Volkswagen was originally established in 1937 by the German Labour Front (Deutsche Arbeitsfront) in Berlin.[5] 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.
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.[6] 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).[7]
In 1934, with many of the above projects still in development or early stages of production, Adolf Hitler became involved, ordering the production of a basic vehicle capable of transporting two adults and three children at 100 km/h (62 mph). He wanted all German citizens to have access to cars.[7] 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 32 RM a week).[9][10]
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 990 RM. 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[11]. However, the entire project was financially unsound, and only the Nazi party made it possible to provide funding.[12][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 May 28, 1937, Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH ("Company for the Preparation of the German Volkswagen Ltd."), or Gezuvor[13] for short, was established by the Deutsche Arbeitsfront in Berlin. More than a year later, on September 16, 1938, it was renamed to Volkswagenwerk GmbH.[14][15]
