Bugging Out: The Story of Volkswagen

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S1: My name is Noah Crowther. I live here in Vermont and run a Volkswagen shop.

S2: Noah Crowther has been fixing up old Volkswagens for more than 20 years. If we were to walk around back in the other areas, like what would we see?

S1: I could walk around if you’d like.

S2: He took us on a video tour of his repair shop.

S1: Lots of Volkswagens, this is here for a new motor. We’ve got a lot of these

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S2: there’s a lime green bus in the garage, shelves and shelves full of parts,

S1: just parts and parts and parts, 40 plus years of stored Volkswagen parts. Hard to find items, things that you can’t get anymore.

S2: Vintage Volkswagen ads all over the walls.

S1: You know, we encourage people to bring their photos in. We get a lot of Christmas cards.

S2: Then Noah opens a door to the outside. Which reveals an entire grassy field full of VW buses, all of them quite old, in a rainbow of different colors,

S1: Bennigan’s and Volkswagens everywhere. Oh, wow. How many cars would you say you have there? You know, I think currently getting worked on and moving through there, third, trying to make people’s dreams come true, you know, they get these buses out of the barns, have been sitting for 20 plus years and they want to put a motor in and get it going.

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S2: Old Volkswagens, like the ones Noer works on, will always be a little flaky, unreliable, but people just love those beetles and buses. One says there’s an emotional element involved when it comes to vintage VW.

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S1: I think it’s the personality that they had. When you look I know as a kid, I would see them and you just smile. You see a bus, you see two eyes and a face. A lot of people it was a part of their life when they were younger or some aspect of their life. There was a Volkswagen in their their beloved aunt that they just loved as a kid would show up in the yellow beetle every weekend. You know, there’s something about that. It was the really fun and had the Volkswagen Beetle, there’s always a party. When she showed up,

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S2: Volkswagen was a uniquely beloved brand in the 1960s and 70s, a countercultural icon. The goodwill toward the VW of that era continues today, but not so much when it comes to modern Volkswagens.

S1: You know, my wife drives a twenty eighteen Tiguan and there’s no personality to that car. Like, I don’t even consider myself part of the newer Volkswagen seen.

S2: Honestly, Volkswagen’s a lot less lovable these days. In 2017, the company was caught lying about its vehicle emissions, a shocking scandal that went to the top of the executive ranks. Now VW is still struggling to redefine its brand and to regain all the goodwill it once had. Most recently, it botched an attempt at an April Fool’s joke so badly that it resulted in an FCC investigation. How did a car that was born 90 years ago as the vision of no joke, Adolf Hitler managed to morph into a flower power hippie mobile, and what went wrong when the summer of Volkswagen love ended? Can a company that’s lost the trust of consumers and government regulators ever get it back? I’m Seth Stevenson. Welcome to Thrilling Tales of Modern Capitalism. Today on the show coming out, the story of Volkswagen. In the late 19th century, Germans like Karl Benz basically invented the car as we know it and were pioneers in the emerging global automotive industry. But by the 1930s, Germany was in economic trouble and its car industry was struggling. Adolf Hitler decided to intervene.

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S3: Well, it was originally a Nazi propaganda project and Hitler was a car buff, and it really annoyed him that in America lots of ordinary people were driving cars. But in Germany, cars were really just something for rich people.

S2: Jack Ewing is a New York Times reporter based in Germany who’s written a book about Volkswagen. He says the company began as a sort of campaign promise from Hitler to his citizens.

S3: He wanted to convince Germans that he was going to give them a better life, he was going to make material things available to them that had not been available before, refrigerators, radios, consumer products like that in cars.

S2: Hitler admired Henry Ford, who turned the United States into an automotive powerhouse by 1927, 80 percent of the world’s cars belonged to Americans. And a lot of that was because the Ford Model T was reliable and affordable. Hitler was eager to make a German version. He asked automotive designer Ferdinand Porsche. Yes, that Porsche to draw up a car that would be cheap and practical. What Porsche came up with was essentially what we now know as the beetle. Hitler dubbed it the folks Volgin, which translates as the people’s car.

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S3: They decided right from the get go that they were going to build the biggest factory in the world.

S2: Jack Ewing has visited that Volkswagen factory about 120 miles west of Berlin. It’s still there and it’s still operational.

S3: It still looks pretty much the same as it did back in the 1930s. If you take a tour of the factory, they always show you a girder that still has shrapnel scars in it.

S2: Germans began placing down payments on future Volkswagens and production of the car was planned to start in 1939, World War Two cancelled those plans. Instead, the Volkswagen factory went into service, building German military vehicles and weapons using slave labor.

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S3: During the war, the place was practically a concentration camp of its own.

S2: When the war ended, the factory, which had been bombed by the allies, came under British control,

S3: the machinery was pretty much intact because they had moved most of it to the basement. And the way it got going again was that they put this British officer in charge named Ivan Hurst, and he had all these sort of starving, jobless Germans to deal with. And he said, let’s get the factory going again. The British also need vehicles for the occupation army. So they scrape together some parts in the factory and got things going again. And that was really the revival. Could very well have ended there. The veto might never have existed without him.

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S2: Ivan Hurst convinced the British military to buy 20000 Volkswagens built on Ferdinand Porsche’s original design. These were no frills cars with a top speed of about 60 miles an hour. But the British found them inexpensive to manufacture, fuel efficient and easy to maintain. And soon enough, regular Germans were snapping them up.

S3: And they discovered that this was a perfect car for the post-war era when people were getting back on their feet. They needed cheap transportation and the Volkswagen was the perfect vehicle.

S2: In the late 1940s, the British handed over control of Volkswagen to the West German government and the company began to look for customers beyond its borders. In 1947, VW started exporting to other countries in Europe, and in 1949, it sold its first two Beadle’s in the United States. Throughout the 1950s, Volkswagen sales ramped up internationally and the company became a symbol of the miraculous postwar West German recovery, the wide appeal of the beetle boiled down to two factors. First, it was ingeniously simple. For example, instead of using liquid coolant that runs through hoses, as most cars do, the beetle had an air cooled engine. It dissipated heat in the least complicated way possible by just running air over the parts. This made it harder to heat and defrost the car in winter, but it also made the car simpler and cheaper to build and to fix, but hand-in-hand with its simplicity. It was the Beatles appearance that won people over Ferdinand. Porsche was using 1930s ideas about aerodynamics in his design, but the result was a car with a friendly, bulbous shape that delighted people somehow both ugly and cute at the same time. In America, there was one other secret to Volkswagen’s success.

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S3: When you think about it, it was an amazing rebranding that this fascist propaganda product then became the sort of official vehicle of the counterculture. I don’t think there’s ever been anything like it.

S4: I mean, imagine what great advertising can do if it can turn the car of Hitler into the car of the hippies, we can do anything.

S2: Dominic, I’m saying, is a marketing consultant in Switzerland, he wrote a whole book about one famous VW ad

S4: for Volkswagen from nineteen fifty nine. It was called Think Small.

S2: By the late 1950s, Volkswagen had made headway in the U.S., but the Beetle was still a curiosity compared to mainstream American cars from Ford or Chevrolet. Volkswagen’s head of American operations decided he needed an attention getting ad campaign to raise the Beatles profile. He made the rounds on Madison Avenue, but ended up going with an upstart agency called Doyel Dale Birnbach. Or be the first ad DDB came up with was a radical departure from the automotive ads of the era.

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S4: Basically, all advertising of the time was illustrated was paint brushed and when you had a car in an ad, it was always longer and wider than in reality, and the people were even painted smaller to make the call look bigger. And obviously you have the car in front of a beautiful house with the housewife waiting for her handsome husband, successful husband, obviously, who brought home a new car. And that was the kind of car advertising that Detroit did. All the ads looked like this. They were interchangeable. And folks walking broke with every rule in that category and with every rule and advertising entirely.

S2: DDB bought a full page in Life magazine for its first VW ad. Then it put a tiny photograph of a tiny little beetle in the upper left corner of the ad, instead of a big illustration of a big tailfins car front and center, and instead of lots of flowery prose about technical specs, most of the ads page was left as blank space. At the very bottom was a surprising tagline Think small. The ad looks modern. Even now,

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S4: we cannot imagine how different the ad must have felt back then in nineteen sixty nine. But I’m sure it was a shock. It was something you had never seen. It was the start of something completely new. I’m sure you could viscerally feel this is something else. What is going on? There’s even a scene in Mad Men, the TV series, they scratch their heads and say, how come those folks, one, people pay money for an app that is basically empty?

S1: Remember, Think Small is a half page ad on a full page, but you can barely see the product. Well, so what you want love it or hate it? The fact remains we’ve been talking about this for the last 15 minutes.

S2: The TV ads went little when Detroit went huge. They went humble and right when Detroit went boastful and brassy, maybe most important, Digby’s ads felt honest when other advertising felt like lies.

S4: People really they collected the ads that put them up on walls that really love them

S2: would also use underdog brand positioning in its famous long running campaign for Avis Car Rentals, claiming that because it was number two to Hertz, Avis tried harder. But the VW campaign seemed to touch some kind of exposed nerve in America. It felt almost subversive. Remarkably, nearly all the people who worked on the campaign were Jewish, helping a Nazi founded company only 14 years after World War Two had ended. But there was something else interesting about the campaigns copywriter Julian Canik.

S4: He really hated consumerism. He hated the American way of life of the 1950s and early 1960s. He hated materialism. And he really, I think, brought up this philosophy into his ads. Think small, not think big.

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S2: The VW campaign Kennedy created continued into the 1960s in print and on TV, as well

S1: as the homely little Volkswagen. After a few years, that begins to look beautiful if you want to show you’ve gotten so we get a big, beautiful Chadi. But if you simply want to get somewhere, get about is this a wildly expensive plaything, a toy for the idle rich? No, just a humble little bag with a new option called the automatic stiction wonders.

S2: This VW campaign tapped into a transformation happening in American society. And Dominic says it even contributed to that transformation

S4: and campaign definitely had a cultural impact and helped grow. Basically, this descent with consumerism and helped make the state of the 1960s a freer and more colorful place.

S2: Driving a Beetle or a Volkswagen bus became a sort of countercultural statement, a badge of nonconformity in 1972, the Beatles surpassed the Ford Model T as the most produced car model ever. But by the mid 1970s, the cultural way Volkswagen surfed had crested and compact cars from Japanese brands like Honda and Datsun were racing Volkswagen’s practical advantages, offering better mileage and reliability. The heyday of the beetle had ended, and it wasn’t clear what Volkswagen would do next. Why do you think Volkswagen decided it would just cheat?

S3: Well, I think that goes to the whole Volkswagen culture.

S2: More on that when we come back.

S1: A great economy car, a car with more room with the rear seat folded down than the trunk of a Cadillac Fleetwood. Where is it that kind of a car shouldn’t

S5: be able to drive.

S1: The pick up from

S2: zero to 60 than a jet lag six hours after sales of the beetle in the bus began to wane in the 1970s, Volkswagen struggled to find an identity in the United States. It introduced new models, the rabbit, the Jetta, but none stood out from the competition or tickled the popular imagination in the same way. VW was getting beat by Korean cars at the bottom of the market and by Japanese cars in the middle, and it couldn’t compete with the European luxury brands at the top. In 1993, Volkswagen hit a low point in U.S. sales. Enter Ferdinand, who took charge of the company that year, was the grandson of Ferdinand Porsche, the designer of the Beetle. The Porsche family has been in the car business for almost as long as there’s been a car business with connections to VW, Audi and, of course, to Porsche. Ferdinand was a child when Volkswagen was founded, but he was steeped in its history.

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S3: He used to play at the factory when slave laborers were working there.

S2: Jack Ewing, the New York Times reporter who wrote a book about Volkswagen, says Ferdinand was shaped by a peculiar upbringing.

S3: His mother in particular, was a very demanding person. When the kids were growing up, whoever had the best grades got to sit next to her and the others were sort of sidelined. It was a very tough family, you know, and both his parents were Nazis. And he I don’t think himself was a Nazi, but he grew up in that atmosphere.

S2: When he took over Volkswagen, he returned to the foundation of VW success with affordable cars that were well-made and good value for the money. He rebooted the Beetle in 1998, giving it an updated look that got a lot of headlines

S6: for those of you who thought the millennium bug had something to do with computers. And I’ve got a bit of news for you, because here at the 1998 Detroit Motor Show, the world’s journalists gather to take a glimpse at the real millennium bug as Volkswagen unveiled the new baseball.

S2: He also went on a buying spree, adding to the Volkswagen Group’s luxury brand holdings, which these days include Lamborghini, Bugatti and Bentley. Behind the scenes, though, Pitch was cracking the whip.

S3: He would set these very tough engineering goals, and if his people didn’t meet them, he would fire them. And he made no bones about this and it was well known in the company. You just couldn’t fail.

S2: With the hard driving piece at the wheel, Volkswagen began to take some dubious shortcuts.

S3: Very soon after he came into office, Volkswagen was accused of stealing a lot of documents from GM. It was pretty clear that he was willing to really push the boundaries to win. And a few years after that, there was another big scandal where it turned out that Volkswagen had been paying for prostitutes, for union leaders to keep them compliant. When these things happened, there was never any real soul searching. They never said, gee, how could this terrible thing have happened? We have to make sure this doesn’t happen again. They never did that. There was sort of a sense that we got away with it. Everything is good.

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S2: One of Volkswagen’s engineering triumphs under was with diesel engines, which are more fuel efficient, but in the past have been kind of smelly and noisy, Volkswagen figured out how to overcome those problems and make it more civilized diesel, which they had great success with in Europe.

S3: The problem was that in the United States, there were stricter limits on nitrogen oxides, which are the big pollutant that comes out of a diesel engine. They were about twice as strict as Europe. So Volkswagen could meet the European standards with its cars, but it was having trouble meeting the US standards and they fiddled around with the technology for a long time and they couldn’t do it. And so at a certain point, the engineers, under a lot of pressure from the top, decided that they would cheat.

S7: Members of Congress went after Volkswagen today over the way it rigged diesel models to cheat on emissions test statements at a House

S2: hearing starting in the mid aughts, VW engineers put a special device in their American diesel cars. This device could tell when the cars were being inspected by recognizing that the inspectors were using a specific regimen of engine tests. And we’re spinning the wheels without moving the car. During these inspections, the cars would run more cleanly in a way that wasn’t feasible under normal conditions. When they were back out on the road, the cars ran much dirtier than promised. Eventually, VW got caught.

S1: Thank you and good morning. We now convene this hearing of the Oversight and Investigations Subcommittee on Volkswagen emissions cheating allegations, initial questions.

S8: My name is Michael Hahn and I’m president and CEO of Volkswagen Group of America on behalf of our company and my colleagues in Germany and me personally, I would like to offer a sincere apology for Volkswagen’s use of software program that serve to defeat the regular emissions testing regime in the spring of 2014, when the West

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S2: Virginia University, its executives at first tried to lie their way out of the problem, their hypocrisy was galling.

S3: Not only were they cheating, but they were advertising that these were very virtuous cars and they specifically targeted the sort of environmentally conscious green driver. In a way, the grown up versions of the people that had bought the Beetle.

S6: We are today announcing the indictment

S7: of six former high level Volkswagen executives, Richard Drinka Burn. That was yesterday

S2: in 2017, after a Department of Justice investigation that indicted several of its executives, Volkswagen pled guilty and paid four point three billion dollars in fines. He had resigned two years before. In the years since the scandal, Volkswagen has sworn it’s turning over a new leaf. It’s shifted away from diesel and it launched an emissions free all electric SUV in the U.S. this year. But true to its recent history, VW couldn’t manage to avoid a stumble.

S7: It’s the prank that could land Volkswagen in serious hot water. Earlier this week, the U.S. subsidiary of the car company announcing it was changing its name from Volkswagen to Volkswagen. In a press release calling it a signal that our future is in being the people’s electric car, the only problem, the whole thing turned out to be an April Fool’s joke gone wrong.

S3: Not to pat ourselves on the back, but I think we at The New York Times were pretty skeptical about that from the very beginning. It just did not make a lot of sense. I don’t know what they were trying to do, but it certainly did not land the way they expected it to know it was a flop.

S2: Did it surprise you that the company would bungle that kind of thing like that? No. This prank, which involved Volkswagen reps lying to news outlets, including the Associated Press in order to maintain the ruse, resulted in a brief surge in Volkswagen stock, which in turn spurred the opening of an SEC investigation. Results pending. Whatever the fallout from the Volkswagen debacle, VW push into electric vehicles is real and in a sense, it marks a return to VW as old playbook.

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S3: They’re now trying to do for electric cars what they did for personal transportation back in the 1930s. They’re trying to make it affordable for everybody. I mean, Tesla’s are pretty expensive. They’re trying to come up with a decent electric car that a middle class person can afford.

S2: We’ll see how Volkswagen’s transformation into an electric car company goes up in Vermont. Volkswagen mechanic Noah Crowther is on board with the effort, but he’s doing it in his own way, thinking small.

S1: I’m researching currently how to make a beetle electric. I’d love to offer an electric conversion for a 67 beetle.

S2: Noah might always be more interested in the Volkswagen of the past than the Volkswagen of the future. The company needs to hope it’s creating the Noah’s Ark of the Future. People devoted to their new generation of cars starting now. That’s our show for today. Next week, we’ll hear about how America’s fate during the pandemic was tied up in the success of a small family owned company whose internal rivalries threatened to tear it apart

S7: weeks before they get a call from the White House saying they need to ramp up production to save the country. One of them had filed a lawsuit to dissolve ownership of the entire business.

S2: That’s next week on Thrilling Tales of Modern Capitalism. This week’s episode was produced by just Miller and Cleo Levin, Technical Direction from Merritt Jaga, editing from Jonathan Fisher. Gabriel Roth is Slate’s editorial director for audio. Alicia Montgomery is the executive producer of podcasts at Slate. June Thomas is senior managing producer of the Slate podcast Network. Lucja is managing producer. I’m Seth Stevenson. See you next week.