After More Than 80 Years, the Beetle Goes Out of Production — It Stood for a Different Culture in Every Era | QDaily Business History

Nazi nationalism, the social market economy, the Mad Men era of advertising, hippie culture — it rode through all of them.

After more than 80 years and 21.5 million cars, Volkswagen is finally discontinuing the Beetle.

Last May, at Volkswagen's 2017 annual meeting, board member Arno Antlitz said that while the Beetle is an appealing classic model loaded with nostalgia, Volkswagen's product plan is not to keep iterating on a single product forever — and that the company would stop developing a next-generation Beetle.

Volkswagen later denied the report. But the company, which has lost tens of billions of dollars over the emissions-cheating scandal, has been holding down costs by trimming its product line and cutting jobs. Beetle sales, meanwhile, kept sliding: only 37,000 were sold in 2017.

On March 12 this year, Frank Welsch, head of Volkswagen's R&D department, said at the Geneva Motor Show that the company would stop developing a new generation of the Beetle, and that the current model would go out of production by the end of the year. In his words, the Beetle "made history, but you can't do it five times over and keep building new new new Beetles."

The Beetle was Volkswagen's first model, and it has been around for more than 80 years since it first appeared in 1935. It is not only a miniature of Volkswagen's own history but also an economic and cultural symbol of the eras it passed through.

Born as a badge of Nazi superiority, but built with the help of a British officer

In 1934, at a meeting with Ferdinand Porsche, Hitler asked him to design a cheap family car that ordinary working people could afford. Germany's economy was then at a standstill, the budget deficit and unemployment were both high, and only 1% of the population owned a car. Hitler, who wanted growth, believed that a car in every household would show that living standards were rising.

That is where Volkswagen's name comes from: in German, Volkswagen means "the people's car."

Before founding Porsche, Ferdinand Porsche had been technical director at Mercedes-Benz, designing luxury cars and high-performance racers; his wish to design a small, economical car had never come true. He won funding from the German automotive industry association, and for it he gave up his Czechoslovak citizenship and joined the Nazi Party.

In 1935 the Beetle's first design was finished. Hitler named it the "Strength Through Joy car" (Kraft durch Freude Wagen), and a prototype was shown at the Berlin Motor Show. For political reasons, the Beetle's first badge was built out of the cross-shaped Nazi emblem; only on the eve of World War II was the outer cross dropped.

Before mass production could start, World War II broke out. The Wolfsburg factory was requisitioned to build military vehicles and was badly damaged in the fighting.

When the war ended, the British took over the factory and planned to demolish it. Major Ivan Hirst, the army officer in charge of the demolition, had worked as an engineer during the war and had been impressed by a Volkswagen the Allies captured from the Germans. He wanted to restart the factory instead.

He found the best-preserved Beetle left over from the Nazi years, had it repainted, and showed it to his superiors, arguing that instead of tearing the factory down they should use it to fix vehicles damaged in the war.

In August 1945 his superiors agreed and placed an order with the factory for 20,000 cars, plus 500 trailers and 500 military vehicles.

Three months later the factory was running again. By the end of 1946 it had built 10,000 cars, for revenue of 55 million marks. To make up for the shortage of workers, Hirst also persuaded his superiors to release 1,000 prisoners of war with the right experience to work there.

After the war it became a badge of the German social market economy's victory

The Beetle's return to production came at roughly the same time as Germany's economic overhaul.

Germany's economy began recovering quickly less than five years after the war ended, and the recovery was treated as a miracle. Marshall Plan aid, which gets mentioned so often, mattered less to it than people assume. Between the end of the war and 1954, West Germany received about US$2 billion in aid in total. Over the same years it paid out more than US$1 billion in reparations and had to pay the Allies US$2.4 billion a year in occupation costs (in exchange, Germany did not have to carry its own defense spending until it rearmed). Even in the country's hardest years in the late 1940s, aid never accounted for more than 5% of national income.

What drove the recovery directly was the freeing of the market.

The Nazis, like the Soviet regime they treated as a mortal enemy, believed in tight control, with the government setting the price of goods. By 1948, prices in Germany had been set by the state for 20 years — first by the Nazis, then by the four occupying powers, the United States, Britain, France and the Soviet Union.

Rationing, brought in when the war broke out in 1939, also lasted until 1948; the daily food ration per person fell from 2,000 calories under the Nazis to between 1,040 and 1,550 (the figure varied by occupying power). Taxes were heavy too: in 1946, any part of a personal income above 6,000 marks a year — the median was 2,400 marks — was taxed at 95%.

Between the destruction of the war and the tight controls, people had no reason to work, and spent their free time scouring the countryside for something to eat. Henry Wallich, an economist at Yale, later recalled: "Every day, and especially at weekends, people went out to the countryside in groups to barter with farmers for food. Sometimes they spent one or two weeks walking a hundred miles, carrying the little they had left — old clothes, cupboard legs, anything the bombing hadn't destroyed — to trade for a sack of grain or potatoes."

When Ludwig Erhard, the father of the social market economy, became West Germany's minister for economic affairs and labor in 1949, Germany quickly scrapped price controls and rationing. The tax system changed too: corporate tax rates were cut roughly in half overall, and personal income tax fell further still. People again had a reason to work harder and earn more.

In 1949 Britain handed the factory back to the German government, and with economic aid and the lifting of limits on industrial development, it came fully back to life.

That year Volkswagen became Germany's largest carmaker, with annual output of 46,000 vehicles.

Under the new economic order, German factories started up again and trade slowly recovered. Volkswagen's Beetle was the product that best represented Germany at the time — it took skill to build, yet it was cheap and thrifty with fuel, well suited to a world that had just come out of a war.

In design, the Beetle inherited a model that Porsche and his partners had drawn up but never built when he first started his own company. The engine sat at the back and drove the rear wheels, which freed up a large space at the front for luggage. The chassis was sealed and hard for water to get into. The engine was air-cooled, so at a time when there was no good antifreeze, owners did not have to worry about it freezing in winter — the car could sit outdoors instead of in a garage, saving on parking.

Against the other popular models of the day, the Beetle was the cheapest to buy, and it was not expensive to repair either.

Because the Beetle sold so well, Volkswagen stuck to a conservative design on this line, turned down other models proposed as reworkings of it, and used marketing to squeeze everything it could out of the Beetle instead.

Between 1933 and 1963 the Beetle saw almost no changes in design or hardware. Volkswagen even ran ads mocking itself, joking that each year's Beetle was a copy of the year before.

Not designing new products also saved Volkswagen a great deal in R&D. The cost of developing a new car usually covers labor, tooling and equipment, materials used up in testing, and power. For a carmaker today, the labor cost of R&D alone can run to hundreds of millions of dollars a year.

As economies recovered after the war and money was short everywhere, the Beetle was sold into more and more countries. Its biggest prize, though, was the United States.

In the 1960s the American market took 48% of all cars sold worldwide. During those years Volkswagen hired heavily to build a new headquarters in the US, growing from 10 employees to 350 in two years. According to Carl H. Hahn, then head of Volkswagen of America, in his book My 40 Years at Volkswagen, he even gave up importing other Volkswagen models during his tenure to make sure the Beetle grew there.

The Beetle's sales peaked between 1960 and 1980. In 1972 total production reached 15 million, breaking the record held by Ford's Model T.

Its American advertising helped drive the "Mad Men" era

Outside Germany, it was the United States that turned the Beetle into a cultural symbol, more than once.

At first the Beetle sold badly there. In 1949, its first year on the American market, two were sold.

Americans generally liked big cars with sharp lines. The Ford Mustang, which kept getting longer and wider, was an emblem of the 1960s.

The small, round Beetle was its opposite. It broke into the American market on one line: "Think Small."

The line came from Doyle Dane Bernbach, a small New York advertising agency. After touring the Beetle factory, DDB's art director Helmut Krone and copywriter Julian Koenig decided to use humor and self-mockery to turn the Beetle's weaknesses into strengths.

So on a page the size of a sheet of A4, everything but the copy — nearly four-fifths of the space — went to the product, against a plain background, with the Beetle drawn very small. The visual jolt underlined how compact the car was, and it was funny. Below the image, short, playful lines set out what this "cheap little car" was good for, and they were persuasive.

A black-and-white page was cheaper than a color one, which also fit the Beetle's practical, economical character. The ad ran in 1959, and DDB kept advertising the Beetle in this style for more than a decade afterward.

It is a classic of the advertising business, though it was contentious at the time. In the third episode of the first season of the American series Mad Men, creative director Don Draper and his colleagues discuss a new Beetle ad and trace it back to the famous "Think Small" campaign — and someone says you can't even make out what the car looks like.

American carmakers' ads of the same period looked like this by comparison: crowded photographs showing off everything from the interior to the steering wheel and the tires, and long blocks of text explaining performance. The car usually stood against a background packed with streets and roads.

Afterward, though, the Beetle's advertising became a classic. "Think Small" was ranked first among the 100 best advertising campaigns of the century by the American trade publication Ad Age. It also changed the advertising business.

On the back of that campaign, DDB became the 11th-largest advertising agency in the United States in 1976.

But its biggest boost came from the hippies

Beyond advertising, the Beetle caught a free promotion in the 1960s: the hippie movement.

From the 1960s on, a young generation that questioned mainstream culture, rebelled and chased freedom took to the cheap, oddly shaped Beetle, and the car came to be known as the hippie car.

The Volkswagen T2 microbus, which carried over the Beetle's looks and its cheap practicality, had room inside, which suited hippies who liked to wander, live in their vehicle and leave whenever they felt like it.

When the hippies held the Summer of Love in 1967, more than 100,000 people gathered in San Francisco's Haight-Ashbury district, and Beetles filled the whole neighborhood.

In 1968 several Beetle-themed films came out, among them The Love Bug and the Herbie collection; even the posters had the psychedelic look particular to that time.

Volkswagen played along with the hippies' affection for the car, putting out a Love Bug limited edition and running ads that said, "We do our thing. You do yours."

By one count, 80% of the nearly 570,000 Beetles Volkswagen sold in the United States in 1970 were painted over with colorful designs by hippies.

The Beetle also pushed along the compact car in America.

Before the 1960s the American market had always been led by big, thirsty cars. The Beetle's popularity made those carmakers start building small ones, and 1960 became the year small, economical models took off in the United States.

In 1961 General Motors launched three small cars — the Buick Special, the Oldsmobile F-85 and the Pontiac Tempest — all cheaper compacts.

Chevrolet launched the entry-level Corvair, its first air-cooled model, its first unibody model, and its first turbocharged one.

Besides the hippies, racing enthusiasts turned the Beetle, short as it was on power, into all kinds of race cars for all kinds of events.

Every car in Formula Vee, an open-wheel single-seater series of the 1960s, was a converted Beetle. Several early Formula One world champions raced in it.

Later the Belgian driver Franz Dubois founded the Fun Cup, in which everyone races a converted Beetle for 25 hours at Spa-Francorchamps in Belgium; it is still run today.

By then the Beetle had become mainstream culture. Transformers, the 1980s cartoon Hasbro made to sell toy cars, had Bumblebee as a Volkswagen Beetle — when Michael Bay shot the film version, Volkswagen refused to cooperate and Bumblebee became a Chevrolet.

In the 1980s the FBI began sorting through information on serial killers to work out how to spot them. One pattern showed up fast: of the cars serial killers drove, the Beetle appeared most often. The pattern was useless, though, because the Beetle was also the car most often driven by young FBI agents who had no savings yet. Which says something about how popular the Beetle was.

The Beetle has been discontinued several times, and even now hasn't fully stopped

In the 1970s, after two oil crises, thrifty Japanese compacts grew more and more popular and Beetle sales fell away. In 1974 the Wolfsburg factory announced it would stop making the Beetle and brought out its replacement, the Golf, switching from an air-cooled rear engine to a water-cooled front one. By June 2002 the Golf had passed the Beetle to become Volkswagen's best-selling car.

In 1978 Volkswagen stopped building the Beetle in Germany altogether. But it still sold well in Mexico and Brazil — in Mexico it was even used as a taxi. After emissions rules tightened, the Mexican factory stopped making it in 1981. Even then, Volkswagen said, the first-generation Beetle had not truly gone out of production.

As a wave of retro nostalgia rose, Volkswagen brought out a new Beetle in 1998. Apart from its distinctive body, with an arched roof and slanted headlights, its engine and chassis came from the Golf — it was in effect a Golf in retro clothing. That was mostly a matter of cost.

The new Beetle sold more than 80,000 in its first year, but it did not last. In 2003 the first-generation Beetle went out of production for good; only parts were still made, so existing owners could get their cars repaired.

The third-generation Beetle arrived in 2011, with a longer nose and a flatter line from roof to tail. It gave up the cute circles and curves inside for Volkswagen's ordinary interior, took a twin-charged engine with more horsepower, and added navigation, power seats and other modern touches — on the whole, a sportier car.

Beetle sales have kept falling in recent years: 47,000 in North America and Europe in 2015, 41,000 in 2016, and 37,000 last year. As a car business, it no longer added up.

Even so, Volkswagen has not entirely let go.

The head of its R&D department had made the plan to end production plain at the Geneva Motor Show, yet when asked, Volkswagen spokesperson Jeannine Ginivan said the Beetle would not be discontinued and that it would still be around in the near future. The statement was vague. It may have been meant to calm the market, or it may have pointed to a new model later; there was news of an electric Beetle back in 2016.

In the 1973 film Sleeper, which Woody Allen directed and starred in, the jazz musician he plays is frozen and lives on to the year 2173. He finds a 200-year-old Beetle in a cave and sets off with the female lead on a (short) journey.

Last year Volkswagen showed the I.D. Buzz, an electric concept car based on the Beetle's sibling, the T2 microbus. The response was unexpectedly good, and the I.D. Buzz will return as a production car in 2022. As for the Beetle, perhaps the 200 years Woody Allen put on screen is not so far off.

Graphics: Feng Xiuxia

Cover image: Pinterest/Giovanni Ribeiro on Unsplash