1932–1938: People's Car project
Model of Porsche Type 12 (Zündapp), Museum of Industrial Culture, Nuremberg
Volkswagen was originally established in 1937 by the German Labour Front (Deutsche Arbeitsfront). In the early 1930s, the German auto industry was still largely composed of luxury models, and the average German could rarely afford anything more than a motorcycle. As a result, only one German out of 50 owned a car. Seeking a potential new market, some car makers began independent "people's car" projects – the Mercedes 170H, Adler AutoBahn, Steyr 55, and Hanomag 1.3L, among others.
VW logo during the 1930s, initials surrounded by a stylized cogwheel and swastika wings
The trend was not new, as Béla Barényi is credited with having conceived the basic design in the mid-1920s. Josef Ganz developed the Standard Superior (going as far as advertising it as the "German Volkswagen"). In Germany the company Hanomag mass-produced the 2/10 PS "Komissbrot", a small, cheap rear engined car, from 1925 to 1928. Also, in Czechoslovakia, the Hans Ledwinka's penned Tatra T77, a very popular car amongst the German elite, was becoming smaller and more affordable at each revision. Ferdinand Porsche, a well-known designer for high-end vehicles and race cars, had been trying for years to get a manufacturer interested in a small car suitable for a family. He felt the small cars at the time were just stripped down big cars. Instead he built a car he called the "Volksauto" from the ground up in 1933, using many of the ideas floating around at the time and several of his own, putting together a car with an air-cooled rear engine, torsion bar suspension, and a "beetle" shape, the front hood rounded for better aerodynamics (necessary as it had a small engine).
In 1932, with many of the above projects still in development or early stages of production, Adolf Hitler got involved, ordering the production of a basic vehicle capable of transporting two adults and three children at 100 km/h (62 mph). He wanted his German citizens to have the same access to a car as the Americans. The "People's Car" would be available to citizens of the Third Reich through a savings plan at 990 Reichsmark ($396 in 1930s U.S. dollars)—about the price of a small motorcycle (the average income being around 32RM a week).
Despite heavy lobbying in favor of one of the existing projects, it soon became apparent that private industry could not turn out a car for only 990RM. Thus, Hitler chose to sponsor an all-new, state-owned factory using Ferdinand Porsche's design (with some of Hitler's design constraints, including an air-cooled engine so nothing could freeze). The intention was that ordinary Germans would buy the car by means of a savings scheme ("Fünf Mark die Woche musst du sparen, willst du im eigenen Wagen fahren" – "Five marks a week you must put aside, if you want to drive your own car"), which around 336,000 people eventually paid into. However, the entire project was financially unsound, and only the corruption and lack of accountability of the Nazi regime made it possible.[Note 1]
Prototypes of the car called the "KdF-Wagen" (German: Kraft durch Freude – "strength through joy"), appeared from 1938 onwards (the first cars had been produced in Stuttgart). The car already had its distinctive round shape and air-cooled, flat-four, rear-mounted engine. The VW car was just one of many KdF programs, which included things such as tours and outings. The prefix Volks— ("People's") was not just applied to cars, but also to other products in Germany; the "Volksempfänger" radio receiver for instance. On 28 May 1937, the Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH (sometimes abbreviated to Gezuvor) was established by the Deutsche Arbeitsfront. It was later renamed "Volkswagenwerk GmbH" on 16 September 1937.
VW Type 82E
Erwin Komenda, the longstanding Auto Union chief designer, part of Ferdinand Porsche's hand-picked team, developed the car body of the prototype, which was recognizably the Beetle known today. It was one of the first cars designed with the aid of a wind tunnel—a method used for German aircraft design since the early 1920s. The car designs were put through rigorous tests, and achieved a record-breaking million miles of testing before being deemed finished.
The building of the new factory started 26 May 1938 in the new town of KdF-Stadt (modern-day Wolfsburg), which had been purpose-built for the factory workers. This factory had only produced a handful of cars by the time war started in 1939. None were actually delivered to any holder of the completed saving stamp books, though one Type 1 Cabriolet was presented to Hitler on 20 April 1944 (his 55th birthday).