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IntroductionIntroduction

Company profileCompany profile

Origin --1937, Wolfsburg, Germany.Origin --1937, Wolfsburg, Germany.

Founder--Ferdinand Porsche & Adolf HitlerFounder--Ferdinand Porsche & Adolf Hitler

Bankers--Deutsche Bank,Bankers--Deutsche Bank,

Volkswagen Bank.Volkswagen Bank.

Present CEOPresent CEO

Marketing partnersMarketing partners Bentley, Skoda, Audi Bentley, Skoda, Audi

and Lamborghiniand Lamborghini

Prof. Dr. Martin Winterkorn

PROFILE OF VOLKSWAGENPROFILE OF VOLKSWAGEN TypeType--Public company--Public company FoundedFounded--Germany,(1937) Headquarters,--Germany,(1937) Headquarters,

Wolfsburg, GermanyWolfsburg, Germany Area served-Area served--Worldwide-Worldwide IndustryIndustry-Automotive industry-Automotive industry ProductsProducts-Cars and trucks-Cars and trucks ServicesServices-Financial services-Financial services ProfitProfit-▲ €4.68 Billion (2008) -▲ €4.68 Billion (2008)

DIVISION OF VOLKSWAGENDIVISION OF VOLKSWAGEN

Volkswagen Group Fleet International,Volkswagen Group Fleet International,

Volkswagen Group Supply,Volkswagen Group Supply,

Volkswagen Group United Kingdom Ltd.,Volkswagen Group United Kingdom Ltd.,

Volkswagen Group of America, Inc.,Volkswagen Group of America, Inc.,

Volkswagen Group China,Volkswagen Group China,

Volkswagen do Brazil,Volkswagen do Brazil,

Volkswagen Group Australia. Volkswagen Group Australia.

HISTORYHISTORY

Volkswagen was founded in 1937.Volkswagen was founded in 1937.

VW’S 1VW’S 1STST Car manufactured on Car manufactured on 16 16thth sept,1938. sept,1938.

Cont…Cont…The Volkswagen was a centerpiece of Nazism’s The Volkswagen was a centerpiece of Nazism’s

claims to benefit ordinary Germans.claims to benefit ordinary Germans.Hitler proposed to build a cheap car that almost Hitler proposed to build a cheap car that almost

anyone could afford. anyone could afford. He gave it the name “KdF Wagen,”(Kraft durch He gave it the name “KdF Wagen,”(Kraft durch

Freude) which we know as the Volkswagen. Freude) which we know as the Volkswagen.

Cont…Cont…

As early as 1934, As early as 1934, FührerFührer had talked with the most had talked with the most famous German automotive engineer Dr. Porsche famous German automotive engineer Dr. Porsche about carrying out his thinking, and given him the about carrying out his thinking, and given him the commission to undertake the construction of the commission to undertake the construction of the German Volkswagen.German Volkswagen.

Early in May 1937, Dr. Ley carried out the Führer's Early in May 1937, Dr. Ley carried out the Führer's commission to found the “Society for the Preparation commission to found the “Society for the Preparation of the German Volkswagenof the German Volkswagen.” .” 

IssuesIssues

EU Internal Market Commissioner Charlie McCreevy EU Internal Market Commissioner Charlie McCreevy announced that he wants to take Germany to the European announced that he wants to take Germany to the European Court of Justice (ECJ) since in his view, Germany has failed to Court of Justice (ECJ) since in his view, Germany has failed to amend the so-called “VW Law” properly and in line with amend the so-called “VW Law” properly and in line with European legislation. The ECJ held last year that the VW law European legislation. The ECJ held last year that the VW law was in breach of European rules on the free flow of capital was in breach of European rules on the free flow of capital across borders within the EU. across borders within the EU.

One of Germany’s governing parties, the Christian Democratic One of Germany’s governing parties, the Christian Democratic Union, is drafting new regulations that would encourage Union, is drafting new regulations that would encourage foreigners to disclose investments in German companies, and foreigners to disclose investments in German companies, and expand Berlin’s right to approve or reject those investments, expand Berlin’s right to approve or reject those investments, based on the national interest.based on the national interest.

VW in CHINAVW in CHINA

China is Volkswagen’s largest market. China is Volkswagen’s largest market.

Volkswagen began producing cars in China in 1985 with Volkswagen began producing cars in China in 1985 with Shanghai Automotive Company, which controls about half of Shanghai Automotive Company, which controls about half of China's car market. China's car market.

They set up a factory on Changchin, Some of the tooling came They set up a factory on Changchin, Some of the tooling came from a failed plant in Westmorland, Pennsylvania. It produced from a failed plant in Westmorland, Pennsylvania. It produced Golfs and Jettas. The latter became the bestselling cars in Golfs and Jettas. The latter became the bestselling cars in China.China.

Cont…Cont…

By 1995 the German car manufacture produced 50 percent of By 1995 the German car manufacture produced 50 percent of the cars in China.the cars in China.

In 2002, it reached the half million cars a year mark, In 2002, it reached the half million cars a year mark, producing 4 out of every 10 passenger cars sold in China and producing 4 out of every 10 passenger cars sold in China and selling more cars in China than it did in the United States. selling more cars in China than it did in the United States.

It announced plans to open a third production site, in Yizheng It announced plans to open a third production site, in Yizheng City, and began exporting cars from China.City, and began exporting cars from China.

In 2004, GM and Volkswagen were given permission to offer In 2004, GM and Volkswagen were given permission to offer car loans through their financing arms.car loans through their financing arms.

Cont…Cont…

In September 2009, VW said it would invest $5.8 In September 2009, VW said it would invest $5.8 billion over three years in China as part of its effort billion over three years in China as part of its effort to stay ahead of the competition.to stay ahead of the competition.

In INDIAIn INDIA

Volkswagen’s beachhead in China is strong, but the company Volkswagen’s beachhead in China is strong, but the company has only made small inroads in India (pun intended). has only made small inroads in India (pun intended).

The company sold only 19,000 units in India in 2009, The company sold only 19,000 units in India in 2009, constituting a minuscule 1.3% market share.constituting a minuscule 1.3% market share.

These results, however, should be used to discount the These results, however, should be used to discount the immense opportunity that India holds for Volkswagen (or its immense opportunity that India holds for Volkswagen (or its competitors). competitors).

Car sales in India grew by nearly 30% in 2009. Auto Insight Car sales in India grew by nearly 30% in 2009. Auto Insight projects that the country will be the third largest automobile projects that the country will be the third largest automobile market in a decade.market in a decade.

Cont…Cont…

India has a large and growing middle class, members of India has a large and growing middle class, members of which command salaries between five and ten times the which command salaries between five and ten times the national average. national average.

Moreover, these individuals work in healthy industries and Moreover, these individuals work in healthy industries and benefit from pay raises that can exceed 20% per year.benefit from pay raises that can exceed 20% per year.

The government of India estimates that some 300 million The government of India estimates that some 300 million people make up this emerging middle class. people make up this emerging middle class.

This segment of consumers-in-waiting makes the Indian This segment of consumers-in-waiting makes the Indian automobile market very attractive. automobile market very attractive.

If VW intends to meet its stated goal of becoming the world’s If VW intends to meet its stated goal of becoming the world’s largest automaker by 2018,it must be successful in India.largest automaker by 2018,it must be successful in India.

Cont…Cont…

Volkswagen Group India emphasized on all aspects of Volkswagen Group India emphasized on all aspects of marketing mix including product, price, place and promotion.marketing mix including product, price, place and promotion.

In its initial years, Volkswagen Group India primarily used the In its initial years, Volkswagen Group India primarily used the print media to promote its products. However, considering the print media to promote its products. However, considering the growth potential of India's automobile market, the company growth potential of India's automobile market, the company started using electronic, digital and out of home media along started using electronic, digital and out of home media along with print media.with print media.

In November 2009, the company launched an integrated In November 2009, the company launched an integrated marketing campaign to strengthen its brand image. marketing campaign to strengthen its brand image.

  

Cont…Cont…

Therefore, in November 2009, the company launched an Therefore, in November 2009, the company launched an integrated marketing campaign to build its brand image. It also integrated marketing campaign to build its brand image. It also launched a marketing campaign for its iconic model, the launched a marketing campaign for its iconic model, the Beetle. Beetle.

Volkswagen India expected that with its brand building Volkswagen India expected that with its brand building exercise, it would be able to increase its sales and capture a exercise, it would be able to increase its sales and capture a significant market share in the Indian car market...significant market share in the Indian car market...

Cont…Cont…

The Group operates The Group operates 44 production plants44 production plants in eleven European  in eleven European countries and seven countries in the Americas, Asia and countries and seven countries in the Americas, Asia and Africa. Africa. 

RISK MANAGEMENT SYSTEMRISK MANAGEMENT SYSTEM:-:- The object of this The object of this system is to identify business risk in a timely manner and to system is to identify business risk in a timely manner and to limit it to such an extent that the economic benefit of the limit it to such an extent that the economic benefit of the relevant business activities outweighs the risk.relevant business activities outweighs the risk.

Designing for India: Adapting “Volk”Designing for India: Adapting “Volk” India’s automobile market presents unique challenges for India’s automobile market presents unique challenges for

Volkswagen. Many millions of people live in destitute poverty Volkswagen. Many millions of people live in destitute poverty in India. Public transportation is a deeply entrenched in India. Public transportation is a deeply entrenched alternative to cars wile roads and related infrastructure alternative to cars wile roads and related infrastructure remains inadequate. remains inadequate.

To succeed in India, Volkswagen must adapt its products and To succeed in India, Volkswagen must adapt its products and strategy to the country, while maintaining its core business strategy to the country, while maintaining its core business model and strengths. model and strengths.

Cont…Cont…

According to VW, “It is the goal to offer attractive, safe and According to VW, “It is the goal to offer attractive, safe and environmentally sound vehicles which are competitive on an environmentally sound vehicles which are competitive on an increasingly tough market and set world standards in their increasingly tough market and set world standards in their respective classes”.respective classes”.

To this end, the authors believe that the company should build To this end, the authors believe that the company should build a product strategy for India centered around safety, fuel-a product strategy for India centered around safety, fuel-efficiency, and eco-friendliness, in that order.efficiency, and eco-friendliness, in that order.

ConclusionConclusionA historical over-reliance on the European automobile market A historical over-reliance on the European automobile market

has put VW into a precarious position. The combination of has put VW into a precarious position. The combination of depressed regional demand and overcapacity cloud the depressed regional demand and overcapacity cloud the company’s outlook in its native region. company’s outlook in its native region.

However, the company must apply greater resources and focus to However, the company must apply greater resources and focus to BRIC countries, particularly India. Success in India will BRIC countries, particularly India. Success in India will require a region-specific approach focused on vehicle safety, require a region-specific approach focused on vehicle safety, fuel efficiency, and environmentally friendly vehicles. All of fuel efficiency, and environmentally friendly vehicles. All of these are strengths of the company. these are strengths of the company.

The right adaptations for the Indian market will enable The right adaptations for the Indian market will enable Volkswagen to differentiate itself from domestic and Volkswagen to differentiate itself from domestic and international competitors and generate growth.international competitors and generate growth.