Department of commerce

TOPIC: VOLKSWAGEN AUTOMOBILE COMPANY

SUBMITTED

TO: DR. AYESHA SHOUKAT

SUBMITTED

BY: JAHANZAIB MUSTAJAB (06)

JAVED AMIN (16)

SESSION: 2017-2019

M.COM (MORNING)

4TH SEMESTER
Contents
INTRODUCTION...........................................................................................................................................3
HISTORY.......................................................................................................................................................5
ORGANIZATION STRUCTURE........................................................................................................................5
APPROACHES...............................................................................................................................................5
STRATEGIES OF BUSINESS………………………………………………………………………………………………………………………..5

MARKETING MIX..........................................................................................................................................5
COMPETITORS.............................................................................................................................................5
SWOT ANALYSIS...........................................................................................................................................5
PESTEL ANALYSIS..........................................................................................................................................5
PRODUCT LINE.............................................................................................................................................5
SALE OF THE COMPANY...............................................................................................................................5
CAPITAL / INVESTMENT OF THE COMPANY……………………………………………………………………………………………..5

ABOUT PAKISTAN.........................................................................................................................................5
ASIA PACIFIC................................................................................................................................................5
INTRODUCTION

Volkswagen Group, also called Volkswagen AG, major German automobile

manufacturer, founded by the German government in 1937 to mass-produce a
low-priced “people’s car.” Headquarters are in Wolfsburg, Germany.

The company was originally operated by the German labour Front (Deutsche
Arbeitsfront), a Nazi organization. The Austrian automotive
engineer Ferdinand Porsche, who was responsible for the original design of
the car, was hired by the German labour Front in 1934, and ground was
broken for a new factory in the state of Lower Saxony in 1938. The outbreak
of World War II in 1939 occurred before mass production could begin, and the
factory was repurposed to produce military equipment and vehicles.
Volkwagen’s military involvement made its factory a target for Allied bombers,
and by the end of the war the factory was in ruins. It was rebuilt under British
supervision, and mass production of the Volkswagen began in 1946. Control of
the company was transferred in 1949 to the West German government and the
state of Lower Saxony. By that time, more than half of the passenger cars
produced in the country were Volkswagens.
Volkswagen production expanded rapidly in the 1950s. The company
introduced the Transporter van in 1950 and the Karmann Ghia coupe in 1955.
Sales abroad were generally strong in most countries of export, but, because of
the car’s small size, unusual rounded appearance, and historical connection to
Nazi Germany, sales in the United States were initially sluggish. The car began
to gain acceptance there as the 1950s progressed, however, and Volkswagen of
America was established in 1955. The American advertising agency Doyle
Dane Bernbach was hired to represent the brand in 1959, and the result was a
landmark advertising campaign that helped to popularize the car as the
“Beetle” and promoted its size and unconventional design as an advantage to
the consumer. The campaign was very successful, and the Beetle was for many
years the most-popular imported automobile in the United States. Although
Volkswagen made many detail changes to the Beetle, the basic rear-engine
design and rounded shape remained the same. The company developed other
rear-engine models with more-modern styling and improved engineering, but
none were as successful as the Beetle.
Competition from small cars with more-modern designs and the company’s
increasingly troubled finances eventually dictated a change in corporate
philosophy toward developing more-contemporary and sportier car models.
As a result, Volkswagen began phasing out its rear-engine cars in the 1970s,
replacing them with front-engine front-wheel-drive designs. The first of those
new cars was the short-lived K70 in 1970, followed by the Pass at in 1973.
Most significant, however, was the Golf, initially called the Rabbit in the United
States, which was introduced in 1974. The Golf was an instant sales success,
effectively replacing the Beetle in the company’s lineup and ultimately
becoming Volkswagen’s best-selling model worldwide.
Joint ownership of Volkswagen by the West German government and the state
of Lower Saxony continued until 1960, when the company was mostly
denationalized with the sale of 60 percent of its stock to the public. Since the
1950s Volkswagen has operated plants throughout much of the world,
including in Mexico, Brazil, China, and the United States. In addition to
passenger cars, the company also produces vans and commercial vehicles.
Volkswagen owns several other automotive companies, including Audi and
Porsche in Germany, SEAT in Spain, Skoda in the Czech Republic, Bentley in
the United Kingdom, Lamborghini in Italy, and Bugatti in France.
In mid-2015 Volkswagen briefly held the distinction of being the world’s
largest car manufacturer by volume after surpassing Toyota Motor
Corporation. However, shortly thereafter Volkswagen faced a public
relations crisis when the U.S. Environmental Protection Agency (EPA)
determined that the manufacturer’s diesel-powered cars contained software
that altered the vehicle’s performance in order to pass emissions tests.
Volkswagen admitted to installing the “defeat device,” and it recalled more
than 10 million automobiles worldwide. In the United States alone, the
carmaker faced fines of more than $4 billion, and several Volkswagen officials
later were found guilty of various crimes. Despite the scandal, Volkswagen
sales worldwide continued to increase.

HISTORY

A BRIEF HISTORY OF VOLKSWAGEN

Volkswagen is the largest car manufacturer in Europe, and there’s no doubt
that the name is more familiar than the name used when the company was
founded in 1937 – Gesellschaft zur Vorbereitung des Deutschen Volkswagens
mbH. A string of successes are featured in the history of this German company,
as well as some setbacks.

1937 to 1945

The company was renamed Volkswagenwerk GmbH on September 16th, 1938,

after being founded on the 28th of May the previous year. Work began on a
new factory in 1938, in what is today the city of Wolfsburg, to produce a new
car designed by Ferdinand Porsche.

The Second World War saw about 20,000 concentration camp prisoners,
prisoners of war and laborers forced to work at the Volkswagen GmbH plant.
During this time, the company focused on manufacturing armaments instead
of cars. Volkswagen created a humanitarian fund in 1998, to help provide
financial compensation for those who were forced to work at the company’s
plant during the war. The fund had helped over 2,000 people in 26 countries
by the end of 2001. In addition, current employees at the Volkswagen plant
have contributed towards a memorial in Wolfsburg, commemorating those
who were forced to work at the plant.

1945 to 1949

The British military government took over responsibility of the

Volkswagenwerk plant in June, 1945 as the war was coming to an end. Mass
production of the distinctive and now famous Beetle was begun, under the
supervision of Major Ivan Hirst.

1949 to 1960

The company increased its range of products during the early 1950s, and the
decade also saw the introduction of the popular Volkswagen Bus, which soon
became affectionately known as the VW Bully. Its ability to perform different
functions led to an increasing demand for the van, with the result that a
separate manufacturing plant was built in Hanover. The beginnings of the
commercial vehicles division of Volkswagen were born. The millionth
Volkswagen Beetle rolled off the production lines in 1955, leading to
celebrations in Germany and around the world.
1960 to 1980

The world car production record was broken in February, 1972 when
Volkswagen announced that 15,007,034 units had been assembled. This
milestone surpassed another important milestone in auto history – the
production of the Tin Lizzy, or Ford Model T, between 1908 and 1927. In 1973,
the company’s use of the modular strategy allowed rationalization to be
achieved by the use of standard components in several different models. At
this time, the company introduced the Volkswagen Passat, which featured
engine power up to 110 bhp, a four cylinder engine with water cooling, and
front wheel drive. The Volkswagen Golf became one of the most famous cars in
the world after the first one was produced at the Wolfsburg plant in early
1974. The company also introduced the sportier Scirocco, and continued
manufacturing the car until 1981. Another legendary car was introduced in
1976, the Golf GTI, and drivers all over the world appreciated the power of its
110 bhp engine.

1980 to 1990

1983 saw robots being used to make cars for the first time ever, when
Volkswagen introduced automation to the assembly plant known as hall 54.
The mainly automated production process was ideal for the company’s second
generation Golf cars.

1990 to 2000
Volkswagen was again making automotive history in July, 1999 when the Lupo
3L TDI was introduced. Its economical fuel consumption of just three litres for
each 100 km was a first for a production car.

2000 to 2003

During the new millennium, Volkswagen moved into a new area of the market,
when they introduced the Touareg. The off road yet luxury car was produced
at the company’s Bratislava, Slovakia facility. Production of a compact van
called the Touran was started at the Wolfsburg facility in late 2002. The
production of the Volkswagen Touran was notable for its use of a collective pay
model in its production, which focused on flexible working hours, flat
hierarchies and leaner production, as well as a more team oriented approach
and the use of more expertise during production. More dynamic changes and
improvements in engineering and design were implemented in 2003, when
the company began production on the 5th generation of the now classic
Volkswagen Golf.

2004 to Present Day

In 2008 VW announces plans for a $1 billion assembly plant in Chattanooga,

Tennessee to make cars and SUVs designed for North America. In 2011 the
facility was complete.

In 2018, Volkswagen announced to end the production of the iconic Beetle, by

2019.
ORGANIZATION STRUCTURE

 OUTLINE OF THE LEGAL STRUCTURE OF THE GROUP

Volkswagen AG is the parent company of the Volkswagen Group. It develops
vehicles and components for the Group’s brands, but also produces and sells
vehicles, in particular passenger cars and light commercial vehicles for the
Volkswagen Passenger Cars and Volkswagen Commercial Vehicles brands. In
its capacity as parent company, Volkswagen AG holds indirect or direct
interests in AUDI AG, SEAT S.A., SŠ KODA AUTO a.s., Dr. Ing. h.c. F. Porsche AG,
Scania AB, MAN SE, Volkswagen Financial Services AG, Volkswagen Bank
GmbH and a large number of other companies in Germany and abroad. More
detailed disclosures are contained in the list of shareholdings in accordance
with sections 285 and 313 of the Handelsgesetzbuch (HGB – German
Commercial Code), which can be accessed at www.volkswagenag.com/ir and
is part of the annual financial statements. Volkswagen AG is a vertically
integrated energy supply company as defined by section 3 no. 38 of the
Energiewirtschaftsgesetz (EnWG – German Energy Industry Act) and is
therefore subject to the provisions of the EnWG. In the electricity sector,
Volkswagen AG generates sells and distributes electricity together with a
Group subsidiary. Volkswagen AG’s Board of Management is the ultimate body
responsible for managing the Group. The Supervisory Board appoints,
monitors and advises the Board of Management; it is consulted directly on
decisions that are of fundamental significance for the Company.
 ORGANIZATIONAL STRUCTURE OF THE GROUP
The Volkswagen Group is one of the leading multibrand groups in the
automotive industry. The Company’s business activities comprise the
Automotive and Financial Services divisions. All brands within the Automotive
Division – with the exception of the Volkswagen Passenger Cars and
Volkswagen Commercial Vehicles brands – are independent legal entities.

The Automotive Division comprises the Passenger Cars, Commercial Vehicles

and Power Engineering business areas. The Passenger Cars Business Area
essentially consolidates the Volkswagen Group’s passenger car brands.
Activities focus on the development of vehicles and engines, the production
and sale of passenger cars, and the genuine parts business. The product
portfolio ranges from fuel-efficient compact cars to luxury vehicles and also
includes motorcycles, and will gradually be supplemented by mobility
solutions.

The Commercial Vehicles Business Area primarily comprises the development,

production and sale of light commercial vehicles, trucks and buses from the
Volkswagen Commercial Vehicles, Scania and MAN brands, the corresponding
genuine parts business and related services. The collaboration between the
MAN and Scania commercial vehicle brands is managed and coordinated
under the umbrella of Volkswagen Truck & Bus GmbH. The commercial
vehicles portfolio ranges from pickups to heavy trucks and buses. The Power
Engineering Business Area combines the large-bore diesel engines,
turbomachinery, special gear units, propulsion components and testing
systems businesses. The activities of the Financial Services Division comprise
dealer and customer financing, vehicle leasing, banking and insurance
activities, as well as fleet management and mobility offerings. With its brands,
the Volkswagen Group is present in all relevant markets around the world. The
Group’s key sales markets currently include Western Europe, China, the USA,
Brazil and Mexico. Volkswagen AG and the Volkswagen Group are managed by
the Volkswagen AG’s Board of Management in accordance with the
Volkswagen AG Articles of Association and the rules of procedure for
Volkswagen AG’s Board of Management issued by the Supervisory Board.

Each brand in the Volkswagen Group is managed by a board of management,

which ensures its independent and self-contained development and business
operations. The Group targets and requirements laid down by the Board of
Management of Volkswagen AG must be complied with to the extent permitted
by law. This allows Group-wide interests to be pursued, while at the same time
safeguarding and reinforcing each brand’s specific characteristics. Matters
that are of importance to the Group as a whole are submitted to the Group
Board of Management in order to reach agreement between the parties
involved, to the extent permitted by law. The rights and obligations of the
statutory bodies of the relevant brand company remain unaffected. The
companies of the Volkswagen Group are managed separately by their
respective managements. In addition to the interests of their own companies,
the management of each individual company takes into account the interests
of the Group and of the individual brands in accordance with the framework
laid down by law.
APPROACHES
Volkswagen is used geocentric approach.

STRATEGIES OF BUSINESS

MARKETING MIX

Price in the marketing mix of Volkswagen

Volkswagen is leading global automobile manufacturer. With 34500 vehicles

sold every day, Volkswagen prices its products competitively for certain
developing nations and slightly more expensively for economies where it is
seen as a brand which can command a higher premium. Volkswagen banks on
its higher quality as a measure for its slightly expensive prices. Psychological
pricing is one of the tactics used by Volkswagen to further its pricing
objectives. Reduction in buyer remorse through perceived and actual high
quality helps them justify the extra money they pay for Volkswagen cars.
Spares too are priced on the expensive side. Hence, he pricing strategy in the
marketing mix of Volkswagen is mostly based on competition, segment,
demand, features offered in the car and the geography being served.

Products in the marketing mix of Volkswagen

Volkswagen offers several vehicles in different countries. Its top selling and
most popular models include Volkswagen Polo, Volkswagen Passat,
Volkswagen Jetta, Volkswagen Sirocco, Volkswagen Tiguan, Volkswagen
Touran, Phaeton, Eos, and Beetle. All these cars are the product strategy in the
marketing mix of Volkswagen. Depending on the level of localization, features,
comfort, size, seating capacity, options, engine configurations and power
several different trims and variants are offered. The various body types
Volkswagen offers including hatchback, estate, sedan, coupe, convertible, SUV,
crossover, coupe and MPV. It also manufactures and sells Hybrid, Dual fuel and
Electric vehicles. Volkswagen cars, Polo and Gold also won the prestigious
European Car of the Year award, which is 50 years old.

Some Salient features of Volkswagen products are as follows

 High quality cars with a brand name to support

 Good service delivery with very few escalated complaints

 Fantastic distribution for the products.

Place in the marketing mix of Volkswagen

Volkswagen cars are available almost everywhere throughout the world.

Having assembling lines and manufacturing facilities in several parts of the
world. These include Germany, Mexico, USA, China, India, Indonesia, Russia,
Czeck Republic, Portugal, Spain, South Africa, Poland, Slovakia. After
recognizing Indonesia as a top destination for car and van sales, Volkswagen
set up a new plant for $140 million towards the manufacturing of large
transport vehicles and multivans. As far as India is concerned Volkswagen to
start the assembly of specific export modules of engines and also local engines
to increase localizations levels to 90% from the current 70%.

In its latest venture into Algeria, Volkswagen also launched a new production
plant there to help boost localizations levels and make cars cheaper.
Volkswagen boasts a truly international presence and has its distribution well
laid it out for the countries it operates in. Volkswagen cars are available
throughout the world via company owned dealerships and multi-brand car
showrooms.

Promotions in the marketing mix of Volkswagen

Volkswagen has always been forceful with its ad campaigns. As a part of its
marketing mix promotion strategy, Volkswagen has used 360 branding to
promote not only the parent company, but all its cars individually. With higher
grade of tensile strength used in its steel, greater depth and shine of paint,
higher craftsmanship of its cabins and better equipment levels has helped
Volkswagen drive ‘higher quality’ as a trait of all of its car and most of its
promotions in developing countries advertised the same.

Abuse friendly build and solid construction along with longevity was
advertised in India and helped it gain important sale numbers. Aggressive
promotional activities using social media networks and online platforms
including Twitter, Facebook, You Tube and Instagram help Volkswagen remain
at the top of the promotional game as competitors are increasingly heading
into online space.

Product differentiation is one marketing tactic used in the creatives for

promotional activities of Volkswagen and safety and German build quality are
two traits used most often in campaigns of its vehicles. Hence, this
summarizes the entire Volkswagen marketing mix.
COMPETITORS

Top Volkswagen Competitors in the world

Volkswagen is a German Automaker company that was founded in the year

1937. As one of the largest vehicle manufacturers in the world, VW has an

average annual production output of 12 million units leading to annual

revenue of approximately 150 billion euro. Its brands include the Seat

and Skoda. It also has full ownership of the exotic Audi, Bentley, Porsche,

Bugatti, Ducati, and Lamborghini subsidiaries. Being a global company, it

employees around 650,000 employees and receives competition from the

following global brands. Following are the top Volkswagen competitors.

 Toyota
 General Motor
 Ford
 Renault Nissan
 Hyundai
 Daimler
 BMW
 Chevrolet
 Honda
 Subrau
 KIA

SWOT ANALYSIS

Strengths:
 International presence – One major strength of
VW is its international presence. It is present everywhere from Europe
to North America, South America and Asia Pacific. The one brand that is
the central attraction of VW’s portfolio is the Audi. However, Volkswagen
 passenger cars are also in demand worldwide. In the recent years, it has
increased its presence in China through partnerships. Asia Pacific
market is growing in importance for the automotive brands and
Volkswagen is working to increase the number of its dealerships there.

 Brand image – For any major brand, its brand image is one of its
biggest strengths. Volkswagen is among one of the most popular
automotive brands of this world. While, its brand is mainly related with
premium and luxury cars like Audi and Skoda, Porsche, Lamborghini etc,
VW also makes passenger cars for the lower end market. Its brand image
helped it bear the shock from the diesel scandal. Brand image proves a
critical strength in such difficult times and can help retain sales and
customers. In 2016 again, its sales picked up and the credit to a large
extent goes to its brand image apart from innovation.

 Large product portfolio – Apart from automotives, Volkswagen sells

financial services. Its product portfolio is made of 12 automotive brands.
VW has large and controlling stakes in several of these brands. These
brands include Volkswagen, Volkswagen commercial vehicles, Audi, Seat,
Skoda, Bentley, Bugatti, Lamborghini, Porsche, Scania, Man and Ducati.
They make premium vehicles, sports cars, bikes and commercial
vehicles. Apart from these, the brand offers financial services which
include Dealer and customer financing, Leasing, Direct bank Insurance,
Fleet management and Mobility offerings. A large product portfolio can
be beneficial in terms of business and can help bear several types of
pressures including changing demand. Sometimes if sales across one
brand or product category declines, another category might see higher
sales. Moreover, a large product portfolio allows you to cater to a large
customer segment and varying tastes of different segments of a global
audience.

 Focus on technological innovation– Volkswagen has focused on

technological innovation to grow its brand and its sales. It is also
investing in research for making autonomous cars. VW acquired a stake
in German Research Center for Artificial Intelligence (DFKI). At Audi
Business innovation center the focus is on developing ideas for urban
mobility of the future. Across all its brands and business segments, the
brand is investing in innovation for creating better technologies and
higher customer satisfaction.
 Human resource management – VW is among the largest employers of
the world with more than 627,000 employees. It also aims to become
one of the most attractive employers in the automotive industry. In 2016,
it was placed at the top in several employer rankings. Apart from
offering a wide array of job opportunities, the brands and companies
under Volkswagen AG have created their own tailor made professional
development programs.

 Excellent supply chain management - Supply chain management is

also a critical strength for any automotive brand and VW has managed
its supply chain very effectively. It is digitizing its supply chain so as to
acquire higher efficiency and make production more effective.

Weaknesses:
 Image and reputation tarnished by diesel scandal: The diesel
scandal of 2015 had tarnished the reputation and image of the brand.
VW continued to feel the effects of the brand till 2017. Dubbed as diesel
dupe or Diesel gate the scandal has cost VW billions of dollars. Millions
of cars were affected by the scandal worldwide which VW itself accepted.
This has tarnished the brand’s image both in US and other parts of the
world. The brand is still feeling the effects of the scandal, however, has
been quick to emerge from its pressure.

 Reduced operating profits due to increased compliance issues: In

US, the brand has paid around 25 Billions in fines, penalties and
restitution for the 580,000 tainted vehicles. This has affected the
operating profits of the brand.

Opportunities:
 Growing demand for passenger cars in Asia Pacific: The demand for
passenger cars in Asia Pacific has kept growing. This presents a major
opportunity for the passenger car makers. While VW has been able to
increase its sales in this market, still the Asia pacific and specifically
China and India are vast markets offering bigger opportunities.
 Sustainable technology: Sustainability also provides a major
opportunity for the VW brand. Apart from sustainable vehicles and
sustainable supply chain, sustainable innovation offer major
opportunities for research and investment. Globally, more and more
people are interested in sustainable vehicles and sustainable technology.
There sales have grown up and it has created new opportunities for the
automotive brands.

 Restructuring and partnerships: Partnerships have helped VW grow

in China. It has struck a similar important partnership in US with
Navistar. Similar more partnerships across the world and in the Asia
pacific regions can help the brand grow faster. Moreover, a large business
is often fraught with management issues. While VW has set ambitious
plans for restructuring and reorganizing its business since the diesel
scandal, the sooner it does it, the better it will be for the business’ health.

Threats:
 Heavy competition: The competition across the automotive industry
has kept growing more and more intense. It is also the biggest threat
leading to higher marketing as well as R&D costs. In every segment
including the premium category, the brand is facing heavier competition
from rival brands.

 Legal and compliance issues: Legal and compliance issues are a major
trouble for the automotive brands. Recently, VW landed itself into major
troubles related to emissions. The legal tussle has cost it more than 25
billion US dollars which shows the level of financial loss a brand might
face if it gets into legal issues. Moreover, government and legal oversight
has grown across the word causing automotive brands more financial
stress.

 Economic fluctuations: Economic fluctuations in major markets can

lead to decline in sales and loss of revenue. The recession was gone long
ago but the economic environment remained difficult for various brands
under Volkswagen AG. MAN faced difficulties in South America because
of decline in demand. However, the demand for commercial vehicles kept
recovering in Europe. Situation was difficult in the shipping industry.
Economic instability in developing countries and emerging markets as
 well as the low prices of oil were also adding to VW’s difficulties. In this
way economic fluctuations in the various markets can pose a major
threat to VW’s business.

PESTEL ANALYSIS
This is a PESTEL analysis of VW discussing how various forces in the business
environment are affecting its business. PESTEL is an acronym for political,
economic, social, technological, environmental and legal. These are important
forces that affect businesses directly and indirectly. Have a look how:–

Political

The importance of political factors in the context of business has grown

heavily in the 21st century. Political forces are now increasingly playing an
important role in the area of international business. From international trade
relationships to foreign supply chain and manufacturing partnerships, all of
them are affected by the political environment globally in various regions and
in turn affect business potential and performance. Companies like Volkswagen
have their supply and distribution network around the globe. Its supply chain
is located over various markets/regions and political stability in these regions
in essential for VW to run its business successfully. Business friendly regimes
and political stability help businesses. Otherwise unfriendly regimes and
unstable political environments can hinder business growth. Chaos and
instability or heavy taxation by governments can lead to loss and business
disruption. The political environments of the Asian markets have remained
stable during the recent years which have led to faster growth of automotive
brands including VW and rising demand in these regions. Geopolitical factors
like terrorism also have the potential to affect businesses and their growth. In
some Midwestern nations where terrorist organizations are quite active, doing
business can be difficult for international brands including automotive
businesses. Other political changes like the Brexit can also create a situation of
uncertainty and give rise to difficulties for large and global business brands. In
this way, political forces have acquired a bigger role in international business
in the 21st century. Political oversight has also grown and automotive brands
are under heavier pressure as compared to a decade or two ago.
Economic

Economic factors may have a direct effect on businesses and they do by

affecting demand. Fluctuations in the economic environment or decline in
economic activity can lead to decreased demand and losses. The world has
seen a bitter recessionary period when demand for vehicles had declined and
several major brands had to be bailed out by the government otherwise they
would have gone bankrupt. While the world economy has returned on track,
economic fluctuations in several markets and currency exchange rate
fluctuations are also having a toll on net profits and revenue. During periods
of declined economic activity the demand for vehicles is affected, affecting the
sales and revenues of brands like Volkswagen. The recession saw employment
level declining across the globe resulting in reduced purchasing power of the
consumers and low demand for vehicles. With economy activity returning
after the recession, sales and revenue have grown but currency fluctuations
affect profits from time to time. Volkswagen has survived the blow from the
diesel scandal and just an year later, its sales surged again. High economic
activities in most of its markets have an important role in its higher sales and
profits. This shows the direct relationship between economic forces and the
survival of large international business including those in the automotive
industry.

Social

Social forces are also playing increasingly important role in the growth of the
business industry in the 21st century. Sociocultural forces affect him buying
habits and preference of the customers. Changing social trends change
people’s preferences. Sociocultural factors affect both sales and marketing. It
is why brands need to create their sales and marketing strategies based on
their markets and their cultures. Moreover, due to the changing trends product
and sales strategies too need to be updated accordingly. Now, people are more
interested in sustainable products and the sales of electric vehicles have kept
rising. Overall, the role of social-cultural factors the context of business has
kept growing.
Technological

Technology has always played a central role in the automobile industry. How
successful an automobile brand is also depends upon how advanced it is
technologically. From AI to automated driving, the automotive brands are in a
race to remain ahead of the others and therefore invest a lot in R&D. VW
acquired a stake in German Research Center for Artificial Intelligence (DFKI).
At Audi Business innovation center the focus is on developing ideas for urban
mobility of the future. Across all its brands and business segments, the brand
is investing in innovation for higher customer satisfaction. It is investing in
technology to bring more eco-friendly and safer cars to the market. It has also
invested a lot in making its manufacturing and distribution processes
technologically more efficient than the rivals. Overall, the role of technology in
automotive industry has grown central and how much businesses invest in
this area determines their level of success.

Environmental

Environmental factors also play a very important role in the automotive

industry. The pollution laws have grown stringent across the world and in
some of the markets there are quite large penalties for brands that do not
meet the criteria. In 2015, VW was forced to recall millions of cars because of
their inability to meet the emissions standard. This resulted in a loss of
billions. Now, the brand is focusing on developing more hybrids and electric
vehicles to gain the trust of its customers back. There is already a lot of buzz
surrounding its highly anticipated I.D., I.D. VIZZION, I.D. CROZZ, and, of course,
I.D. BUZZ. All around the world and especially in the developed countries, the
laws related to environment and emissions have been made tough which
makes it mandatory for brands like Volkswagen to focus on models that are
more environment friendly.

Legal

Legal factors too have acquired huge importance in the 21st century. The legal
and regulatory framework has grown tighter and brands face huge compliance
risks in all areas from labor to environment and driver safety. VW was already
made to cough up billions in the Diesel scandal case. The brand was found
using defeat devices to escape emission tests. As a result, millions of VW
models had to be recalled and fines to be paid in Billions. Globally, the
governments and the law are using stringent means to prevent any kind of
violation by the automotive brands and non compliance is highly risky. Thus,
the overall role of legal factors in the area of international business and the
automotive industry cannot be denied.

PRODUCT LINE

The whole operation of the company revolves on designing, manufacturing

and distributing engines, motorcycles and – of course – vehicles. Volkswagen
AG is so powerful that it was the seventh largest company in the whole world,
according to the list from Fortune Global 500 in 2016. A major reason why
Volkswagen AG is such a massive company is how it managed to have 12 major
subsidiaries with their respective iconic brands. Brace yourself for the list of
companies under Volkswagen AG that are world leaders in the automotive
industry.

AUDI

This German manufacturer of automobiles focuses on designing, engineering,

producing, marketing and distributing luxury vehicles. Audi has its roots back
in the first part of the 20th century. In 1932, it started as the Auto Union
because of the manufacturers Audiwerke, Horch, Wanderer, and DKW. It only
began as Audi in the 1960s when Volkswagen acquired it from Daimler-Benz.
The first series Volkswagen introduced for its launch is the Audi F103. The
company name has an interesting twist. “Audi” is a Latin word that means
“listen.” Turns out, the German word for listen is “Horch.” Haven’t you realized
the connection yet? The founder of Auto Union is August Horch. When it
comes to the logo, we can see four rings. These rings represent the four
companies that formed the Auto Union. Meanwhile, the slogan of Audi is
“Advancement through Technology.” Strangely though, Audi USA prefers “Truth
in Engineering” and has been using it since 2007.
 Audi is comparable to Mercedes and BMW when we talk about world sales for luxury
cars.

LAMBORGHINI

The complete brand name is actually automobile Lamborghini

S.p.A. Lamborghini is an Italian manufacturer of SUVs, sports cars, and
supercars. Volkswagen AG owns this company because of Audi.
In 1963, the brand name was longer to acknowledge its powerful Italian
founder. Automobile Ferruccio Lamborghini S.p.A. managed to closely compete
with Ferrari because of its Miura sports coupeé in 1966. Miura became the
standard for high-quality vehicles of its time due to its rear-wheel drive and
rear mid-engine. After a series of ownership, Volkswagen AG finally acquired
Lamborghini in 1998. However, Audi is the one with direct control over the
Italian brand.
BENTLEY

Since 1998, this British marketer and manufacturer of SUVs and luxury
vehicles have been a Volkswagen AG subsidiary. Bentley Motors Limited’s
main office is in Crewe, England.

In 1919, W. O. Bentley founded Bentley Motors Limited in Cricklewood, North

London. Memorable Bentley sports cars in the past namely Bentley Speed Six,
Bentley 4 1/2 Litre, Bentley Arnage, Bentley Turbo R and Bentley R Type
Continental became the inspirations for current popular models such as
the Mulsanne, Bentley Bentayga, Continental GT and Continental Flying Spur.
Eventually, Rolls-Royce acquired Bentley in 1931. However, the engineering
corporation Vickers managed to acquire Rolls-Royce Motors in the later years.
By 1998, Vickers finally decided to sell Rolls-Royce to no other than
Volkswagen AG. The purchase obviously included Bentley, specifically its
administration, production, model nameplates, designs, and logos.

Just because Bentley is in Crewe does not mean that every new creation
emerges there. Some models’ assembly is in Germany, specifically at Dresden
factory owned by Volkswagen. The manufacture of the Bentayga is at the
Volkswagen Bratislava Plant while the Continental is in Zwickau.

SCANIA AB
The former company name of Scania AB is AB Scania-Vabis. This is an
important Swedish manufacturer for the automotive industry. It manufactures
commercial vehicles such as buses and trucks, and diesel engines for various
industrial applications. Because of the merger between Vabis and
Maskinfabriks-aktiebolaget Scania, Scania AB was developed in 1911. Since
1912, its head office never changed location which is in Soö dertaö lje. Through
the years, Scania AB expanded through its manufacturing facilities in Russia,
Poland, Brazil, Argentina, India, Netherlands, France, and Sweden. Scania AB
established assembly plants spanning ten countries around Europe, Asia, and
Africa. It also makes sure to have finance and service companies all over the
world. It already reached at least 45,000 employees from different
countries. Scania AB currently holds a logo showing the griffin from the
province of Scania’s coat of arms.

SEAT

Sociedad Espanñ ola de Automobiles’ de Turismo or SEAT is a manufacturer of

automobiles from Catalonia, Spain. The industrial company Instituto Nacional
de Industria or INI founded SEAT S.A. in May 1950. It is one of the earliest
subsidiaries of Volkswagen AG because it was acquired in 1986. Back in 2006,
a total of more than 16 million SEAT vehicles has been manufactured since the
1950s. Included in that sum are the units from the Martorell plant with over
six million in quantity. More than 70 countries benefit from the products of
SEAT.
ŠKODA AUTO

Simply called SŠ koda, this automobile company from Boleslay, the Czech
Republic started in 1895. It was first named Laurin & Klement. SŠ koda Works
acquired Laurin & Klement in 1925. The latter was eventually owned by the
state due to Communism. Its brand name fully disappeared to SŠ koda Works. In
1992, SŠ koda changed into a private company. Then, in 2000, Volkswagen
finally acquired SŠ koda.

SŠ koda’s initial role is to be Volkswagen’s entry brand. But, the company

became so popular because most of its models are similar to Volkswagen
units’ features and prices but actually have better space compared to the latter
brand. In 2016, it successfully sold 1.13 million vehicles.

BUGATTI

Known as a French manufacturer of luxury automobiles, Bugatti Automobiles

S.A.S. is located in Alsace, France. Volkswagen acquired it in June 1998. Bugatti
introduced concept cars from 1998 to 2000. Its first model Veyron
16.4 became available for sale five years later.

PORSCHE

Porsche has a complicated company name: Dr. lng. h.c. F. Porsche AG. It is a
famous manufacturer of automobiles in Germany. It focuses on producing
high-performance sedans, SUVs and sports cars. Current Porsche models
include Cayenne, Macan, Panamera, 911 and 718 Boxster/Cayman.

DUCATI

An Italian manufacturer, Ducati Motor Holding S.p.A. designs iconic

motorcycles. It became a subsidiary of Volkswagen because of Lamborghini.
MAN SE

Formerly known as MAN AG, MAN is the abbreviation of the German company
Maschinenfabrik Augsburg-Nuö nberg. This is a company focusing on
mechanical engineering, buses, heavy trucks, and diesel engines for turbo
machinery and marine propulsion. Because of its versatility, MAN SE reached
more than 53,800 employees and €13.6 billion annual sales in 2016.

SALE OF THE COMPANY

Volkswagen Group Sales in 2018 by Brand

The main brands of the Volkswagen Group reported worldwide deliveries for
2018 as follows:

Jan.-Dec. Jan.-Dec. Change

Brands
2018 2017 (%)
Volkswagen Passenger Cars 6,244,900 6,230,300 0.2

Audi 1,812,500 1,878,100 -3.5

SŠ KODA 1,253,700 1,200,500 4.4

SEAT 517,600 468,400 10.5

Porsche 256,300 246,400 4

Volkswagen Commercial Vehicles 499,700 497,900 0.4

MAN 136,500 114,100 19.6

Scania 96,500 90,800 6.3

Volkswagen Group (total) 10,834,000 10,741,500 0.9

With the exception of Audi, all major brands in the Volkswagen Group
increased sales worldwide in 2018. The Group brands were able to more than
compensate for the risks in individual regions such as the general economic
uncertainty in China and the adverse effects of the WLTP changeover in
Europe. Especially the Group’s new SUV models were strong growth drivers.
The Volkswagen Passenger Cars, SŠ koda, Seat, Porsche and Lamborghini brands
all set new deliveries records.
Volkswagen Brand Sales by Market in 2018

The Volkswagen Group reported deliveries in various major market and

regions of the world in 2018 as follows:

Jan.-Dec. Jan.-Dec. Change

Markets
2018 2017 (%)

Europe 4,380,700 4,328,500 1.2

Western Europe 3,583,500 3,583,900 0

Germany 1,284,800 1,286,500 -0.1

Central and Eastern Europe 797,200 744,700 7.1

Russia 229,800 191,800 19.8

North America 956,700 976,400 -2

USA 638,300 625,100 2.1

South America 590,000 521,600 13.1

Brazil 401,700 308,000 30.4

Asia-Pacific 4,546,300 4,505,800 0.9

China (incl. HK) 4,207,100 4,184,200 0.5

Worldwide 10,834,000 10,741,500 0.9

In Europe, the brands of the Volkswagen Group delivered a total of 4.38

million vehicles in 2018, 1.2 percent more than in 2017. The Group grew
especially strongly in Central and Eastern Europe, where 797,200 vehicles
were handed over to customers, 7.1 percent more than the previous year. This
increase was especially due to strong performance in Russia, where Group
deliveries grew by 19.8 percent. Despite the significant adverse effects of the
WLTP changeover of the fleets in the second half of the year, deliveries by the
Group in Western Europe reached about the same level as the previous year, at
3.58 million vehicles. In Germany, deliveries also remained at the prior- year
level, at 1.28 million vehicles.

There was a two-way split between the situation for the brands in the markets
of North America. While growth was recorded in the USA with 638,300
vehicles delivered (+2.1 percent) and Canada with 118,500 vehicles delivered
(+3.7 percent), there was a drop of 15.6 percent compared with the previous
year in Mexico. In total, the Volkswagen Group handed 956,700 vehicles over
to customers in the region, 2.0 percent less than in 2017.

Developments for the Volkswagen Group in South America last year were
extremely positive. With growth of 13.1 percent in deliveries to 590,000
vehicles, the region made a decisive contribution to the positive overall figures
of the Group. The outstanding performance of the Group brands in Brazil,
where 401,700 vehicles were delivered, a rise of 30, 4 percent, more than
offset the fall of 22.4 percent to 118,600 vehicles delivered in Argentina. In
Argentina, conditions for the overall market remained difficult in a generally
poor economic environment.

In the Asia-Pacific region, the Volkswagen Group achieved growth, with 4.55
million vehicles handed over to customers – despite the negative effect of the
Chinese market, where the overall economic situation became more sluggish
in the second half of the year as a result of the trade dispute with the USA. The
reluctance to buy on the part of consumers had a negative impact on the entire
automobile market, which contracted for the first time after many years in
2018. In this situation, the Volkswagen Group still achieved slight growth
compared with the previous year, at 4.21 million vehicles delivered, and were
able to increase its market share.

CAPITAL / INVESTMENT OF THE COMPANY

ABOUT PAKISTAN

Volkswagen Signs Agreement to Set Up Assembly Plant in Karachi,

Pakistan.

Volkswagen is to invest $135mn in an automotive plant which will be set up in

Pakistan. The objective of this plant is to manufacture and assemble their
vehicles in the country with local collaboration. Karachi-based Premier Motor
Limited was granted the ‘category-A Greenfield investment status by the
ministry of industries and production. The assembling of Volkswagen vehicles
is in talks and reportedly a contract has been made.
The plant will be set up in Balochistan and land has been purchased for this
venture. The plant is expected to be operational by 2021. Engineering
Development Board (EDB) Deputy General Manager Asim Ayaz confirmed the
Greenfield status. He further shared that it is expected that Kia and Changan
will launch their vehicles by July 2019. Reportedly, 13 companies have been
awarded the Greenfield status while two have been given the Brownfield
status. Automotive manufacturers and dealers from France, Germany, Korea,
Japan, China, and UAE are all eyeing to bring investment in Pakistan.

Update: Volkswagen has entered into an agreement with a local luxury brand
to officially enter Pakistan’s automotive market. The world’s largest
automobile manufacturer will assemble its cars within the country. Earlier this
month, Volkswagen AG and Premier Motors Limited inked the agreement in
Hanover, Germany according to the Board of Investors. Premier Motors would
assemble vehicles from completely knocked-down (CKD) kits, they added.

The brand is expected to assemble four types of vehicles in three phases. BOI
officials have added that in partnership with Premier Systems Private Limited-
the authorized Audi importers in Pakistan, to assemble the Cassy, Skoda,
Transporter T-6 and Amarok

ASIA PACIFIC