Volkswagen reached the U.S. in 1949, but in a market dominated by flashy Detroit autos, the Volkswagen was austere. With no advertising and only a tiny dealer network, sales climbed slowly to 2,000 by 1953 and 150,000 by 1959. The VW bus arrived in the early 1950s, and the sporty two-seater Karmann Ghia was introduced in 1956.
In 1955, with annual sales approaching 30,000 cars, the company set up a U.S. headquarters and established Volkswagen of America. In March 1958, Volkswagen hired its first U.S. ad agency, J.M. Mathes Inc., but in 1959 it moved its account to Doyle Dane Bernbach.
Initial VW USA ad spending amounted to $1 million, not including dealer and distributor expenditures, which followed the corporate business to DDB. The truck division was assigned to Fuller, Smith & Ross at first, but moved to DDB within a year.
At DDB, print ads were designed by Helmut Krone and written by Julian Koenig; b&w layouts and sans serif type echoed the product's austerity. The ads were witty and self-deprecating, and encouraged readers to reconsider all their assumptions about buying cars. One such print ad, "Think Small," from DDB, was named the top ad campaign of the 20th century by Advertising Age.
By stressing VW's negatives in the ads, DDB turned them into a witty positive: A car that never changed never grew obsolete. In the 1960s, the Volkswagen Beetle became the best-selling imported car in America, and its advertising became the most influential in the industry.
In the late '60s, VW introduced variations on its basic product, with a view to encouraging its maturing customers to trade up within the brand. Square-back and fastback models reached the U.S. market in 1966, and microbuses arrived in 1968. In 1971, VW introduced the Super Beetle, with improved suspension, a curved windshield and more trunk space. In 1975, the front-wheel-drive Rabbit arrived, to be followed by the Golf and Jetta.
In 1979, DDB produced its final commercial masterpiece for VW: "1949 Auto Show," which started with a period announcer in front of a microphone saying, "And now the star of the 1949 Auto Show, the car the public wants, the all-new DeSoto." The camera panned to an exhibit presided over by an engineer in a white coat who explained the air-induction ports of another Detroit behemoth. It then showed an announcer in front of a Packard and next a trio of girl singers proclaiming, "Longer, lower, wider; the 1949 Hudson is the car for you."
The camera finally found a lonely man in a bow tie no one seemed to be paying attention to. "So Volkswagen will constantly be changing," he said, "improving and refining their car. Not necessarily to keep in style with the times, but to make a better car. Which means to all of you better mileage." As the camera drew back, voice-over noted, "Of all the promises made at the 1949 auto show, we at Volkswagen kept ours."
But the character of the company as well as the prices of its products had outgrown the "Think small" days of the early 1960s, and that was reflected in its advertising. By the early 1980s, whimsy vanished from Volkswagen advertising and was replaced by hard-sell information positioning the company on the basis of "technological leadership." In 1986, Volkswagen introduced the Acura to compete in the luxury car segment.
Second coming of the Beetle
Among its problems, Volkswagen was perceived by some as a foreign company siphoning sales from the American auto industry and causing thousands of U.S. laborers to be thrown out of work. In 1992, DDB Needham Worldwide (DDB and Needham Harper Worldwide had merged in 1986) mounted a campaign that promising to cover the car payments of any buyers who lost their jobs.
One DDB Needham effort focused on the German word fahrvergnugen, meaning driving pleasure or enjoyment. But both the word and the ads were puzzling to American car buyers, and that campaign was soon replaced by another tagged, "On the road of life there are passengers and there are drivers. Drivers wanted."
In 1994, Volkswagen debuted a new, streamlined Beetle in Detroit. The car created a storm of publicity, though the company avoided any official references to it as a Beetle. By 1996, Volkswagen had officially dubbed the car the "New Beetle," and it was successfully introduced in April 1999.
In 1995, the automaker turned to Arnold Communications, Boston, to introduce the New Beetle with a campaign that acknowledged the famous DDB advertising. Early ads built on the offbeat image that had made the original Beetle stand out; they were humorously self-deprecating of standard car advertising and evoked a kind of 1960s nostalgia.
During its first year, sales of the New Beetle exceeded all expectations: In 1999, more than 83,000 New Beetles were sold on ad spending of $33.5 million, according to figures from Competitive Media Reporting. However, by 2000, honeymoon was over.
As total VW sales grew by 12.6%, New Beetle sales decreased 2.8%. VW tripled its ad spending to $218.6 million, according to CMR, but the sales decline continued in 2001. Research revealed that consumers felt the car was cramped inside, so in spring 2001 Arnold launched a new campaign based on the theme "Round for a reason."
Without sacrificing the dry wit of previous work, the advertising emphasized the New Beetle's interior spaciousness. One ad showed the car's dashboard adorned with a chorus line of 13 plastic hula dancers swaying their hips. Another calculated the number of coffee cups, laundry bags and dachshunds that could fit inside a New Beetle.
In 2001, Volkswagen was the No. 51 U.S. advertiser, with ad spending of $595.7 million, up 6.7% over the year earlier. That year, it had U.S. sales of $15.98 billion, up 14.7%, and operating income of $576 million, down 3.5%.
VW’s fortunes worldwide began once again to slip in the subsequent years, the result of the automaker’s move upmarket with pricey luxury cars like the Phaeton. Critics said VW should not have let its bread-and-butter models, such as the Golf and Jetta, get so long in the tooth. Sales of the new Beetle dropped dramatically. VW's global profits skidded dramatically as critics charged that its quality also slipped.