SWOT Analysis of Volkswagen: Strengths & Weaknesses 2021

NameVolkswagen AG
HeadquarterWolfsburg, Germany
CEOHerbert Diess
Revenue252,632 million EUR (2019)
Profit13,887 million EUR
CompetitorsToyota Motor Corp, Daimler AG, General Motors Co, Honda Motor Co Ltd, Nissan Motor Co ltd

Company Overview

Volkswagen AG is one of the leading automobile manufacturers with a global sale of 11 million vehicles in FY2019 to most of the world: Europe, South and North America, Asia-Pacific, and other markets. It stands out as the provider of top quality and technology sophisticated vehicles.  

Except for automotive businesses, the group also covers financial services, which contributes EUR 40 billion and makes up 15.89% of the group’s total revenue in FY2019. It includes business activities such as dealer and customer financing, direct bank, insurance, fleet management, and mobility. Let’s now perform VW’s detailed SWOT Analysis.

Volkswagen Strengths 2021:

  • Strong brand portfolio

VW AG has more than 10 independent brands within 3 main automotive divisions: passenger cars ( Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Porsche, Volkswagen Commercial Vehicles, and others), commercial vehicles (Scania vehicles and services, MAN), and power engineering unit. The strongest business area is passenger cars which bring 72% to the group’s total revenue in FY2019. 

  • Impressive global presence and heavy investment into R&D

Having 124 production locations over the globe, among which 72 are focused in Europe, Volkswagen Group pays close attention to R&D to keep up with technological advances. In 2019 the group filed 7,614 patent application for inventions which focus on driver assistance systems and automation, connectivity, alternative drive systems, and lightweight construction. 

Increased 4.9% from FY2018, R&D of Automative division received funding of EUR 14.3 billion in FY2019 which compromise up to 6.7% of Automative division sale revenue.  

Even though there is the spread of the pandemic in 2020, the group continues to reinvent several brands and present new models such as ID.4 its first all-electric SUV, Caddy California a camper van with bed and kitchen, Enyaq iV electric crossover, and others.

VW Group Vehicle Production Locations. Source: Annual Report 2019

  • Partnerships with leading companies

Strategic partnerships with Microsoft, Infineon, Cree/Wolfspeed, and AVL list accelerate the transformation of zero-emission and autonomous mobility. In 2019, VW AG and Ford Motor Company invested in Argo AI for the development of autonomous driving. The total investment reached $2.6 Billion. They also collaborated with Amazon Web Services in building a digital production platform that would decrease the production cost of the group.

Volkswagen Weaknesses 2021:

  • Rising Debts 

In FY2019, VW AG already reported an increasing amount of third-party borrowing reaching EUR201 billion increased from EUR190,8 billion in FY 201. By Sept 30, 2020, the debt continues to rise reaching EUR 210,8 billion, where almost 90% of it comes from the financial services division. 

  • Degraded public image

When Volkswagen AG was caught on manipulating the test result for CO2 in 2015, the group was fined accumulating around EUR 30 billion in various countries. The reputation of the group consequently has been strongly damaged.

With ongoing lawsuits over the globe, the group would continue to pay millions in fines and require some time to rebuild its reputation, especially in the USA market.  

Volkswagen Opportunities 2021:

  • European Green Vehicles Initiative 

Committing to the Paris Agreement on climate protection, VW AG is targeting to zero-emissions by 2050. By the end of 2022, the group is allocating over EUR 32 billion for e-mobility, autonomous driving, digital connectivity, and new mobility services. The group is also planning to sell 3 mln all-electric cars per year and launching 50 purely electric-powered models by 2025. Their total investment in digital and electric vehicle technologies will exceed EUR 73 billion by 2025.

  • Strategic Investments

Working towards transformation to e-mobility and digitalization, VW AG is planning to expand its product into electrification and powertrain. The group is planning to open new factories in China, the US, and eastern Europe. 

  • Together 2025+ strategy

Committing to ensure its profitable and long-term growth, the group developed Together 2025+ strategy which consists of five modules: Best Govenrmenace, Best Performance, Best Brand Equity, Software-enabled Car Company, and Excellent Leadership.  

  • Diversity of market segments 

Even though the group is well established, its presence in an emerging market such as South East Asia, India, Russia still has a certain market potential to explore. 

Volkswagen Threats 2021:

  • Covid-19 pandemic and volatile of financial market

Due to the Covid-19 pandemic, all the aspects of the group have been influenced especially customer demand, production, and supply chain. The net cash flow of the automatic division decreased by EUR 10.4 billion to EUR -4.8 billion in the first half of 2020. The Volkswagen Passenger Cars brand sold 39,8% fewer vehicles for the first half of 2020 than the same period of last year. 

The turbulence of uncertainty on the financial market and the changes in exchange rates, interest rates and availability/price of raw materials might also lead to the financial risk of the group. The group’s share price had dropped sharply in Q1 2020 and slightly recovered in Q2 2020. Nevertheless, it still much lower than the level at beginning of the year. 

VW AG (VOW3) share price drops due to volatility of the financial market in 2020. Source: VW AG official website

  • Intensive competition

The automotive industry is highly competitive. It is influenced by fast technological development and the presence of strong candidates with solid operations and financial resources such as Toyota Cor, Daimler AG, General Motors Co, and others. The VW AG needs to stay ahead by constant innovation, adjustments of its product portfolio to market needs, as well as efficient cost management, and expanding the market potentials. 

Volkswagen SWOT Analysis Conclusion:

  • VW AG currently faces multiples challenges such as intense competition, the volatility of the market, and damaged reputation due to diesel issues. Nevertheless, it’s still one of the world leaders in the automotive industry. It has decent investment into R&D, global coverage of manufacturing sites, a variety of products offering with impressive sales of EUR 252 billion in FY2019 all over the globe. 
  • With the group’s strategy of Together 2025+ and transformation toward e-mobility and digitalization, it continues to keep the leading position and utilize its advantages to stay ahead of its competitors. 


  1. Global Data: Volkswagen AG (VOW3) Financial and Strategic SWOT Analysis Review, April 2019
  2. VW AG Annual report 2019 and Interim Report for Jan-Sept 2020 
  3. Car & Driver: Everything you need to know about the VW Diesel Emissions Scandal, Dec 2019
  4. VW AG Strategy Together 25+ official VW Website, 2020
  5. CNBC: Volkswagen closes $2.6 billion investment in self-driving start-up Argo AI, Jun 2020
  6. Reuters: VW boosts investment in electric and autonomous car technology to $86 billion, Nov 2020

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