From Business History: De-Nazifying the Love Bug: The VW Beetle Story Part II

Pushkin too quick.

No, it's perfect Pushkin stop, you got it.

How does a country that is completely destroyed end up making the best selling car of all time?

This is business history.

Last time on the show, Adolf Hitler had a to do list. It was a pretty evil to do list.

But way down on the to do list he was going to design a car for the German.

People, for the German volcan if you will, it was going to be a volks wagin.

An engineer named Ferdinand Porsche signed up to design and build the Volkswagon. His son in law, Anton Pieck ran

the factory, and he ran it with utter brutality. He

forced enslaved workers to build the militarized version of the Volkswagen Beetle. And then in the spring of nineteen forty five,

the two guys running the factory flee. The Allies come

in and the workers are freed.

And there is this question, a question for the Volkswagen factory and for all of Germany, which is what are the Allies gonna do with the factories? What's gonna happen

to the German economy.

It is tempting to say that what you should do after two World Wars started by Germany. Perhaps you should

make it so that Germany can never fight again, more than never fight again, can never produce anything, can't.

Produce a car, a rifle.

You want Germany to basically make pretzels and beer, and that's it till the end of time.

And this was not just some like populist emotional response, right.

The Secretary of the Treasury of the United States of America had exactly this response. His name was Henry Morgenthaw,

and he put together this plan called reasonably enough the Morgan Thought Plan, and it said here, oh, yeah, of course, of course you get to read from him. This is

my favorite part. Within a short period, if possible, not

longer than six months after the cessation of hostilities, all industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed. This is saying, like, if there is a

machine in it, we will take that machine or smash it to bits. Yeah, this is basically saying, let's make

Germany a country of nineteenth century peasants farming the land forever we know.

Of course, the United States decided not to pursue that plan.

We know in fact that the United States and its allies decided to pursue essentially the opposite plan. Instead of

destroying the factories that supplied Germany's war machine, the Allies helped the Germans rebuild them better than ever. I'm Jacob Goldstein,

I'm Robert Smith, and this is Business History, a show about that history of business.

Love explaining that to people today on the show. How

did we get from a moment of utter destruction to a German economic miracle where it became one of the big manufacturing powers in the entire world? And how did

that lead to a little car that looked something like a bug being driven around the streets of California by hippies and surfers.

The war is over. The war is over. Good newses,

cheers Allies. The Soviets have occupied the eastern part of

Germany and they know what they're going to do with the economy there. They're going to take everything. They're just

taking the factories back to the Soviet Union. But the Allies,

so the US, Britain and France, they have cut the western part of Germany into three parts, three occupation zones, and the Allies at this point can't really agree on what to do with the German economy. The Americans were

super anti Nazi, fair enough. The British are obviously also

anti Nazi, but maybe they were like a little bit less anti Nazi than the Americans, or like you could at least say that British were more pragmatic about the situation.

For one thing, Britain, unlike the United States, at this moment, was like flat broke. They had had their economy destroyed

by the war essentially, and they had this chunk of Germany that they were responsible for managing, and they couldn't afford to feed and clothe the Germans forever. They couldn't

afford for it to be a ward state. I mean

they're rationing food in London. Yeah. Yeah. The British still

have a big empire in Africa and in Asia at this time, and so they are used to managing countries that they have subjugated, and they tend to do it without having to deploy that many troops. And what they

do is they deploy some small number of people and then they get the locals to kind of run the economy on their own. So they think, maybe we can

do this in Germany.

And there's a little bit of luck that comes in for the Volkswagen factory because it happens to be in the British section of West Germany.

And so the British sent in an Army office server named ivan Hurst to basically run this factory that the Allies have taken from the Nazis. At pictureman Khakis, I

just do you have rolled up sleeves, a hack a sharp hat. Time to get to work here, boys, And

he finds when he gets to the factory that about seventy percent of it is still in good shape, which end of World War two in Germany is pretty good.

This is definitely a glass half full situation. And so

while the Allies are sort of thinking their big thoughts about what should we do with the German economy, Ivanhurst thinks, what's if we're going to start making some cars at this car factory. He is an engineer.

What do engineers do they see a factory, They're like, let's make some cars.

We can drive him around. He does have the good

sense to change the name of the town where the factory is. It's a town that the Nazis had built

the Germans. As you remember from last time had built

the town alongside the factory and they called it. I

don't think German stot this kdf Wagins, which basically means strength through joy cars town extremely Nazi name, yes, and so Ivan and the British sort of look around town and they say that there's this castle in town or near town, and it's called Wolfsburg, perhaps of Wolfsburg, and so.

That's what they call the town. And that is still

the name of the town where Volkswagen is headquartered.

Slightly less nuts.

It's not super warm and fuzzy, right, Wolftown, Wolftown, So okay, so they've de notified the name. He's getting the factory going,

and now he needs some demand, right, if they're gonna make these cars, somebody's gonna have to buy them.

The Germans don't have any money, and so Hurst convinces the British to order beetles to be used for the occupation forces, which again very pragmatic. Right, it costs money

to make cars in England to ship them to Germany.

If you even can do that, if you even can do that, yeah, So the British order twenty thousand beatles Volkswagens to be delivered in a year, which is way more cars than the factory has ever built in a year.

They're just putting the factory back together, and crucially, it is not clear at this point who is actually gonna work in the factory and build these cars.

To recap from last time they had had Arian youth building the cars they were drafted off to the war.

Then they were using enslaved prisoners and they've obviously been freed and escaped, and so when you look around, there's also the people who enslaved those prisoners.

Right the people running the factory who worked.

For the Nazis or who were Nazis. You didn't want

them in charge. How Nazi is too Nazi?

It is a question that is central to the rebuilding effort across the western part of Germany. Who can we

hire and feel like at least okay about hiring, and who is absolutely too Nazi? Can never allow them back.

There was the incident we talked about last time in the show show, which was the nursery where babies born to the enslaved workers were brought. They promised they would

take care of the children, but they allow the children to die. Those people clearly are too Nazi.

Right.

Ten members of the staff were tried for murder, two were sentenced to death.

And then you get to the factory itself, where there were some people clearly who were knowingly sending those babies off to die. And Hurst and his colleagues go through

the records of the people who ran the factory and they wind up firing two hundred and twenty eight people, including the technical director and the head of operations at the factory too Nazi.

So it kind of leaves you really with soldiers returning from the war.

Yeah, and there are lots of soldiers who have been demobilized, who are, you know, looking for work, but they are very difficult people to manage, right, Like, now you have this factory with people who were just off fighting the Soviets on the Eastern Front. Imagine being the manager and

being like, hey, can you pick up the pace? Like,

see what's going to happen if you tell a Nazi soldier to do that?

And here they are in a destroyed factory. There's no

real housing in the town, so they're being housed in the cabins. I suppose for the former enslaved workers, they're

essentially working and living in a concentration camp.

Yes, and you know food is hard to come by.

I mean, Germany is destroyed, right, so you have workers just wandering off to try and find something to eat.

People are living on like a thousand calories day. And

on top of all that, the winter of nineteen forty six is particularly cold, and the ports freeze over and the rail lines freeze over, and so you can't get food to the factory, you can't get supplies to the factory.

Essentially the factory, the assembly line closes down for months.

So the British engineer Ivan Hurst promised twenty thousand vehicles.

Not looking good for.

Him, he does deliver ten thousand. Kind of a miracle,

kind of a miracle. They were ten thousand extremely bad cars.

They were built partly with like sort of quasi salvaged parts that had been left over at the factory, and like something like half of them, immediately after driving out the factory gets had to come back for repairs.

It's like that moment in the comedy where the car rolls off the production line. Everyone cheers and the wheels

fall off and the windshield caves in and everyone's.

Like, oh, it was that truly like doors wouldn't close, headlights wouldn't work. But in an interesting quirk of history,

this proved to be kind of a lucky break for Volkswagen itself, Volkswagen as an entity, because British engineers were going around Germany looking at factories thinking like, are there any really nice ones we want to take back to England piece by piece as reparations for the war? Right,

this is still the spirit of the count to something.

Sit You could have a British people's wagon, you know, built in Manchester.

And so these engineers come to the Volkswagen factor and they see these garbage cars coming off the line and they're like, this is a terrible vehicle. People around the

world are never going to want to drive these so called Volkswagens. Will pass.

Thanks, I'm hearing the Benny Hill theme, but keep drive the car and the doors are falling off. And so

this Volkswagen factory is removed from the reparations list. They

leave it alone. So around this time we're getting to

the later part of the nineteen forties, there is this big important shift happening in Germany and Europe, and that is that the Allies have decided that in general they want Germany to actually thrive and succeed.

Yeah, and it's interesting to think about why this is happening, right.

There are a few reasons. One is, within Germany there

is a threat from the right, essentially from the former fascists. Uh.

People are painting swastikas on the walls of the Volkswagen factory people. You know, they were Nazis three years for

this right and that spirit is still there, and so the West is concerned about that. There is also a

threat from the left, right, the Soviets are right there, right across the line in Germany. And furthermore, Communism is

popular in Western Europe right Chao Italia. And so there

is this idea which is we can fight the threat both from the right and the left by helping the ordinary people of Germany and Western Europe get richer.

They should rename the town's strength through capitalism, Yes, wagons town.

And you know, the Marshall Plan from the US is probably the most famous part of this, but especially in Germany, the Marshall Plan was not that big in terms of dollars.

I think more important was this vibe shift away from let's make Germany poor and isolate it so they can't hurt us, and toward let's make Germany rich and trade with them so they don't want to hurt us.

And I know it's a different show that we'll do one day, but the same thing was happening in Japan too. Yes, yes,

And I love this shift like it really makes me happy to think about.

I guess partly because I believe in it. Right for me,

the central big idea of economics of markets is the world is not zero sum. The pie can get bigger,

everybody can be better off, trade can bring nations together in a web of prosperity. And I know this sounds

like naive or unfashionable, but I think it's true.

And this was the dream at the time that if you pulled this off in Europe and in Germany, there could be economic growth, shared prosperity, liberal democracy, a chicken at every pot, a Volkswagen in every driveway.

After the break, we know it's gonna happen, but it's really interesting how it happens. How Hitler's car wins over

America's hippies. That's what we're going to talk about later.

In the show.

Okay, at the end of the ads, let's get back to what ivan Hurst is doing at the Volkswagen factory.

So after a few years ivan Hurst in his khaki suit and Johnty hat, he started to turn things around at Volkswagon. He's created a network of dealerships, which is

what you have to have, right trained mechanics. He's developed

a nicer version of the Beatle for export, and orders are coming in at least nearby in Europe from Netherlands and Switzerland, and it's time he feels to hand Volkswagen back to the Germans.

And so you got to figure out then, ye who's going to run it? And we get back to our

central question, how Nazi is to Nazi.

There were the guys who ran the factory before. They're problematic.

They're pretty Nazi, right. Ferdinand Porsche, who developed the beadle,

and his.

Son in law Anton pich Pisch, who actually ran the factory, wound up joining the SS at the end of the war.

They fled to their estate in the Austrian countryside and they actually there's this interesting story about them that's worth telling for a minute. So the Allied soldiers caught up

with them and arrested them and questioned them. But what

the Allies were really interested in.

Not what they did, no, what they built, yeah, and what they knew right they had worked I think Portion in particular had worked on weapons systems, and as we know, the Allies after the war were obsessed with what German engineers.

And scientists knew about building weapons. So they talked to

Porsche and then they release him. And then the French

car company Renault comes to Porsche and Piere and ask them if they want to come help Renault build a little people's car. It's people's car in French Voa tour

de Jon. I don't know, I just met that up.

I looked it up everyone and they say yes because I think, you know, Porsche really does love designing cars and building these cars. So Porsche and Piere and actually

Porsche's sun Fairy Porsche, they go to the French controlled part of Germany to have talks with Renault. But the

guys at Pougeot, the other big French car company, they hear about this and they're like, no, no, no way.

They point out that during the war, when the Nazis had invaded France, Porsche had been given control of Pougeaut factories and had, you know, sent some of the executives to concentration camps where some of them died, and so the Poushio guys are like, there is no way we can work with this guy to build the car. He

is too Nazi, and so they get arrested again, this time by the French. But eventually the French let him

go and they go home and they start a little sports car company called Porsche. Porsche not too Nazi for

the world, not too Nazi for the world, but too Nazi to run the Volkswagen factory. So they are not

going to work. So, you know, Ivanhurst crosses them off

the list of potential people to run the factory.

So he's going through the names and he comes up with one Heinrich Nordhoff, and he had helped run Opel, which I guess is car and truck firm in Germany.

He had GM. It was connected to GM.

I think it was GM's German operations, okay, but more importantly he had been one of those German car makers who had fought this idea of.

A Volkswagen right.

He had said, it's not possible, it can't be done, and it sort of resisted Hitler's push for that. Now,

eventually he would cooperate with Hitler as and many people did.

He actually got an award from Hitler for meritorious service in factory whatever whatever whatever the.

Ververt shoft Fur award. I think it means war economy leader.

But all I hear is Furer is like a mini Furer.

And for the Americans, that's too Nazi. Yeah, it's pretty Nazi.

If Hitler gives you an award and stuff.

Great British they're like, he gave out a lot of awards.

We've got to hire someone. So they hired and say

what you will about the Fearer's award.

Nordov was great at running a car company. Yeah, so

he comes in and you know, looks at the Volkswagen and says, let's, you know, let's polish this thing up a little, which is amazing. Remember they're emerging from the war.

They can barely build these cars. But he's smart enough

to know people like a little luxury, like a little shine on there. They got to have better hub caps,

you know, shiny, right, you gotta have different colors. He

has like a Bordeaux red, pastel green colors, and like any factory boss. He wants to get productivity up. He

specifically says he wants every worker to increase their productivity by thirty percent, which is a tough ask. But here

Nordoff and really the entire German economy gets a big boost from monetary policy. Great moments in monetary policy right

here Germany, nineteen forty eight.

So at the time, Germany is running on reichs Mars, the currency. It was created in the nineteen twenties, and

it had been through a lot. There was a ton

of inflation. They weren't worth very much. It was still

the sort of German money from the war, right, and so because it was sort of worthless and there was shortages, the country of Germany at this point post war is running on you know, bartering and ration slips and all of this sort of stuff and occupation currency introduced by the various allies.

And so if you're running a factory and paying your workers in reichs mark worthless pieces of paper, you're kind of out of luck. You can be like, work harder

or else I won't keep giving you these worthless pieces of paper. And so the big break for Nordoff and

Volkswagen and really all of what's about to become West Germany comes in June of nineteen forty eight, when the Germans got rid of the reichs Mark and introduced a new currency called the deutsche Mark. It's going to become

the most important currency in Europe. And you could trade

in ten reichs marks for one deutsch mark.

Which is the numerical part of it. But it was

also functionally a devaluation of the currency. So anyone who

had their savings could transfer their savings over to deutsch mark, but it was worth almost nothing. It took away people's savings,

so not lucky for those people, but it allowed Germany to remove the price controls and sort of start their economy from scratch. You see this with a lot of

economies in trouble. They devalue the currency and kind of

start over. And so now to the extent people had savings,

those savings are gone.

But the money you get paid, if you say, work at a factory can buy stuff is worth more. Yeah,

is worth something? Is functional, right, So now they're back

in the familiar world of you get a job, they give you money, and you can use that money to buy stuff. And so Nordhoff gets his productivity gain. Now

people are showing up to work, they're motivated to make cars better, and the factory starts working better.

And there is another quirk of macroeconomics, which is if you've devalued your currency, it also makes the objects you make much cheaper to the world.

It helps exports, yes, and so not long after this, in nineteen forty nine, the British turned Volkswagen over to the newly formed Western and government going to the new decade.

The new currency is propelling Germany forward. Exports are starting

to grow and it happens the vertschaft Wunder, the German economic miracle votschaft WNDA.

You know, the.

Decade of the fifties was incredible for Germany. For an

investment is coming in. The government has focused on economic

growth and Germany is catching up to its richer neighbors.

In that one decade, living standards for Germans doubled. It

was this incredible economic era and the Beetle was really at the center of it. I mean, you know, sales

were growing, but also as a symbol, Volkswagen was like, you know, the national car maker, and the Beatle was like like the chrome ornament on the hood of the vert shaft wunder and by nineteen fifty five Volkswagen had produced one million Beatles. So nord Off is still running

the company and he wants to, you know, keep this going.

He wants to keep growing, and so he come up with a plan, a plan that specifically has three let's call them prongs. Did he call them prize has no idea,

but let me do the prongs. I'm a good conger.

Okay, okay, Prong number one, Prong number one domestic sales.

So in Germany, remember this was not a big driving culture before the war, so Nordiff really has to change the idea of what it means to own a car.

This is not a luxury thing. This is something that

everyone needs and has to have. It's like a TV

or refrigerator. If you live in the modern world, you

have to have a car, which of course was Hitler's original dream. We should know here he never made very

many of those cars under Hitler, right, So the way to do that is to essentially make the car cheaper.

In the nineteen fifties, the beetle cost what a typical worker would make in thirteen months. So that's the equivalent

of like a sixty five thousand dollars car now, so that's pretty expensive.

That's not cheap.

At the end of the decade he had gotten down the cost of the car to about eight months salary for a typical worker. So that's progress, right. And on

top of that something we're going to see a lot in business history. Volkswagen creates a financing arm that essentially

can lend people the money to buy the car, so they can get into the car for relatively.

Cheap and pay it off over time. And there was

also this plan where several people could buy a car and share it, which I love. It feels very West

European to be in a nice way. Why don't we

do that and do that? I would do that. So

all these things are happening, Beetles are like, I don't know, a third or so thirty forty percent of the cars on the road in Germany at this point.

That is Prong one, as you said, sort of the core of Germany's economic miracle is not building stuff for Germans, but it's building stuff that people in the rest of the world are going to buy.

And that is where prongs two and three come in.

Prong two pitch the Beetle as a rugged car for the developing world, very very smart.

Yeah, and I mean it was built as a rugged car.

It was, you know, used by the military. It was,

in fact a rugged car. It was a car that

was easy to work on. There were big parts of

the developing world, of course, at this point in the nineteen fifties, where the roads were bad, where there weren't very many mechanics, and so Volkswagen actually builds a factory in Brazil that winds up cranking out cars for Latin America.

And you know, the Beetle is fuel a vision, it is rugged, it is easy to work on, becomes a very popular car in the developing world. Yeah.

You could open the trunk and the engine is right there.

You don't have to lean over it or get under the car. You can fix everything right away, which comes

in useful if you're on the Pan American Highway.

Prong three, Prong three, Prong three was.

And this is the hard one. Sell the Beetle to

rich countries, and one rich country in particular, the one that kicked your ass in World War two and is the biggest car country in the world.

Right referring to of course, to the United States of America.

And this is tough, right, because America had invented mass barcating of cars. They have at this point, but probably

at least the three big car manufacturers in Detroit churning out cars.

They do not need another car in America. Yeah. There

was a German executive around this time who said selling Volkswagens to America would be like trying to sell American beer in Bavaria. Like, they don't want what you're selling.

They don't need what you're selling. They got it already.

Yeah, and especially if your car is associated with Adolf Hitler, it seems like it's not going to work.

But of course it did in a very delightful way.

We'll talk about that after the act and we are back from the app So let's talk about the cars Americans are buying in the late nineteen fifties.

If you were shopping for a car, you wanted a car that was big, a big slab of car, boat of car, a big, heavy rectangle to impress your neighbors.

Maybe it had a lot of chrome. It probably had

tail fins.

Oh, absolutely, big hood ornament, shiny hubcaps.

And almost certainly that car was made in America. So

in every way we're talking about the opposite of the Volkswagen Beetle, which is small, round and made in Germany.

But you put it that way, it's just funny, right.

You could picture it as a quaint thing you see in the Netherlands.

Yeah, like on some little stone street. But in Dallas, Texas.

On Dallas, Texas, it's going to get run over by a Chevrolet like a little bug.

And at the time Americans were really the way they were shopping between cars was by looking at their amenities and their upgrades. Right, Oh, does it have the new

air conditioning? Does it have a electric reclining seats? I mean,

this is the height of luxury. And Jacob, you've put

a picture in here of the dashboard of a Volkswagen from around this time. What I love about it is

the upgrade it has is the Bluemen vasin. It is

a ceramic vase. It looks to be bolted to bolted

right next to the radio on the dashboard. And in

this picture there's three lovely I don't know, Adleweiss or something in there.

Fresh flowers. There are fresh cut flowers in this German

porcelain vase that is an optional extra, right, and it's perfect right. Put this little car with this little vase

with the little flowers next to the giant Ford or Chevy with its electric seats and air conditioning, and it just looks like a joke. And this is how American

auto executives saw this car as a joke that they didn't care about because it's ridiculous. And this again, as

with the poorly functioning factory in the mid forties, this again is a weird kind of lucky break for Volkswagen because since the executives don't take the car seriously, they're not worried about it as a threat. They're not demanding

tariff protection against it. They're like, sure, you want to

sell your cute little car to twelve people in America, go ahead, And that is in fact what happens. But

initially it is a truly tiny percentage, as in less than one percent. But that tiny number of people, I guess,

as with you know, sort of classic early adopter. Maybe

they love their Volkswagons, right, they feel like they have discovered this special, different car.

And this came at a very particular moment in American history, which is lucky for Volkswagen. Right, Americans are getting rich.

It's the nineteen fifties, right, they won the war. Things

are going very well in America, so they have extra disposable income. Plus women are starting to go in the workforce,

so they are looking at having more than one car.

And if you have your big boat.

Of car parked outside of your suburban home, why not get a little tiny car to go with it. It

makes total sense.

Yes, yes, Volkswagen was the second car, and it was particularly popular among women. There's this one woman in Ohio

who's quoted in that excellent Bernard Reager book The People's Car.

She said her Volkswagen lets me be the boss when I'm behind the wheel.

It might have stayed a novelty car in America until something happened in nineteen fifty nine. It was a big,

big deal in a small, small place. It was a

magazine ad.

How amazing. Can we just pause for a moment and say,

there's an error where a magazine ad ante any thing where anything in a magazine was important. I'll take it.

Have you seen page forty nine?

So this ad was made by an ad agency called Doyle Dane Burnbuck Burnback.

Was like I think he gets shouted out in Madman.

He was this guy central to this creative revolution in advertising going on around the time where ads are getting more interesting and more creative, and this particular ad is one of the most famous ads of all time, and in part it's famous because it was so different.

So car ads in the nineteen fifties, if you've ever seen them, it's often a guy smoking a cigarette with a fedora on right, and maybe he's wearing a tuxedo, and there's a beautiful woman in.

An evening gown.

It is the height of luxury. It is saying you

are going to live large in this automobile. Yeah, there's

a great, big, shiny, full color car, you know, sparkling.

Let's look at this Beatle ad and just talk about it. Right.

You look at the ad and the first thing you see is nothing like It is mostly empty space. And

then in the top left corner of the page, really small, kind of like off in the back you cover it with your thumb, there is a little black and white picture of a Volkswagen Beetle, a little photo of a little car. And then most of the way down the

page is the headline think Small, which is hilarious. Yeah,

at the time, it is hilarious.

It's all the advertising you've ever seen in your life is saying think big, and at this moment someone's saying think small.

And you smile and you read.

There's a whole bunch of text talking about how great this car is, but it's also tiny. Think about the

time that this ad is hitting, right, nineteen fifty nine.

What do we think of when we think of the fifties, We think of like consumerism, We.

Think of conformity, man in the gray flannel suit. And

so the calculation was that there was some number of Americans who you know, who were ready for something different, who were ready for something that was counter to the culture, if you will, perfect in this decade of the nineteen sixties.

Perfect timing. Teenagers adore this thing. They start to put

pictures of it, not you know, racing cars on their walls.

Right, and they actually tear the ad out of whatever Life magazine and peanut on their wall.

The agency has another ad that says, if it runs out of gas, it's easy to push.

That one is really good, right, like it is making fun of itself. There's another one that is sort of

more sly it's a big picture of a beetle, and then the headline below it says lemon.

Yeah, it says lemon, and the car looks like a half lemon. So that's funny. But lemon is also a

slang term for a terrible car, as in that guy saw me a lemon. The wheels felm.

Yes, but so so you think that's what they're saying.

But then you read the copy below the headline and it says, you know, the problem with the car isn't a bad engine or unreliable breaks. It's a blemish on

the chrome trim of the glove compartment, spotted by Inspector Kurt Kroner at the Wolfsburg factory. Very very interesting, right.

It comes off as self deprecating, but when you read it it's actually the opposite. It goes through point by point,

how precise and exacting the engineers a Volkswagen are. It

ends like this, This preoccupation with detail means that the VW lasts longer and requires less maintenance by and large than other cars. It also means a used VW depreciates

less than other cars.

Right, So here they're not like, oh, you can push it or whatever. They're not pitching it as a smaller

car or a cheaper car. They're pitching a better car,

a more reliable car, a car that holds its value.

And I think this is you know, foreshadowing a couple things we're going to see more broadly in global business in the years to come after this. One is the

rise of foreign car makers in the US, who are going to obviously build reputations for reliable cars. And two,

even bigger is this global brand that is developing for German manufacturing in general. Right, Germany as this world leader

at building precise, efficient, reliable stuff, which does drive their economy through the twentieth century and into the twenty first century.

And it's essentially saying that American cars and turns out all of American industry have not really had competition, uh huh, And so they've been on top for so long that maybe they're a little bit lazy.

Dare we say they're cutting corners? And certainly, you know,

the German economy is going to run on making fancy complicated machines cars, but also like big machinery that builds other machines and selling it to the rest of the world.

Like they are in fact great at that.

You know. I was talking to a professor who a

historian who studies the car industry, and I was talking about the amazement that the Germans and the Japanese in this era, the people whose countries were destroyed, the losers of the war, end up having this huge dominance in imported vehicles over the sixties and seventies. And he said,

one of the reasons is that the American factories at this point were thirty forty years old, and even though they had to rebuild them from scratch, the Japanese and German factories could put more modern techniques, modern machines. You know,

it's a brand new factory, and so could actually put out a product that was better than the old Detroit plants.

I buy it. It's interesting, and for purposes of our story,

it means that the beetle, with the push of this ad campaign takes off in the US. Sales go from

one hundred thousand a year to one hundred and fifty thousand to two hundred thousand. Surfers are driving them, Teachers, moms, hippies.

Of course, people start having beetle races. And this is

how we get to that moment we talked about at the beginning of the last episode. That moment in the

late nineteen sixties when Disney is testing cars for a racing movie, and.

Remember they park all these different cars outside the commissary on the lot and have the people who work at the studio walk around and just like try out the cars, open the doors, sit behind the wheel. And what they

notice is that when people see the Volkswagen Beetle they do something unusual. They pet the car, a little petting

of the car like it's like it's a cute puppy.

Or an animal. They were gonna call the movie car

Boy Girl, but people loved the Volkswagen so much that they wound up calling the movie the love Bug. The

Beatle in the movie had a name. It was Herbie.

Watched it when I was a kid, and kind of amazingly, when Disney goes to Volkswagen is like, great news, We're gonna make your car the star of a movie. The

executives are like, hmm, will this car in the movie It's gonna be like sentient and have a mind of its own and drive around San Francisco.

Will that make people think Beatles are unreliable? We're not

so sure about this.

Or aggressive or aggressive And actually, if you watch the movie, of course it is a Beetle, but nowhere in the film is they're referred to as a Volkswagen.

And yet it is a big, long commercial. That's what

the New York Times pointed out in their review of the film.

Yes, and it was a hit. They were sequels and reboots.

Shout out Herbiego's Bananas. And in nineteen sixty eight, the

year that The Lovebug premiered, three hundred and ninety nine thousand, six hundred and seventy four Beatles were sold in the US.

And this was it.

This was actually peak Beetle, not necessarily because of any problem with the Beatle. But there were other foreign cars

now who are following Volkswagon's lead, specifically, Toyotas and Hondas were coming in by the boatload. At this they had

entire ships that could carry four five thousand cars, unloading them in California and just rolling them off right, And the Beetle did still have life left in it. In

nineteen seventy two, the fifteen millionth seven thousandth and thirty fourth Beetle rolled off the production line. Beating the record

set by the model t Ford for the best selling car of all time.

And I will note sometimes people say the Toyota Corolla is the best selling car of all time, But the trick is it's not the same car. Toyota has been

making a car called the Corolla for decades. But if

you look at a Corolla today and look at a Corolla twenty five years ago, they look nothing the same.

The amazing thing about the Beetle is if you look at the Beetle that Ferdinand Porsche designed in the nineteen thirties and the one that came off the line in nineteen seventy two, they look basically the same.

The last final Beetle rolled off the production line in Mexico in July of two thousand and three, seventy years after Hitler started to rant about a people's car.

Seventy years. Yeah, they made more than twenty one million

Beatles over the course of that time. And by the way,

do you know who was the chairman of Volkswagen in two thousand and three when that last Beatle came off the line. I know, but I can't pronounce his name,

Ferdinand Pierre. I can't either, who was the son of

Anton Pierre and the grandson of Fernand Porsche. So that's

the end of the Beatles story, right, best selling car of all time, dreamed up by Hitler, beloved of hippies and people around the world. We've talked about it for

two episodes, and like, I'm curious, Robert, like, when you step back, where's this sort of land for you? What

are you left with?

So two things come to mind. The first one is

about the design of the Beatle. When we looked at

that first picture of Adolf Hitler looking at the very first model of the car, before they'd built a single one, it looked almost identical to the car we see today.

There was something about it, a beauty about it that survived for seventy years and made the car successful.

Okay, so that's one. What's the other one?

And the other one is about resiliency. Think about Germany

after the war. There's probably rarely been a country that

is as devastated as Germany was after World War Two, and then this German economic miracle is happening within twenty years, and so in some ways, I'm like, there is an amazement that when a country has nothing using some wise decisions, good economics, world trade that we talked grows the pie.

You can actually make a country like rapidly improved. I

mean it's It is an inspiring story for any country that's facing any sort of difficulty, like if Germany can do it, other countries can.

Do it too. I love it. It's a story that

starts with Hitler and has a happy ending. I'll take it.

Our producer is Gabriel Hunter chang Or engineer Sarah Bruguier, and our showrunner is Ryan Dilly. I'm Jacob Goldstein, and

I'm Robert Smith. We'll be back next week with another

episode of Business History, a show about the history wait for it, of business

Volkswagen Beetle

Dodge Spirit

Ford Model T

Toyota Corolla

Toyota Car Toyota

Original notes