Volkswagen Evergreen Beetle Car: Enduring Principles for Living Legacies

Volkswagen recently advertised in India the commercial launch of its iconic small car, Beetle. Sporting the almost similar exterior that made the car a folklore for decades from its first launch in 1938, the Beetle of today incorporates ultra-modern technologies. The author of this blog post is gratified that the launch coincides with the topic of retro-futurism which the author has discussed in his recent blog post titled “What Palm Holds, Eyes Behold: The Retro-Futurism of iPhone SE”, Strategy Musings, April 18, 2016. (http://cbrao2008.blogspot.in/2016/04/what-palm-holds-eyes-behold-retro.html). Without doubt, the arrival of Beetle in a new avatar is a striking example of retro-futurism, and reinforces the insights of the previous blog and offers additional perspectives.

Some comparisons and contrasts with Apple SE are also inevitable and quite necessary. 

Fundamentally, Apple SE being an electronic product and Beetle being an automotive product they are as different as chalk and cheese in design, manufacture and usage. Yet, they represent, in real time context, the relevance and practicality of retro-futurism as a concept. They also demonstrate that ‘retro’ can be as recent as four years (as is the case with Apple SE) and as distanced as eighty years (as is the case with Beetle). Given the thousands of products that have been designed, developed and used as well as rendered obsolete and phased out over all through the four hundred years of successive industrial revolutions, the impact of retro-futurism as a practical paradigm is self-evident.

Origins, growth and decline

The first Beetle was designed as an idea by Joseph Ganz, a Jewish Engineer in early 1930s. Adolf Hitler, however, grabbed the concept and ordered Porsche to develop a Volkswagen (literally, a “people’s car”). The design and manufacture of the Beetle including building of Volkswagen factory was completed in the late 1930s. Enduring the trials and tribulations of successive world wars, Beetle survived to grow as the most sustained small car design, and Volkswagen as the most dominant European automobile company. The Beetle was designed as a basic small family car at the cost of a motor cycle to transport two adults and three children (Is not Tata Nano a retro-futuristic concept?). It was one of the first to have air cooled rear engine and chassis mounted on torsion bars, and a roundish body looking like a bug!

In its long history, over 21 million Beetles were produced. Beetle’s most successful period was the decade of the 1960s, with it becoming a favourite all over the Americas and Europe. However, the emergence of new global designs, especially from Japan, brought its glory down. Volkswagen had to officially end the declining production run of Beetle in 2003, worldwide. There is no denying that Beetle was the most successful rear engine design and had little spec to spec competition in its class. Volkswagen itself had to go through several iterations before its successor Golf could be perfected and popularized.

Interestingly, Volkswagen attempted to update Beetle in 1995 itself with a redesigned vehicle based on its Polo platform. It had the same exterior but used a higher horsepower engine and multi-speed gearbox. The final edition of the New Beetle happened in 2010, marking the demise of the New Beetle as well. The phase-out of the New Beetle demonstrates that there is a difference between the ongoing requirement for annual updating of automobiles and retro-futurism as a distinctive repositioning. Typically, retro-futurism needs to deploy a few breakthrough approaches to breathe new life into the retro designs.

Upgrade versus reinvention

Over the first twenty years, Beetle had continuous upgrades which by today’s standards would look very marginal. For example, the engine capacity moved from 1 litre to 1.2 litre and engine power moved from 24 HP to 36 HP. Elimination of starter button, repositioning of ash trays, redesign of bumpers, windows, turn lights and fenders were all that to claim for upgrades. The first syncromesh gear box did not arrive till the 1960s. Such minor changes continued to propel Beetle until the fade-away years of the 1970s, which brought hot new competitive designs from Japan on one hand and stringent fuel economy and emission standards in US and Europe on the other. Yet, supported by improvements like electronic fuel injection internally and convertible body designs externally, Beetle moved on with a niche positioning until the complete phase-out in 2003.

Volkswagen realized that notwithstanding the decline in sales, there was a huge reservoir of goodwill for Beetle as a design concept and owner experience. The New Beetle which was designed in the late 1990s was aimed at making the car contemporary with 1.8 litre capacity engine developing 150 HP, transverse mounting of engine, nippier drive train, independent suspension, bright colours, ABS brakes, high intensity discharge headlights, traction control, and other stylistic changes. Yet, the combination of the largely untouched Beetle exterior profile and the more powerful Golf internals as the new Beetle was not enough to fuel a new rally for the new Beetle. This is ample proof that retro-futuristic designs must not only retain the best of the old but also integrate the best of the future.

Digital Beetle 2016

After decades of incremental mechanical engineering as above, the Beetle is now reinvented as Beetle for the millennials’ era incorporating digital technologies to make the much loved buggy car future-proof. It is a combination of classic style and contemporary engineering in a future-ready digital platform. It retains the iconic two-door design and rear wheel drive but has now a larger engine series capable of delivering up to around 200 HP of power and up to around 30 KgM of torque, previously unthinkable for such a compact car. It also sports a seven speed automatic transmission, large alloy wheels, keyless starter, light sensing Xenon headlamps, electronic braking distribution, anti-lock braking system, traction control, electronic stability programme, six air bags and digital multimedia. It features all the digital bells and whistles that make travel in a contemporary car a joyous ride of safety and pleasure.

With affordable pricing, the Digital Beetle could scale up to sell in millions again. With premium pricing it could just be an everlasting niche product, selling in just thousands. Either way, the product could continue to retain its iconic status even decades later. Beetle reflects the requirements of retro-futurism brought up in the earlier piece on Apple SE: (i) A product should be developed with a state of elegance that could enable it to qualify itself as a new product even years later, (ii) Recalling a retro design has to be more than for emotional or reminiscence reasons; it should bring the latest technologies within the restored contours, (iii) The higher the size of the industry market base (and its growth rate), the greater is the potential for retro-futuristic products, (iv) Retro-futurism is not about using old dies, moulds or chassis for cheap products but is more about creating superior products with re-optimized cost and technology balance, and (v) importantly, Retro-futurism should never be mere refurbishment; it must be on reinventing the ‘old’ as a contemporaneously relevant ‘new’. 

Living legacies

Additionally, however, there are a few important lessons from Beetle that supplement the above. It is not uncommon to have legends and legacies. What is relatively uncommon is for such legends and legacies to live on physically across generations, which is not impossible as Beetle demonstrates. The enduring living legacy principles are as follows.

Inspirational designs have no expiration risk. As demonstrated by Apple SE and Beetle, inspired, and inspiring, design have no shelf life. They can survive and succeed in perpetuity. Indian epics and Raja Ravi Varma paintings are irrefutable evidence on an entirely different level. This is because inspirational designs and products appeal to the spirit as much as to the eye.

Structured teams can continuously develop innovative themes to perpetuity. History has it that Beetle concept was the brainchild of one innovative designer, way back in 1930s. By virtue of the design getting passed to Porsche, the established car maker, the concept became a reality, with continuous updates by Volkswagen teams. Designers and Developers in harmony can embed lasting value in products.

What lasts in crisis outlasts competition. Beetle was a pre-World War car. Though essentially a civilian design, the product was hijacked for military purposes. Its manufacturing facility was ravaged in bombings. Lasting through the crises, Beetle proved its mettle as a product that is crisis-proof, and hence as a product of sustainable success over generations.

Global businesses can be built on single but marvellous products. Many companies and leaders believe that they require multiple products to scale up, more so globally. While such a strategy has its relevance, Beetle is one example (along with scores of others) that one great product can create, or at least lay a lasting foundation for, a global corporation. Sony, Intel, Microsoft, Facebook, Google, and several other global corporations, each founded on just one core product, are living examples.

Glorious past gives lasting legacies but unflinching faith shapes living legacies. Managements that are driven by numbers of margins and viability as well as phase-outs and fade-outs lose track of the evergreens they have in their midst. It requires more than ordinary managerial skill and leadership insights to identify, support and nurture designs and products of perpetual value.

It is an evolved human characteristic to be creative and innovative and to constantly invent or discover something new, and build new businesses around it. While there can be no two opinions that it is a natural path, it is equally important to retain the soul and spirit of the original innovation and creativity. The paradigm of living legacies, as discussed herein, inspires us to recognize that certain types of unique innovation and creativity are everlasting in nature.   

Posted by Dr CB Rao on April 28, 2016

The Beetle-Ambassador Paradox: The Essence of Product Perpetuity

Beetle subcompact car produced and sold by Volkswagen of Germany worldwide is an iconic product that came to be timeless in its acceptability to the young and old alike across generations. First designed and produced by Porsche in 1934 as a family car, Volkswagen sold over 20 million Beetle cars until the mid-1980s. It was probably the first car with an air cooled rear engine.  Its peak production was 1.3 million units a year but dipped to 30,000 units a year, prior to its production halt. It also became a car that signified multi-country production and was ‘reverse exported’ from an emerging country to the country of origin, Germany. Beetle is now back again, evolving for the last several years as an urban car from Volkswagen for a fun loving modern generation of the 21^st Century.   

Ambassador compact car produced and sold by Hindustan Motors (HM) of India is in its own humble way an iconic product in India that became synonymous as much with the inception and growth of the Indian automobile industry in the 1950s as the frustration of technological obsolescence in India. First made by Morris Motors Limited as Morris Oxford II model in 1956 in the United Kingdom, it began to be manufactured by HM in 1958 under a technical collaboration at its Uttarpara plant in India. From a dominant market share in a diminutive automotive market of India (30,000 cars per annum or so in the 1970s), Ambassador collapsed in output to just 2500 cars per year in a super grown contemporary automotive market in India (3.3 million cars per year presently).

Comparisons and contrasts

Beetle, doubtless, represents a product concept and a product profile that was timeless. Despite the plethora of manufacturers and car segmentations and designs that overwhelmed the world automobile scene from the 1960s, Beetle retained a niche. The car looked the same but continued to integrate internal changes. All said and done, the Ambassador also stayed on as a car mass-produced in India for the longest number of years on the same assembly line in the whole world. No other car made in the world has surpassed this record. In fact, as opposed to Beetle, there was never a long term break in the production of Ambassador. Strangely, Beetle and Ambassador share the rounded, curvy retro looks. The comparisons probably stop here.

Beetle evolved over the years, and reinvented in recent years, as a very modern design that integrated high end electronics with hi-precision mechanicals. In contrast, Ambassador continued to remain the same old car with minimal design changes, except the engines getting updated to newer emission norms progressively. Volkswagen, the producer of Beetle has been  marching on to become one of the world’s largest car manufacturer, with an output of       million vehicles, covering 10 global brands and 200 models, produced in nearly 100 factories and a global workforce of 500,000. HM, the producer of Ambassador has shrunk perilously down, with an output of only a few thousand vehicles of all types, and mounting losses, notwithstanding several product diversification moves based on further foreign collaboration arrangements.

The formula for product perpetuity can be gleaned from the positive profile of Beetle and Volkswagen as well as the negative profile of Ambassador and Hindustan Motors. Possibly, the history of both Beetle and Ambassador indicates that certain products can have a lasting presence, if the manufacturers set their heart on their retention, allied to or independent of product-specific viability, but mandatorily linked to technology, product lines can stay onto near perpetuity. Three critical aspects are discussed below.

Tradition with technology

Product functionalities may change or new ones may emerge but usage traditions remain. As far as automobiles are considered, while the basic functionality of movement or transportation does not change, several others have got added. However, the tradition of a family vehicle, an urban vehicle or urban vehicle remains. How an old basic design is updated to modernity retaining the tradition is the key to product perpetuity. While retaining the original “The Beetle”, new models such as GSR for sporty applications and Cabriolet in the 50s, 60s and 70s branding for lifestyle applications have been added. Power and safety options are offered at the level of a large sedan even though Beetle is a small car. As if it were an ultramodern car, both hard top and soft top variants are offered. All the trappings of a modern car, in terms of electronics and trim are offered. Even if the shell is of vintage design, elegant lines and accessories are used to add to provide a pleasingly modern but traditionally retro look to Beetle. Ambassador which got stuck with the design of the 1950s did nothing of that sort, and the negative results are obvious.

The concept of novel product development combining tradition with technology has wider applicability. The latest to emerge is the smart watch which redefines the traditional concept of wearing a wrist watch with cellular connectivity and communication. The traditional concept of handwriting has been restored with tablets and phablets that can accept writing and drawings while that of physical book reading has been revolutionized with electronic book reading, a few years ago. Many traditional practices like wrist bands and spiritual bands are modernized with healthful metals, elements and electronics, and made contemporary with designs. The concept of retrospective products with futuristic technologies has revolutionized food processing and lifestyle industries. There could be virtually no limits to this trend. Products and functionalities can remain in perpetuity so long as technology updates them to modern functionalities.  

Innovation with investment

Innovation cannot happen without investments – in people, assets and supportive infrastructure. However, investments need viability which in turn comes from a successful product portfolio. Volkswagen did not stop only with Beetle; it continued with aggressive additional product development for multiple segments in global markets. In contrast, HM did not, and could not, go beyond Ambassador for India. Though the company entered, from time to time, into collaborations with world class Japanese automotive giants such as Isuzu (for trucks) and Mitsubishi (for cars and SUVs), the company could not provide the requisite investments to support product diversity that could provide the scale and scope economics which could, in turn, support updating of an aged but popular niche product such as Ambassador. Probably, as a product that was for decades in a sub-scale automotive market of India which was no more than 30,000 cars per annum for 3 manufacturers, Ambassador probably lost the game of innovation from the start.

Innovation and investments, however, require a business sense. What Ambassador could not achieve in India, Maruti-Suzuki could achieve in the same Indian market with aggressive investments, innovative products and intensive marketing. Maruti 800 car was a path breaker. Though it was discontinued a few years ago it is slated for a comeback with more contemporary technological flourishes. Hyundai which blazed new trails, years later, with i10 car is set to keep up the product perpetuity with i10 Grand car. The ability to make timely investments and support product innovation is the essence of enabling product perpetuity. The task becomes complex as well as easy when a product has a number of outsourced components. There are several marquee products and brands in India which can be brought to contemporary standards (Leyland Comet truck, Tata Indica car, Bajaj Scooter, for example) while investing in new products. What Bajaj did not do for the perpetuity of its highly popular scooter (in fact, it killed the product), its originator Vespa has done.

Brands with brain and brawn

Products with perpetuity potential typically enjoy significant brand power, initially and for several years of growth. Ambassador had brand power in India as much as Beetle had in its global markets. Even when products go out of perpetuity, the brand pull remains. ‘s strategy of reinventing a new low cost car model, “Go”, for India and other emerging markets through the revival of Datsun brand is a classic example. Reliance brought out its clothing brand Vimal after several years of retirement. It goes without saying that if investments on popular products on the lines considered in earlier sections are accompanied by commensurate investments on brands, product perpetuity can be ensured. It implies that even when erstwhile popular products face temporary setbacks, it would be a futuristic move to keep the brands in public recall in gross or subtle ways.

For product perpetuity, brand building has to happen with both brain and brawn. The potentially perpetual brands get identified with native traditions in an intuitive yet refined way, oftentimes with emotionally identifiable icons. Air India’s Maharaja and Amul’s little girl are outstanding examples. However, for product perpetuity to occur there must be a one-to-one association between the product and the brand. When companies attempt to leverage popular brands across a product range it becomes difficult to support perpetuity of a product. The ideal conditions are that the product must have a distinctive, even if vintage, design and the brand must have a specific user association. Jeep, Land Rover, Innova and Sumo (all utility vehicles), Comet and Viking (truck and bus), and Lambretta and Vespa (two wheelers) are a few examples. Unfortunately, companies seem to be losing their interest and penchant to build correlated products and brands.

Product perpetuity could present an attractive fallback option for companies in a perpetual rush for product diversity in highly fragmented and intensely competitive markets. Products of vintage standing can be akin to family silver that could be worth a fortune when chips are down; such products need to be tended to technology, investments and branding in a manner exclusive to them, however. There is nothing to be bugged about dated models as long as they are cared for enough not to be outdated, as the classic example of Volkswagen Beetle (or “Bug” as it is also popularly called) demonstrates!

Posted by Dr CB Rao on October 12, 2013