The Beetle's Brothers

In a few months, Germany's perennially astonishing Volkswagenwerk will roll out the 13 millionth copy of the car that is known at Wolfsburg as "Type 1" --and to the rest of the world as "the beetle." The builders of the bug are less exultant over another statistic, however. Type 1, first manufactured in 1945, has already exceeded by five years the 19-year production span of Henry Ford's Model T--the Tin Lizzie that old Henry kept on too long, until it nearly carried him to ruin. Demand for the beetle remains strong, but VW fears getting stuck with a museum piece. Its solution: to become a German General Motors, offering a wide variety of models for different tastes and budgets.

The General Motorization of VW has just advanced significantly. Stockholders of one of Germany's smallest but soundest automakers, NSU Motorenwerke, voted to merge with a Volkswagen subsidiary, Auto Union. They thus formed a combine that could rank on its own as Germany's third largest automaker. NSU, which turns out four basic models, will contribute more than $140 million of the subsidiary's total $400 million in sales this year, and a valuable reputation for innovation as well. It devised the highly efficient Wankel engine, which powers the popular new RO-80 sedan (price: $3,580).

Sportier Company. "Volkswagen can afford to offer several lines," says Kurt Lotz, the elegant and imposing VW chairman. The line-up now stretches from sub-beetles to Mercedes-sized sedans. Auto Union's new Audi 100, an 80-h.p. model that sells for $2,223, has surprised Wolfsburg executives by competing strongly with the 411, VW's stolid, 68-h.p. entry in the medium-priced market. The basic beetle, which still accounts for nearly two of every three VW sales, is about to get some sportier company. In February, VW entered a joint development venture with Porsche; soon they will be producing a fast, mid-engine two-seater, the Volksporsche.

The balance sheet suggests that Volkswagen could rest easy. In 1968, sales of the world's fourth biggest automaker (after the U.S. Big Three) rose 25%, to nearly $3 billion--and they are running 12% above that rate so far this year. The company's profits advanced 21% last year, to $85 million. Still, VW faces special perils. Revaluation of the German mark (see Money, page 90) could cut into exports by raising prices in foreign countries, where the company does more than three-quarters of its business. VW is also being tail-gated by hustling Japanese automakers. Last year, Japanese competition in Australia forced VW to close down assembly lines that had once produced more than 20,000 beetles a year; the equipment now assembles cars for Japan's Nissan Motor Co.

Germany's largest exporter is most vulnerable in the U.S., its biggest foreign market. The company shipped a record 570,000 cars there in 1968, but its 51% share of the American market is under direct attack by the Japanese and by Ford's new $1,995 Maverick. In its first two weeks on sale, the Maverick has been selling briskly but somewhat off the pace set by the then-new Mustang in 1964. So far, it has made no appreciable dent in Volkswagen sales, but next year it will be joined by VW-sized cars now being designed by G.M. and American Motors.

A more immediate threat to Volkswagen is a revival of the small-car safety issue. Films of crash tests involving Volkswagens and bigger Detroit models have been run off at Senate auto-safety hearings. The films showed a lower "survivability" among VW occupants, prompting Crusader Ralph Nader to call the VW the "most dangerous car on the American highway." The prospect of costly new safety rules--for example, a minimum distance between the passenger's head and the windshield --deeply troubles Volkswagen.

Further diversification may ease these difficulties. In Germany, Lotz seeks more mergers. VW has research and development agreements with Daimler-Benz as well as with Porsche. He is also looking for what he calls "cooperative efforts that reach across the border." Some observers are intrigued by the fact that NSU has an R & D contract with France's Citroen, which is effectively controlled by Italy's Fiat. That serpentine connection could ultimately open the way for cooperation between Europe's Big Two.

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