28 May 1937: the Volkswagen car company is formed

On this day in 1937, Volkswagen, now the world's second-biggest vehicle-maker, was founded as the 'Society to Prepare the German People’s Car'.

In the 1930s, the race was on to build a car for the German people. Adolf Hitler – suffering from automobile envy and peeved that the average American was speeding around in an affordable car but the average German was not – made his desires known. He demanded that a car be produced that could convey the model Aryan family of two adults and three children along Germany's fancy new roads at speeds of up to 100kmh, for the price of 990 reichmarks.

So in 1933, he instructed Ferdinand Porsche to build such a car. Porsche built three prototypes, one of which was instantly recognisable as the iconic Beetle. It was initially called the Kdf-Wagen named after the ideal of strength through joy', or Kraft durch Freude. And on this day in 1937, the Society to Prepare the German People's Car – Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH – was founded, and was soon abbreviated to the rather more snappy Volkswagenwerk GmbH. The government allocated 480,000 reichmarks as start-up capital for the construction of a new factory, and on 26 May, 1938, Hitler laid the foundation stone in the Stadt des KdF-Wagens renamed Wolfsburg in 1945, and still the home of Volkswagen today. 

After WWII, the factory found itself in the British occupied sector of Germany and was handed over to Major Ivan Hirst to run on behalf of the British military government. He persuaded the British Army to order 20,000 cars for its occupying personnel, effectively saving the company from ruin. The business, now renamed just Volkswagen was offered to various US and British car companies, who all rejected it. So in 1949, the company was made into a trust controlled by the West German government, and administered by the state of Lower Saxony, which still owns 20%. The German federal government floated its stake on the German stockmarket in 1960.

The company went from strength to strength, becoming a potent symbol of German post-war regeneration. It suffered problems in the 1970s, but came back stronger to become the world's second-largest vehicle-maker behind Toyota.

Recommended

Should you buy Vodafone shares, or steer clear?
Share tips

Should you buy Vodafone shares, or steer clear?

Vodafone grew revenue by 4% and profit by 11% last year, and offers investors a 6.4% dividend yield. So should you buy Vodafone shares? Rupert Hargrea…
17 May 2022
2021 Château La Mascaronne rosé: a work of art from Provence
Wine

2021 Château La Mascaronne rosé: a work of art from Provence

This wine soars above all others with its grace, refinement and impressively long finish
17 May 2022
The UK jobs market is still red hot – but will it last?
UK Economy

The UK jobs market is still red hot – but will it last?

For the first time ever, there are more job vacancies than people to fill them, and wages are rising at a decent clip. But that might just be a tempor…
17 May 2022
Melrose Industries: a British manufacturer that is well-placed for recovery
Share tips

Melrose Industries: a British manufacturer that is well-placed for recovery

Melrose, the aerospace and automotive manufacturer, has been hit by the pandemic, but the shares are unduly cheap says David J Stevenson.
17 May 2022

Most Popular

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
High inflation will fade – here’s why
Inflation

High inflation will fade – here’s why

Many people expect high inflation to persist for a long time. But that might not be true, says Max King. Inflation may fall faster than expected – and…
13 May 2022
Is the oil market heading for a supply glut?
Oil

Is the oil market heading for a supply glut?

Many people assume that the high oil price is here to stay – and could well go higher. But we’ve been here before, says Max King. History suggests tha…
16 May 2022