The Volkswagen Group, or VW AG, is Europe’s biggest car manufacturer, with its headquarters located at Wolfsburg in central Germany. VW AG not only owns the brand VW, but also owns Audi, Bentley, Bugatti, Lamborghini, Seat and Skoda.

It was not until the year 1933, that Adolf Hitler announced that the German people should get a "people's car"; a four seater, which is able to drive up to 100 km/h, but most importantly with a price below 1000 Reichsmark. Sad but true, it was Hitler’s desire of a selling price below 1000 Reichsmark that gave the VW Beetle a unique selling point (USP) and which enabled the later success of the Beetle and, simultaneously, the beginning of the success of Volkswagen.

The construction side of the new Beetle was one key factor to its success. The main aim was to keep the costs per unit as low as possible in order to meet the people’s needs and make it their car – the "people car" (the english translation for Volkswagen). Since everybody knew that this was the most difficult part of the task, a whole city, Wolfsburg, was built in central Germany to host the production site. Wolfsburg’s entire infrastructure is based on the specific needs of Volkswagen AG. The construction plant still profits mostly from its perfect location and the city's well-planned infrastructure, but also the connections it offers to other industrial areas in Germany and Europe, via sea, land or air. The Mittellandkanal, a channel that connects Wolfsburg with its suppliers from Asia, also connects Wolfsburg with its customers abroad, including the USA, South America and Africa. The excellent motorway connection to Berlin allows quick consultation with the German Government, located in Berlin. The railway connection to the Ruhr-Valley, Germany’s biggest industrial area, was vital in the early years, since VW was fully dependent on the steel supply from the Ruhr-Valley. The fact that Wolfsburg got built next to the large City of Braunschweig, enabled VW to ensure that the workforce was highly-skilled as it recruited from a broad radius.

Once the production side was completed, Ferdinand Porsche planned the design of the production processes and introduced flow production. Porsche studied the principles of flow production at Henry Ford’s production lines in Detroit/USA, and was able to introduce the same principles in Wolfsburg. The disadvantage of flow production, the lack of variety and flexibility within the production line, was overcome through the production of just one model - the VW Beetle.

Through continuous re-investment of profits into production and research, VW became more and more important through the 70s, 80s and 90s. However, in the early 90s, VW was facing serious problems concerning their position in the market. It seemed to be that the high-class car market was growing extensively, leaving VW with their low to middle-class cars far behind the trend. But again, VW’s CEO Piech was keen to overtake the high-class brands like Bentley, Lamborghini and Bugatti, which themselves had serious financial problems and were keen to get bought out. For each purchased brand, Piech introduced the same business philosophies that helped VW, and by the late 90s, all of the brands were competing successfully in their market segment, improving VW’s overall position in the car market. By 2000, VW was operating in nearly every sector of the car market, including Trucks as well as a wide range of cars, leaving them less exposed to problems if one particular segment faced problems.

VW’s move to cheaper production in Eastern Europe, including production lines in Russia, Poland and the Czech Republic could be considered unethical because it went with massive rationalizations in Germany. However, it is clear that these moves were necessary to keep VW competitive in the market, as cheap labour contributes significantly to the maximisation of profits and keeps costs per unit as low as possible, making VW one of the most successful car manufacturers in the world.

The success of Volkswagen AG is still hugely dependent on their perfectly organized infrastructure, not only in Wolfsburg but also with regards to their perfect supply channels around the world, which keep production costs as low as possible to offer competitive prices as well as renowned German quality. A wide range of products and brands make VW less likely to struggle, as it operates in various markets, thereby decreasing the probability of a sudden financial disaster.