Volkswagen Group Overview

How VW group Own Every Other Brand? From Skoda to Bugatti, Explained!

This car speeding like an airplane is called Bugatti Veyron. It was running at a speed of nearly 380 kmph. No car manufacturer has been able to break the top speed record of the Bugatti Veyron to date. The record made by Bugatti in 2005 is still held with the Chiron, which has a top speed of 489 kmph.

Bugatti would have vanished if it was not bought by the Volkswagen Group. Volkswagen provided Bugatti with the world's fastest W16 engine. At that time, the technology available with Volkswagen was not present with any other brand.

The Volkswagen Group is a dinosaur in front of elephants. It owns multiple brands, including Audi, Lamborghini, Porsche, Skoda, Seat, Man, Scania, and Ducati. Every brand under the Volkswagen Group is a segment leader and highly profitable.

The Volkswagen Group has the advantage of part sharing among its brands. For example, the engines of Audi are used in the cars of Volkswagen and Lamborghini, which increases the profit margins of these brands.

The Volkswagen Group acquired many brands to understand the fascinating story behind its growth. The company started with the manufacturing of a low- cost car called Volkswagen, meaning people's car. The production of this car started in 1938 but was stopped during World War II.

After the war, a British army officer took over control of the bombed factories of Volkswagen and started the production of Beetle cars for the British army. In 1947, the company started producing Beetle cars for civilians as well. Beetle cars became famous around the world due to their reliability and affordability.

Beetle cars contributed more than 75% to the Volkswagen Group in terms of sales. To improve its product competitiveness and diversification, the Volkswagen Group acquired 75.3% stakes in Audi in 1965. This acquisition provided the group with a plant and highly skilled workforce, as well as a new engine range.

Time. The 1.7 liters engine of the Audi was considered a technological innovation that gave the Volkswagen Group a competitive edge over Ford vehicles. After Audi, Volkswagen's next big acquisition was the Spanish car manufacturing brand, Seat. This acquisition helped Volkswagen expand quickly in the Western European market, especially since Spain was becoming a member of the European Union in 1982. It also made Volkswagen the biggest auto manufacturer in Spain, with over 1000 authorized dealers and production facilities with low labor costs.

Following Audi and Seat, Volkswagen Group acquired the Czech auto manufacturing company Skoda. Skoda had a good brand value in Eastern Bloc countries and was popular in Western European countries as well. These three mass-market acquisitions were followed by the acquisition of three luxury car makers: Bentley, Lamborghini, and Bugatti. These acquisitions helped Volkswagen strengthen its technical expertise and innovation in the luxury car segment.

In addition to luxury car brands, Volkswagen Group also acquired commercial vehicle manufacturers Scania and MAN, as well as superbike maker Ducati. The biggest acquisition by Volkswagen Group was Porsche, in which they acquired 50% stakes. Porsche is more than just a car manufacturing company and its members are the biggest shareholders of the Volkswagen Group.

The advantage of having so many brands under the Volkswagen Group is the sharing of parts and platforms. Almost all the car brands under Volkswagen share platforms developed by Volkswagen itself. This concept of developing different cars on the same platform was innovated by Volkswagen in the late 1990s. Sharing of engines is also done, such as using Volkswagen's TFSI engine in Audi and Porsche vehicles.

Research and development are done together for many brands under the Volkswagen Group, leading to better R&D and cost minimization. Skoda, Seat, and Volkswagen are the three volume brands that contribute 80% of the sales for the Volkswagen Group. However, part sharing also has disadvantages, such as the issue of recalls. If a part installed in multiple brands' vehicles worldwide has an issue, it becomes costly for the brands to recall, refit, and resupply those vehicles.

In 2015, the Volkswagen Group faced a major scandal when their diesel engines emitted high levels of nitrogen oxide. This led to a recall of 11 million vehicles worldwide. Despite this setback, Volkswagen remains the biggest car manufacturing company in Europe and is ranked 2nd in the world after Toyota.

With its numerous brands and innovations, Volkswagen has become a powerful company in terms of sales, revenue, and innovation. For example, Volkswagen provided the W16 engine to Bugatti, showcasing its research and development capabilities.