The story
Founded by German Labor Front on May 28, 1937, in Berlin.1
1937 to 1945
Volkswagen (transl. "People's car"; lit. 'People's wagon') was founded in Berlin as the Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH ('Limited Liability Company for the preparation of the German People's Car', abbreviated to Gezuvor) by the National Socialist Deutsche Arbeitsfront (German Labour Front) and incorporated in the Stadt des KdF-Wagens bei Fallersleben, ("City of the Strength Through Joy car at Fallersleben) on 28 May 1937. The purpose of the company was to manufacture the Volkswagen car, originally referred to as the Porsche Type 60, then the Volkswagen Type 1, and commonly called the Volkswagen Beetle. This vehicle was designed by Ferdinand Porsche's consulting firm, and the company was backed by the support of Adolf Hitler. On 16 September 1938, Gezuvor was renamed Volkswagenwerk GmbH ('Volkswagen Factory GmbH').
Shortly after the factory at Fallersleben was completed World War II started, and the plant primarily manufactured the military Kübelwagen (Porsche Type 82) and the related amphibious Schwimmwagen (Type 166), both of which were derived from the Volkswagen. Only a small number of Type 60 Volkswagens were made during this time. The Fallersleben plant also manufactured the V-1 flying bomb, making the plant a major bombing target for the Allied forces.
Slave labour was utilised in the Volkswagen plant, e.g. from the Arbeitsdorf concentration camp. The company would admit in 1998 that it used 15,000 slaves during the war effort. German historians estimated that 80% of Volkswagen's wartime workforce consisted of slave labour. Many of the slaves were reported to have been supplied from the concentration camps upon request from plant managers. A lawsuit was filed in 1998 by survivors for restitution for the forced labour. Volkswagen would set up a voluntary restitution fund.
1945 to 1970
After the war in Europe, in June 1945, Major Ivan Hirst of the British Army Royal Electrical and Mechanical Engineers (REME) took control of the bomb-shattered factory for use in repairing British Army vehicles, pending the expected disposal of the plant tooling and equipment as war reparations. However, no British car manufacturer was interested. A British report on the car said that "the vehicle does not meet the fundamental technical requirement of a motor-car … it is quite unattractive to the average buyer … To build the car commercially would be a completely uneconomic enterprise."
In 1948, the Ford Motor Company of USA was offered Volkswagen, but Ernest Breech, a Ford executive vice president, said he did not think either the plant or the car was "worth a damn." Breech later said that he would have considered merging Ford of Germany and Volkswagen, but after the war, ownership of the company was in such dispute that nobody could possibly hope to be able to take it over. As part of the Allies' industrial plans for Germany, large parts of German industry, including Volkswagen, were to be dismantled. Total German car production was set at a maximum of 10% of 1936 car production numbers. The company survived by producing cars for the British Army, and in 1948 the British Government handed the company back over to the German state, to be managed by former Opel chief Heinrich Nordhoff.
Production of the Type 60 Volkswagen (re-designated Type 1) started slowly after the war due to the need to rebuild the plant and because of the lack of raw materials, but production grew rapidly in the 1950s and 1960s. The company began introducing new models based on the Type 1, all with the same basic air-cooled, rear-engine, rear-drive platform. These included the Type 2 in 1950, the Karmann Ghia in 1955, the Type 3 in 1961, the Type 4 in 1968, and the Type 181 in 1969.
In 1960, upon the flotation of part of the German federal government's stake in the company on the German stock market, its name became Volkswagenwerk Aktiengesellschaft (usually abbreviated to Volkswagenwerk AG).
On 1 January 1965, Volkswagenwerk acquired Auto Union GmbH from its parent company Daimler-Benz. The new subsidiary went on to produce the first post-war Audi models, the F103-series, shortly afterwards.
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Another German manufacturer, NSU Motorenwerke AG, was merged into Auto Union on 26 August 1969, creating a new company, Audi NSU Auto Union AG (later renamed AUDI AG in 1985).
1970 to 1999
From the late 1970s to 1992, the acronym V.A.G. was used by Volkswagen AG as a brand for group-wide activities, such as distribution and leasing. Contrary to popular belief, "V.A.G." had no official meaning, and was never the formal name of the Volkswagen Group.
On 30 September 1982, Volkswagenwerk made its first step expanding outside Germany by signing a co-operation agreement with the Spanish car manufacturer SEAT, S.A., which led to the first VW models being built in Spain within SEAT factories, ultimately leading on to the Spanish company's full takeover by Volkswagen (below).
To reflect the company's increasing global diversification from its headquarters and main plant (the Volkswagenwerk in Wolfsburg), on 4 July 1985, the company name was changed again—to Volkswagen Aktiengesellschaft (Volkswagen AG).
On 18 June 1986, Volkswagen AG acquired a 51% controlling stake in SEAT, making it the first non-German subsidiary of the Volkswagen Group. On 23 December the same year, it became the Spanish company's major shareholder by increasing its share up to 75%.
In 1990—after purchasing its entire equity—Volkswagen AG took over the full ownership of SEAT, making the company a wholly owned subsidiary, and on 28 March 1991, another step to the expansion of the group's activities was made through the signing of a joint-venture partnership agreement with Škoda automobilová a.s. of Czechoslovakia, accompanied with the acquisition of a 30% stake in the Czech car manufacturer on 16 April 1991.
On 19 December 1994, the group began the acquisition of Škoda Auto by raising its share to 60.3%. Later, on 11 December 1995, it became the Czech company's largest and controlling shareholder by increasing its share up to 70%.
Three prestige automotive marques were added to the Volkswagen portfolio in 1998: Bentley, Lamborghini, and Bugatti.
2000 to present
On 30 May 2000, after having gradually raised its equity share, Volkswagen AG took over the full ownership of Škoda Auto, making the company a wholly owned subsidiary.
From 2002 to 2007, the Volkswagen Group's automotive division was restructured so that two major "Brand Groups" with different profiles would be formed. The Audi Brand Group included Audi, SEAT and Lamborghini, while the Volkswagen Brand Group consisted of Volkswagen, Skoda, Bentley and Bugatti.
Volkswagen Group revealed on 24 October 2009 that it had made an offer to acquire long-time partner and German niche automotive manufacturer Wilhelm Karmann GmbH out of bankruptcy protection. In November 2009, the supervisory board of Volkswagen AG approved the acquisition of assets of Karmann, and planned to restart vehicle production at their Osnabrück plant in 2012.
In December 2009, Volkswagen AG bought a 49.9% stake in Dr. Ing. h.c. F. Porsche AG (more commonly known as Porsche AG) in a first step towards an 'integrated automotive group' with Porsche. The merger of Volkswagen AG and Porsche SE was scheduled to take place during the course of 2011. On 8 September 2011, it was announced that the planned merger "cannot be implemented within the time frame provided for in the Comprehensive Agreement". As reasons, unquantifiable legal risks, including a criminal probe into the holding's former management team were given. Both parties "remain committed to the goal of creating an integrated automotive group with Porsche and are convinced that this will take place".
On 4 July 2012 Volkswagen group announced they would wrap up the remaining half of Porsche shares for €4.5 billion (US$5.6B) on 1 August 2012 to avoid taxes of as much as €1.5B, which would have to be paid if the wrap up happened after 31 July 2014. On 1 August 2012, Volkswagen AG purchased the remaining stake in Porsche AG equalling 100% of the shares in Porsche Zwischenholding GmbH, thus making Porsche the second German wholly owned subsidiary of the group after Audi.
Volkswagen AG completed the purchase of 19.9% of Suzuki Motor Corporation's issued shares on 15 January 2010. Suzuki invested part of the amount received from Volkswagen into 1.49% of Volkswagen. In 2011, Suzuki filed a lawsuit at an arbitration court in London requesting that Volkswagen return the 19.9% stake.
On 25 May 2010, it was announced that Volkswagen Group, through its subsidiary Lamborghini Holding S.p.A., had acquired a 90.1% stake in the Italian automotive design house Italdesign Giugiaro. In less than three months, the transaction had been completed making the Italian firm a member of the Volkswagen Group. Since 2013 the Volkswagen Group has held a 89.7% stake in Traton.
In 2015 research showed a security flaw in the keyless ignition of Volkswagen and other carmakers' vehicles. Volkswagen spent two years trying to keep the research from the public domain. On 3 August 2015, Nokia announced that it had reached a deal to sell its Here digital maps division to a consortium of three German automakers—BMW, Daimler AG, and Volkswagen Group, for €2.8B. This was seen as an indication that the automakers were interested in automated cars. Volkswagen held a 19.9% non-controlling shareholding in Suzuki between 2009 and 2015. An international arbitration court ordered Volkswagen to sell the stake back to Suzuki. On 17 September 2015, Suzuki paid US$3.8 billion (€3.4 billion) to complete the stock buy-back just hours prior to a major scandal about emissions violations engulfing Volkswagen. Suzuki had wished to buy Fiat diesel engines. In 2021, Volkswagen agreed to combine Bugatti with Rimac Automobili to form the joint venture company Bugatti Rimac. As part of this change, Volkswagen handed its 45% share to subsidiary Porsche AG. In 2026, Porsche sold it's share of Bugatti Rimac to an international consortium led by HOF Capital, a New York based investment firm.
In early 2024, Volkswagen Group began looking for partners among international technology corporations to create AI labs, new digital prototypes of products and functions using artificial intelligence. In October 2024, Volkswagen plans to close at least three plants in Germany and cut jobs, facing challenges from delayed EV investments and a drop in Chinese sales.
Emissions scandal, 2015
On 18 September 2015, the US EPA announced that Volkswagen had installed a "defeat device" software code in the diesel models sold in the US from 2009 to 2015. The code was intended to detect when an emissions test was being conducted, and altered emissions controls for better compliance. Off the test stand, the controls were relaxed, and emissions jumped 35 to 40 times regulatory levels according to investigators at West Virginia University and the California Air Resources Board. About 482,000 vehicles are under the recall order, a potential US$18 billion (€16.2 billion) —US$37,500 (€33,800) per violation— in fines are pending, and news accounts speculate a criminal indictment for the deception is certain.
The VW Group CEO, Martin Winterkorn, said he was "deeply sorry" and ordered an external investigation. The software code was only revealed when the EPA refused to certify VW's 2016 models for sale in the US unless the corporation provided full disclosure. On Sunday, 20 September 2015, VW Group announced it was halting the sale of its four-cylinder diesel models in the US. The US EPA press release on its Notice of Violation, and the California Air Resources Board letter dated 18 September 2015 contain significant chronological detail of the agencies interaction with VW on the issue.
On 22 September 2015, VW AG admitted that 11 million cars worldwide had been fitted with software intended to deceive emissions testing. The company issued a profit warning, saying it had set aside US$7 billion (€6.3 billion) to fix the fraud. On 23 September 2015, Martin Winterkorn announced his resignation from the CEO position after a crisis meeting of the company board. On 25 September 2015 Matthias Müller was named CEO. Müller was the head of the Porsche marque within the VW corporate umbrella.
On 21 April 2017, a US federal judge ordered Volkswagen "to pay a US$2.8 billion (€2.5 billion) criminal fine for rigging diesel-powered vehicles to cheat on government emissions tests". The "unprecedented" plea deal formalised a punishment that Volkswagen AG agreed to earlier in 2017. In addition, the plea deal includes a US$1.5 billion (€1.3 billion) settlement for various environmental, customs and financial violations.
Overall, Volkswagen will pay more than US$30 billion (€26.8 billion) in penalties and lawsuit settlements related to the scandal.
Huge debt
In its own financial report for 2023 Volkswagen Group estimated its long, medium and short term debt at €155,6B. It is unclear how Volkswagen group plans to pay off that massive debt considering its falling global vehicle deliveries, planned closure of at least three factories in Germany after it previously closed two factories in Russia as well as 64% drop in profit for the three months to the end of September 2024. German Chancellor Olaf Scholz criticised Volkswagen's plan to close factories in Germany. He proposed a European subsidy program for electric vehicles.
Latest setback for Volkswagen came on 21 November 2024, when Swedish battery producer Northvolt filed for bankruptcy, Volkswagen previously invested €1.4B in their failed business. On 27 November 2024, Volkswagen announced sale of its Xinijang factory in China partly because "demand for combustion engine vehicles is going down".
Electrification strategy 2025
In 2016, Volkswagen Group announced a corporate "Strategy 2025" that focuses on electrification of its portfolio. The VW Group developed the Volkswagen Group MEB platform chassis that will be utilised in a range of various cars and light utility vehicles across several VW Group marques due to its flexibility and floor-mounted battery.
As of May 2018, the VW Group has committed US$48 billion (€41 billion) in car battery supplies and plans to outfit 16 factories to build electric cars by the end of 2022. According to VW Group CEO Dr. Herbert Diess, the company will offer 25 electric models and 20 plug-in hybrids by 2020.
Production in Xinjiang
Volkswagen Group came under pressure for cooperating with the Chinese government in the region of Xinjiang. In that same region, western-funded NGOs accused the Chinese government of having committed human rights abuses against the Uyghur minority group, which included mass surveillance, incarceration, and forced labour. After these accusations emerged, Volkswagen responded, "We do not assume any of our employees are forced laborers." Süddeutsche Zeitung claimed that Volkswagen was operating a plant in Xinjiang at a loss in order to curry favour with the Chinese government to set up more lucrative plants in other parts of China, which Volkswagen denied, saying that the decision to set up the plant in 2012 was purely based on economics. In November 2024, Volkswagen announced it would sell the plant to Shanghai Motor Vehicle Inspection Certification.
New Auto
In 2021, Volkswagen Group released their New Auto strategy. The strategy was based on transitioning to electric cars, and building a shared platform, battery systems, software and mobility solutions to use across all their brands. This involves creating the Scalable Systems Platform, as well as developing software under a new subsidiary CARIAD. Volkswagen Group aims by 2024 to transition to selling mostly electric cars. It aims to have six battery factories in Europe by 2030. In 2023, Volkswagen Group announced plans to cut costs by €10 billion (US$11.1B). In February 2024, Volkswagen Group and Chinese electric vehicle manufacturer XPeng signed a technology cooperation and joint development agreement on platform and software.
Restructuring (2026–present)
In March 2026, during the conflict involving the United States, Israel, and Iran, Volkswagen entered talks with Israel's state‑owned defence firm Rafael Advanced Defence Systems to explore converting its Osnabrück car plant into a facility producing components for the Israeli Iron Dome air defence system. The deal was reportedly blocked by the Qatar Investment Authority, which owns over 10% of Volkswagen shares and over 17% of its voting rights.
In July 2026, Volkswagen Group announced plans to cut around 50,000 jobs in Germany by 2030 as part of a broader restructuring amid growing competition from Chinese automakers, particularly BYD, alongside US tariffs and weaker profitability.
From Wikipedia’s article on Volkswagen Group, shared under CC BY-SA 4.0.5