Volkswagen SWOT Analysis (2020)

Company: Volkswagen Group
Founders: German Labor Front
Year founded: May 28th, 1937
CEO: Herbert Diess
Headquarters: Wolfsburg, Germany
Employees (Dec 2019): 671,200
Type: Public
Annual Revenue (Dec 2019): Euro € 252.6 Billion
Profit | Net income (Dec 2019): Euro € 13.88 Billion

Products & Services: Passenger Vehicles | Commercial Vehicles | Motorcycles | Engines| Propulsion Components | Turbomachinery | Banking | Financing | Fleet Management | Insurance | Leasing

Competitors: Toyota | General Motors | Chevrolet | Daimler | Hyundai | Renault Nissan | Ford | Fiat Chrysler Automobiles | Zorya | Koenigsegg | Tesla

Fun Fact: Did you know that over 21.5 million original Volkswagen Beetles were sold since 1945, making one of the best-selling cars of the 20thcentury?

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 about 15 years away from 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.

Here is the Volkswagen SWOT Analysis.

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. 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.

3. Diversified Brands: The Volkswagen group is highly diversified with two major divisions: the Automotive division and the Financial Services Division.

4. Strong Global Presence: Volkswagen operates in 150 countries, with 70 plants spread in Germany and across the world. From Europe to America, Asia, Africa, and Australia, the company has a substantial market share in developed and developing economies. [Source]

5. Strategic Restructuring: After plunging drastically in the aftermath of the emissions scandal, the company restructured strategically and rebounded within two years. It is not only more profitable than before, but it has also managed to set aside €20bn for the expansion of its electric cars. [Source]

6. Strong Financial Position: With immense financial capability comes flexibility and the ability to do anything a company needs to do to beat the competition. As of May 2020, Volkswagen is ranked #8 in sales, #37 most profitable, #70 in terms of assets, #133 for market value, #144 Top Regarded Companies, and #90 World’s Most Valuable Brands. [Source]

7. 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. [Source]

8. Effective Management of Operations: While other companies struggle to manage suppliers, raw materials, sales, capacity-demand ratio, and so on, Volkswagen is producing over 25,000 cars per day. Effective management makes all these look so easy. [Source]

9. Great Partnerships: From suppliers to tech providers, 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 Accenture, a leading consultancy firm in software and hardware. [Source]

10. 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. [Source]

Volkswagen’s Weaknesses

1. 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. Dubbed the emissions scandal, Volkswagen was forced to recall 5 million cars 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 are the present and future, but they prefer rideshare, car share, and car hires. This makes Volkswagen’s lack of diversity a major weakness.[Source]
3. Weak Marketing Strategies: Outside Europe, Volkswagen does not market or promote its brands aggressively enough. In most cases, the company will collaborate with a company already in the market. It is collaborating with JAC to produce low-cost electric cars in China. [Source]

Volkswagen’sOpportunities

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 ride-hailing, 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. [Source]

3. 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 others are already ahead, but Volkswagen can catch up by increasing investment in autonomous R&D. [Source]

4. Expand Operations in Emerging Markets: The auto markets 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. [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. [Source]

3. Stringent Regulations: As the threat posed by climate increases, governments will increasingly focus on reducing their greenhouse gas emission and carbon footprint with stringent 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 $2.5bn annually are projected as the worst-case scenario.[Source]

5. Global Recession: With the looming recession in the aftermath of the pandemic, Volkswagen’s car sales are threatened. The outbreak slashed operating profit to drop 81% in the first quarter of 2020. [Source]