Business Analysis

Volkswagen SWOT analysis

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In the car manufacturing company, Volkswagen has established itself as one of the leading carmaker brands in Europe. The Germany-based company was first established in Wolfsburg, currently working with almost 342,000 employees, building up 21,500 plus automobiles in a day, which is huge. The world’s largest automobile manufacturer has its production sites in Asia, Africa, America, and Europe. For above 70 years now, the Volkswagen Company has been committed to making advanced technology, offering supreme quality in the most appealing designs, making them all accessible for numerous people around the globe, such as the all-electric ID family, the Golf, and the Beetle, which are considered as bestsellers in the world of automobiles. 

Volkswagen has its market presence around the globe in almost 150 countries, and they are continuously producing vehicles in 13 countries at 30 different locations. The vision of the company is to ambitiously provide the universe with climate-neutral mobility during the whole process of manufacturing and supply chain management. Currently, Volkswagen is ready to offer the world a new electric car every year for four upcoming years, and the set goal is expected to achieve a revenue level of at least 70% from Europe and 50% from China and North America up till 2030. In 2002, the company divided its car manufacturing business into two groups which are Volkswagen and Audi. The Volkswagen brand group of the company is launching the cars Bugatti, Bentley, Akoda, and Volkswagen. On the other hand, the Audi brand is manufacturing, SEAT, Lamborghini, and Audi. Both the brands have set their goals to focus on improving their profitability, lowering the production cost, and focusing more on their foundation business, and to achieve these goals. The company is planning a variety of strategies for business growth. 

Here is the SWOT analysis of the company Volkswagen including the strength and weaknesses of the company along with the threats it can overcome and the opportunities it can avail.

Volkswagen Strength

Being one of the largest automobile manufacturers in the world, the company’s brand portfolio is also huge; currently, the company Volkswagen is selling its vehicles under more than 12 brands such as Bentley, Audi, SKODA, SEAT, and others. Other than cars, vehicles like buses and trucks are manufactured by the company’s brand Scania Man and Volkswagen, and motorcycles are sold under the brand Ducati. With a huge variety of vehicles and brands, Volkswagen gains the strength in the vehicle industry that no other rival brand can compete with Volkswagen in this regard. Although Toyota and General Motors are also big names in the vehicles industry, they still don’t have such amount of brands as compared to Volkswagen. To cater to the deals, they have to face due to their emission scandal and to overcome market pressure, the company has set some new goals to achieve. One of the focal objectives is to increase their research and development (R&D), secondly to develop and design proficiencies in the department of autonomous driving, digitalization, and battery technology, and to introduce 30 new electric vehicles in till next four years. One of the noticeable strengths of Volkswagen is that it is the most highly acknowledged brand in the world, nominated as the world’s best employer according to Forbes 2020. Having a highly impressive brand portfolio, Volkswagen has a strong global production network.

Volkswagen Weaknesses

The first and foremost weakness in the SWOT analysis of Volkswagen is its polluted reputation due to the 2015 incident, when in September, Volkswagen got indulged in a scandal of installing software in cars that cheated emission tests. Volkswagen was one of the most trusted automobile companies until this revelation happened. As an outcome, the company was penalized for submitting more than $30 Billion as plenty in several countries, and the struggle was real to regain the consumers’ trust. Although Volkswagen has a spectacular portfolio with a huge range of brands, there is still a need for diversification, as the focus of the company is on manufacturing cars for sale; however, it is the major weakness in terms of car sharing and car rentals, and rideshare. Today’s world is more attracted to the commodities which have already created hype in the market through strong advertising and interesting marketing strategies. Volkswagen is lacking somewhat in manufacturing the battery-driven vehicles and has to upgrade its expertise in this regard. The company Volkswagen is lacking in this regard, having weak marketing plans, specifically outside Europe, so there is a need for Volkswagen to promote its brands enthusiastically.

Volkswagen Opportunities

Volkswagen is earning its revenue majorly from the countries of the Eurozone, where the only currency which is used frequently is the euro. So, if there is a change in the rate of euro exchange, the company’s profits and revenues can get affected. The company Volkswagen has the opportunity to push its exports towards the US or to other countries of the world up till the exchange rate of the euro is low as compared to other currencies. For the manufacturing of autonomous vehicles, almost 33 companies are currently working in the world, and only a few of them are interested in testing their autonomous wheels on the roads, and no one is interested in selling their automobiles to the general public. These companies mostly include Tesla, Ford, and Google. It can be expected that the autonomous wheels are a highly upcoming demand for the industry, so there is an opportunity for Volkswagen to work on the plans of introducing its autonomous wheels up till 2025. To capture the market and stay the leader in the industry, Volkswagen can work on introducing its autonomous vehicles before other companies so that it can increase its sales and gain a higher market share.

Volkswagen Threats

A number of states around the world are interested in encouraging the initiatives for fuel efficiency and reducing the greenhouse gas emissions, and these types of initiatives by the governments affect the production costs for the automobile manufacturing companies. For the companies involved in car making, it is not possible to recoup that extremely competitive market which becomes price-sensitive too. So, in this SWOT analysis, these policies can be considered threats to Volkswagen. Another threat for the company is to overcome the situations where it is involved in several lawsuits internationally following the emission scandal. The company has already seen a lot due to its damaged reputation during 2015; still, it will have to pay billions of extended damages and fines following those cases. The company is already facing huge competition, so it has to work on its reputation to overcome the threats. Volkswagen is currently facing continual competition from not only the conventional automotive corporations but also from the modern players in the main industry. Specifically in China, the new manufacturers of home-based Chinese are giving tough competition to the company Volkswagen by providing the same quality vehicles at a rather low price. Also, some of the new companies, including Tesla and Google, are also working hard to offer the world e-cars, making it harder for Volkswagen to compete in this area of manufacturing. Moreover, the company Google is also working in the manufacturing of self-driving cars, and it is a definite threat to the company Volkswagen despite being the leader in the conventional automotive manufacturing industry. So to overcome these threats, Volkswagen has to avail of all the opportunities coming its way.

Mind Map

Key takeaways

With this SWOT analysis, it can be concluded that the company Volkswagen is no doubt leading the automobile manufacturing industry with a huge portfolio, including several brands. However, there is still room for improvement for almost all the business organizations in the world; similarly, Volkswagen has a couple of weaknesses, which can be cut down through strong strategies and positive marketing plans. In this SWOT analysis, there is a vivid transition from conventional automobiles, such as internal combustion engines along with human-driven cars, to electric wheels and self-driven cars, and Volkswagen can avail this opportunity to expand its business and enhance its portfolio by increasing its profit and sales revenues. The company is further required to work on its management skills by demonstrating productive supervision in the manufacturing of its traditional cars worldwide. If Volkswagen can manage to succeed in completing the current modifications in the manufacturing industry, it can maintain its position as the leader in automobile manufacturing. Also, if the company fails to upgrade itself in terms of competing for the companies like Tesla and Google, its reputation as one of the top companies in vehicle manufacturing can fade with time, which will eventually affect its sales revenue and profits. 

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