forefront of the industry, Volkswagen invests heavily in R&D, focusing on developing new technologies, such as electric and autonomous vehicles, and improving the efficiency and performance of its existing products. As per the data, the company spent €15.6 B and planned to invest more to match competitors’ tech, such as Tesla’s.
Efficient Production Network: With more than 120 production facilities worldwide and over 667,647 employees, Volkswagen has an efficient production network. The company’s “TOGETHER – Strategy 2025” aims to increase efficiency and reduce costs, to reduce production costs by 20% by 2025.
Various Partnerships: By effectively establishing partnerships with multiple companies in different industries, the company was able to enhance its capabilities and broaden its offerings. In 2023, the most exciting news for the company is that its partnership with Ford is a possibility, and more news like this is coming in the following days.
Steady Finance: A strong cash flow and finance helped the company to hold its market position, expand, and efficiently process its operations. Behind that, the constant profitability and revenue played a crucial role. In 2022, the company reported revenues of €279.2 B, an 12% increase from the previous year, with an operating profit of €7.6 B.
Weaknesses – Volkswagen SWOT Analysis
Controversial Advertisement: The company faced several controversial tags because of its constantly miscommunicated and controversial ads. Starting with the “Jamaican accent” ad in 2013; after that, just two years ago, they made a racist ad that was culturally insensitive, and it’s a constant that’s happening and damaging the company’s reputation.
Scandals: Volkswagen has been found involved in several major scandals, including the “Dieselgate” scandal in 2015, in which the company was found to have installed software in diesel vehicles to cheat on emissions tests. The scandal led to significant financial penalties, with the company paying over €30 B in fines and compensation.
Low Diversification: Compared to other competitors in the market, Volkswagen has a low level of diversification compared to other automotive manufacturers. Not just because their primary focus is on producing passenger cars and commercial vehicles but also on the target markets. As a result, almost 70% of the company’s sales are from the passenger cars category, making it over-dependent on this category.
Complex Organizational Structure: Under the Volkswagen Group umbrella, Volkswagen has a complex organizational structure with multiple brands and subsidiaries. Not to mention its complicated decision-making process has cost the company a lot, including letting go of many opportunities and dealing with controversial ads and scandals.
Opportunities – Volkswagen SWOT Analysis
Portfolio Diversification: Volkswagen has an opportunity to diversify further its product portfolio, which would help the company to reach new customer segments. As a part of the plan, The company has already made significant investments in electric and autonomous vehicle technology, with plans to launch many new electric models in the coming years.
Market Expansion: Emerging markets are ripe for any automotive companies to tap into, and there is significant potential for growth. With a strong presence in China, selling over 3.18 M vehicles in 2022, it is also expanding its business in India and other markets in third-world countries where consumer purchasing power is rising.
Self-Driving Tech: The autonomous driving market is growing; in 2022, the total size is $931.34 B with a 12.4% growth rate. Even though Volkswagen has already introduced several autonomous driving features in its vehicles, such as advanced driver-assistance systems (ADAS), there is space to improve. It plans to invest €50 billion in electric and autonomous vehicles over five years.
Sustainable Practices: Using sustainable materials and promoting recycling and reuse, Volkswagen can position itself as a leader in sustainable automotive manufacturing. Volkswagen is investing in electric and hybrid vehicles, setting ambitious sustainability targets, including becoming carbon-neutral by 2050 and reducing its carbon footprint by 30% by 2025.
Centralized Digitalization: The automotive industry is becoming increasingly digital with advanced technologies such as artificial intelligence and the internet of things. Volkswagen has the opportunity to invest in these technologies to enhance its overall vehicles and services.
Threats – Volkswagen SWOT Analysis
Competitive Market: Volkswagen is facing tough competition in the global automotive market, particularly from other major players such as Toyota, General Motors, and Ford. China is the company’s biggest market; they faced significant losses in 2022, and sales were down by 6.8%.
Lawsuits: In recent years, the company has faced numerous lawsuits and legal challenges, mainly related to the “Dieselgate” scandal. Besides the class action between VW and Porsche, investor lawsuits have significantly hampered the company’s finances.
Economic Downturns: The company has faced economic challenges in the past, such as the 2008 financial crisis, which led to a decline in sales and profits. As 2023 just might happen, and inflation is already hitting the automotive industry pretty hard, VW is exposed to economic risks in different regions and markets.
Govt. Regulations: Changes in government policies and regulations can impact the demand for Volkswagen’s vehicles, particularly concerning incentives for electric and hybrid cars. As there has already been a carbon emission scandal, along with others, the company is in a tight space regarding any government law violations.
[Bonus Infographic] SWOT Analysis of Volkswagen
Recommendations for Volkswagen
The company should prepare to grab opportunities and tackle the threats in the years to come. Here are some recommendations for that.
- Investing in electric vehicle development and production will pay off by bringing more sales and keeping a steady cash flow.
- The company should be more transparent about its operations and sustainability practices, including its carbon emissions and environmental impact.
- Continuing to invest in innovation and new technologies, such as autonomous driving and digitalization, will help the company stay ahead of competitors.
- Expanding its business into emerging markets with significant potential for growth will expose the company to new markets and increase sales.
Frequently Asked Questions (FAQs)
Does Volkswagen Own Ferrari?
No, Volkswagen doesn’t own Ferrari.
What are VW’s Most Selling Cars?
VW’s most selling car is “The Beetle,” with 23 M total sold items in 81 years.
Final Words on Volkswagen SWOT Analysis
Volkswagen is a leading player in the global automotive industry, with a strong brand image, broad product portfolio, and well-established distribution network. The company has the opportunity to position itself as a leader in electric vehicles, sustainable manufacturing, and emerging markets. Still, it must address ethical and governance issues to maintain its reputation and ensure long-term success.
References
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- Alaniz, A. (2023, March 16). Volkswagen Group CEO Says Partnership With Ford Is Growing. Motor1.com.
- Volkswagen Group achieves solid annual results, significant increase in deliveries expected in 2023. (2023, March 3). Volkswagen Group.
- Volkswagen blames cultural insensitivity for ad criticised as racist. (2020, June 11). Reuters.
- Volkswagen brand increases earnings in 2022 and continues to drive forward e-offensive. (2023, March 15). Volkswagen Newsroom.
- Ferrazzi, K. (2015, October 6). Volkswagen’s Fatal Flaw: Its Corporate Structure. LinkedIn.
- Wayland, M. (2021, May 12). Volkswagen plans self-driving electric microbus with Argo AI by 2025. CNBC.
- Volkswagen Group sales down 7 pct in 2022 due to supply bottlenecks. (2023, January 13). Xinhua.
- Kottasová, I. (2018, November 16). Volkswagen to spend $50 billion on electric car ‘offensive.’ CNN.
- Singh, V. (2022, November 25). Volkswagen Losing Share In Its Single Biggest Market, China. Yahoo Finance.
- Ethington, S. (2022, November 10). US judge issues final approval on $80M Volkswagen, Porsche class action settlement. JURIST.
- The Motor Trade Industry: Inflation Impact Report. (n.d.). ChoiceQuote.
