West Germany: To Prevent Slipping, Keep Going

Though the success of West Germany’s Volkswagen has been one of postwar Europe’s most glittering economic achievements, aggressive Chairman Heinz Nordhoff, 64, feels that a moment of relaxation by his company could be fatal. “What an auto company loses in the market today,” says Nordhoff, “it probably can’t recover in the next 50 years.” To keep Volkswagen from slipping—it is now the world’s third biggest automaker, after General Motors and Ford—Nordhoff plans to spend $375-500 million on expansion in the next five years, lift Volkswagen’s annual capacity to 1,500,800 autos and minibuses. At its Wolfsburg headquarters, Volkswagen is building a new 400-acre plant, and at Kassel 2,500 workers are bustling to complete another 1,400-acre plant. Now Volkswagen has decided to build a fifth plant at the North Sea port of Emden, where the projected output of 500 autos a day will be used solely for export. Construction begins next month.

Nordhoff is also broadening Volkswagen’s sales appeal. Encouraged by the growing desire of car buyers to trade up—a tendency that is rapidly becoming as pronounced in Europe as in the U.S.—Nordhoff is quietly placing more emphasis on a new and bigger Volkswagen: the Volkswagen 1500, which bears little resemblance to its beetle-shaped little brother, now officially designated the 1200. The 1500 is about six inches longer and three inches wider than the 1200, has fairly orthodox lines and a pronounced front hood —even though its more powerful engine remains in the rear. It sells in Germany for $1,500 for a two-door sedan, $300 more than the 1200 sedan, also comes as a station wagon for $1,600. Nordhoff hopes to double output of the bigger Volkswagen to 2,000 cars daily within six months, will slightly cut back production of the standard Volkswagen to achieve this.

Taking a tip from pizazz-minded Detroit, Nordhoff has also brought out a 15005, which has more chrome trim than the standard 1500 and a 66-h.p. engine (v. the standard’s 54 h.p.). So far, Nordhoff has not shipped any of the bigger Volkswagens to his best export market, the U.S.—though some have been brought in by returning tourists. He is in no hurry. Even without the new model, Volkswagen’s sales in the U.S. rose 25% in 1963’s first half, to 121,884 cars. Besides, demand for the 1500 is so great elsewhere that Volkswagen is reluctant to set aside even the 700 cars it would need to give each of its U.S. dealers one car for introduction. The 1500 is unlikely to appear in the U.S. market before 1965.