The History of Volkswagen

Short Answer

Volkswagen was founded on 28 May 1937 by the German Labour Front, the Nazi regime’s organisation of employers and employees, to build Ferdinand Porsche’s “people’s car”. During the war its plant made armaments with about 20,000 forced labourers, and the Beetle went into series production only under British trusteeship, from December 1945. Privatised in 1960, Volkswagen replaced the Beetle with the Golf in 1974, became a group of many brands, went through its biggest crisis over manipulated diesel engines in 2015 and is now building electric cars.

Where did the idea of a “people’s car” come from?

Talk of a car for ordinary Germans began long before Volkswagen existed. In December 1904 the engineer Heinrich Dechamps wrote about a “Volksautomobil” in the journal “Der Motorwagen”, and small cars from Opel and Hanomag were later sold as “people’s cars” too. Ferdinand Porsche designed small cars for Zündapp in 1931 and for NSU in 1933, the second with a rear-mounted, air-cooled four-cylinder boxer engine, but neither was put into production. After Adolf Hitler took power in 1933 he announced state support for motorisation at the Berlin motor show, and mass motoring became part of the Nazi regime’s propaganda.

How was Volkswagen founded?

In a memorandum to the Reich Ministry of Transport dated 17 January 1934, Ferdinand Porsche proposed a people’s car for four adults that could cruise at 100 km/h. On 22 June 1934 the RDA, the association of the German motor industry, commissioned his design office to develop it; the story of that office is told in the history of Porsche. Prototypes followed from 1935, and three test cars of the V3 series covered 50,000 kilometres each from October 1936. In January 1937 the German Labour Front (DAF) took the project over, and on 28 May 1937 it founded the company that became Volkswagen in Berlin, under the name “Gesellschaft zur Vorbereitung des Deutschen Volkswagens”, with Porsche, Jakob Werlin and Bodo Lafferentz as its directors. On 16 September 1938 it was renamed Volkswagenwerk GmbH.

What was the KdF-Wagen, and what did the plant build in the war?

Earthworks for the main plant began on 8 February 1938 beside the Mittelland Canal near Fallersleben, in what is now Wolfsburg. At the foundation-stone ceremony on 26 May 1938 Hitler named the car the “KdF-Wagen”, after the Nazi slogan “Kraft durch Freude” (Strength through Joy). From August 1938 the DAF sold it through a savings scheme at 990 Reichsmarks, paid at five Reichsmarks or more a week; 336,638 people signed up, and none of them ever received a car. When the Second World War began on 1 September 1939, no car had been built. The factory turned to armaments instead: it repaired aircraft and, from 1940, built the Kübelwagen military vehicle and, from 1942, an amphibious vehicle, 66,285 vehicles in all. The 630 KdF saloons that were made went to the Nazi elite.

Did Volkswagen use forced labour?

Yes. From June 1940 Volkswagenwerk GmbH relied on forced labour for its armaments production. In Volkswagen’s own account about 20,000 people from countries occupied or controlled by Germany were forced to work there, including about 5,000 concentration camp prisoners, and in 1944 they made up two thirds of the workforce. They had no rights and suffered racial discrimination, too little food and violence. Babies born to forced labourers were taken from their mothers a few days after birth, and 365 of these children died of neglect and malnutrition before the war ended.

How has Volkswagen dealt with that past?

In 1986, at the initiative of its Works Council, Volkswagen’s Board of Management commissioned an independent study of the company in the Third Reich, led by the historian Hans Mommsen and published in 1996. A memorial stone for the forced labourers was unveiled at the Wolfsburg plant on 9 October 1991, and a humanitarian fund for those affected followed in 1998. Since 17 December 1999 the permanent exhibition “Place of Remembrance of Forced Labor in the Volkswagen Factory” has documented their fate at the plant.

How did the British rebuild Volkswagen after the war?

American troops reached the plant on 11 April 1945 and freed the forced labourers. From June 1945 the British Military Government ran the company in trusteeship, and its order in August for 20,000 saloons for the occupation forces saved the factory from being dismantled; Major Ivan Hirst led the plant for the British. Series production of the saloon, the Type 1, began on 27 December 1945, with 55 cars built that year. Exports began in 1947 with cars for the Netherlands, and on 1 January 1948 the former Opel manager Heinrich Nordhoff became General Director. On 8 October 1949 the British handed the company over to the trusteeship of the West German Federal Government, with the State of Lower Saxony administering it.

How did Volkswagen grow after the war?

In the decade that followed, Volkswagen became West Germany’s biggest car exporter, and the Beetle was the decade’s best-selling car in Germany, with a market share of around 40 percent. The Transporter van was added in 1950, Volkswagen do Brasil was founded in 1953 and Volkswagen of America in 1955, and the one millionth Volkswagen was built on 5 August 1955. On 22 August 1960 the company became a stock corporation, Volkswagenwerk AG: 60 percent of the shares were sold to the public as “people’s shares”, and the remaining 40 percent were split equally between the Federal Government and Lower Saxony. On 1 January 1965 Volkswagen bought an initial 75.3 percent of Auto Union from Daimler-Benz, the beginning of its multi-brand group; Auto Union and NSU merged in 1969 into the company that was renamed Audi AG in 1985. Heinrich Nordhoff led Volkswagen for 20 years, and Kurt Lotz succeeded him in 1968.

Why did Volkswagen need more than the Beetle?

Relying on a single model became a weakness. The recession of 1966/67 cut production, and after 1970 the air-cooled, rear-engined Beetle lost ground to newer cars with water-cooled engines and front-wheel drive, even though on 17 February 1972 it passed the production record of the Ford Model T with 15,007,034 cars. Volkswagen answered with a new generation: the K 70 in 1970, the Passat in 1973, the Scirocco and the Golf in 1974 and the Polo in 1975. These cars carried the company through the oil crisis of 1974/75, and by 1976 the crisis was over. Beetle production in Germany ended in 1978, and the last of 21,529,464 Beetles was built in Mexico on 30 July 2003. How these cars changed the company is the subject of Otto’s article on the legendary cars that defined Volkswagen.

How did Volkswagen become a group of many brands?

In 1985 Volkswagen set up a joint venture in Shanghai and, on 4 July 1985, changed its name to Volkswagen AG. It took a majority stake in SEAT in 1986 and made Škoda a Group brand in 1991, and Bentley, Lamborghini and Bugatti followed in 1998. After German reunification it moved into Saxony, where the first Golf from its new plant at Mosel near Zwickau was completed on 15 February 1991. Under Ferdinand Piëch, chairman of the Board of Management from 1993, Volkswagen adopted lean production and shared platforms, and around 2002 the Volkswagen brand entered the luxury class with the Phaeton and the SUV market with the Touareg. Porsche AG began buying into Volkswagen in 2005, and from January 2009 Porsche Automobil Holding SE held more than 50 percent of the ordinary shares; under an agreement of 2009, Volkswagen took full ownership of the Porsche sports car company on 1 August 2012.

What was the diesel crisis?

In September 2015 American authorities published documents on the manipulation of diesel engines by Volkswagen. Martin Winterkorn resigned as Chairman of the Management Board and Matthias Müller succeeded him, and Volkswagen itself calls the diesel issue the biggest crisis in its history. In Europe alone about 8.5 million cars with EA189 diesel engines were recalled. In 2016 Volkswagen settled civil claims in the United States over about 475,000 cars with 2.0-litre TDI engines, and in January 2017 it settled the criminal cases with the American government, including fines and an independent compliance monitor.

Who owns Volkswagen today, and where is it heading?

As at 31 December 2025, 53.3 percent of the voting rights in Volkswagen AG were held by Porsche Automobil Holding SE, 20.0 percent by the State of Lower Saxony and 17.0 percent by Qatar Holding, with 9.7 percent in free float. Its newest chapter is electric. Production of the ID.3, the first model of the ID. family on the modular electric drive toolkit (MEB), began at Zwickau on 4 November 2019, and in February 2026 the Volkswagen brand delivered its two millionth all-electric car.

Common Questions

• When was Volkswagen founded? On 28 May 1937, when the German Labour Front founded the company in Berlin to prepare the “people’s car”. It took the name Volkswagenwerk GmbH on 16 September 1938, but series production of the car began only after the war, on 27 December 1945.
• Who founded Volkswagen? The German Labour Front (DAF), the Nazi regime’s organisation of employers and employees, founded the company. Ferdinand Porsche, whose design office had developed the car, was one of its first directors, together with Jakob Werlin and Bodo Lafferentz.
• What does the name Volkswagen mean? It is German for “people’s car”, an idea discussed in Germany since 1904, long before the company existed. In 1938 Hitler gave the car the propaganda name “KdF-Wagen”; it became known around the world as the Volkswagen and, by its nickname, the Beetle.
• Why is Volkswagen based in Wolfsburg? Because its main plant was built there from 1938, beside the Mittelland Canal near Fallersleben. The company moved its head office from Berlin to Wolfsburg in 1948 and was entered in the commercial register there on 29 July 1948.
• When was the last original Beetle built? On 30 July 2003 in Puebla, Mexico, after 21,529,464 Beetles. Production in Germany had already ended in 1978.

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