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Despite a sluggish financial recovery after World War II, Volkswagen struck gold with its iconic Beetle, which managed to stay in production until 2003.
The concept of a "people's car" was nothing new when Dr. Ferdinand Porsche set out to make the Beetle. The Ford Model T had come and gone by this point, and in truth the Beetle didn't add much to the idea of what made for a proper people's car. But where the Model T was obviously going to be a success from the start, the Beetle was a surprise success, pulling off an amazing sales feat by way of good timing and a brilliant marketing campaign.
Dr. Porsche had long wanted to produce a hugely mass-market everyman's car, but his early attempts hadn't exactly worked out. In 1931, he built the Porsche Type 12 prototype for Zundapp, a company which primarily built motorcycles. But Porsche couldn't reach an agreement with the company brass about the engine type to be used, and he left to develop a prototype for NSU, one of the Auto Union brands. This prototype, called the Porsche Type 32, used the signature air-cooled engine, but NSU abandoned the project during the prototype phase. But it wasn't long before a new prototype was commissioned by Adolf Hitler as part of his grand plan for Germany.
The Type 60, as this new version of the car was called, borrowed heavily from the design of a contemporary Czech car which had debuted a couple of years earlier, built by Tatra. The Tatra had started life as the V570 prototype in 1931, and would become the T77 and then the T97 both before the debut of the Beetle. The similarity was undeniable, and the Czech company sued. Volkswagen then called on some business partners, known as the Wehrmacht, for help. Once Germany had invaded Czechoslovakia, the lawsuit was blocked, and Tatra was actually banned from building the T97.
This was maybe not the most ethical of business practices (and from the Nazis, imagine) and Volkswagen would end up paying an out-of-court settlement to Tatra in 1961; albeit, not a very big one. Production of the car seemed ready for a big launch in 1938, but only a few were built by the outbreak of WWII, and the factory was switched over to producing military vehicles. After the war, the fate of the company was unclear. It was under the control of British and American armed forces, but neither of them really knew what to do with it. A number of British companies declined to buy it, saying that the car was simply too ugly to be commercially successful.
Ford turned down the offer to have the company for free, saying it wasn't worth the money. Volkswagen's energies immediately after the war were primarily given over to producing vehicles for the British army. Volkswagen struggled on for years, and then in the late Fifties, they took off in the US in a big way. The postwar boom had given way to economic downturn, and by 1960, the classically huge American cars which had dominated the Fifties were losing sales to smaller cars. But American brands were slow to catch up with this trend, as exemplified by the Ford Edsel debacle of the late Fifties.
Fans of the show "Mad Men" will recall that Volkswagen's Think Small campaign of 1959 was an unexpected hit. It flew in the face of conventional advertising wisdom at the time, but it caught everybody's attention just at the time when Americans were looking to buy small cars. The Beetle saw a huge sales boom during the entirety of the Sixties, and several vehicles based on the Beetle were also produced. By 1972 it had surpassed the production record set by the Model T, and in the end, more than 21 million units of the Beetle were built.
The only vehicles to have sold more are the VW Golf (the Beetle's replacement), the Ford F-Series and the Toyota Corolla. Most of these cars were built in Germany, but several million were also built in Latin America, Mexico and Brazil in particular. VW still builds other models in these countries, and the Latin American market remains an important one for the company. In 1971, VW brought out the more powerful and sporty Super Beetle, but by this point, the Beetle was already in decline. American car companies had gotten at least somewhat better at building small cars, and more importantly, more sophisticated Japanese imports were taking over the market segment.
The Beetle just couldn't compete with these cars, and so VW changed its focus for the American and European markets, while shifting the Beetle to a car primarily for the Latin American market, where it stayed in production all the way up until 2003. The car remains one of the most recognizable vehicles of all time, and it set the bar for the postwar version of the people's car. It wasn't fast, it wasn't luxurious, but it managed to be just the right car for its time in a way that no other car has managed since.