From Business History: De-Nazifying the Love Bug: The VW Beetle Story Part II

Summary

Fiasco: From Business History – De-Nazifying the Love Bug: The VW Beetle Story Part II

Pushkin Industries | Jan 21, 2026

Host: Robert Smith
Co-host: Jacob Goldstein

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Episode Overview

This episode of Business History explores how the Volkswagen Beetle—a car designed under Hitler’s Nazi regime—transformed into one of the most beloved and best-selling vehicles in history. The episode covers the Beetle’s trajectory from a symbol of fascism to its reinvention under Allied occupation, through West Germany’s economic miracle, and finally to its unlikely fandom among American hippies and mainstream global culture. The hosts grapple with the deep ethical questions around "de-Nazification," postwar recovery, and the power of branding, while tracing the industrial and economic forces that shaped postwar Europe.

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Key Discussion Points & Insights

1. The Aftermath of WWII and the Fate of German Industry

• Destruction and Moral Reckoning:

  • The hosts begin by dramatizing Germany at the end of the Second World War: its infrastructure shattered and its moral compass deeply compromised.
  • The Allies face a critical question: Should Germany’s industrial capacity be erased to prevent future aggression, or rebuilt for stability and prosperity?
    • Quote:
      • “It is tempting to say that what you should do after two world wars started by Germany... is make it so Germany can never fight again. Maybe just let them make pretzels and beer, and that's it.” — Robert Smith (03:00)

• The Morgenthau Plan:

  • The U.S. Treasury Secretary Henry Morgenthau proposed a radical deindustrialization plan. Jacob reads from the plan itself:
    • Quote:
      • “All industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed.” — Jacob Goldstein, reading Morgenthau Plan (03:39)
  • The plan aimed to turn Germany into “a country of 19th-century peasants farming the land forever.” (04:02)

2. Policy Reversal: Rebuilding for Peace

• Pragmatism Prevails:
  • The U.S. and Britain reject Morgenthau in favor of rebuilding German industry, seeing it as the path to stability and as a bulwark against communism. (04:55–06:29)
  • The British have a special relationship with Volkswagen since the factory is in their occupation zone.
    • “There's a little bit of luck that comes in for the Volkswagen factory because it happens to be in the British section of West Germany.” — Robert Smith (06:29)

3. Ivan Hirst and the Birth of Wolfsburg

• Leadership and Denazification:
  • British officer Ivan Hirst takes over the Volkswagen plant, finding it surprisingly intact and decides to get it running again.
  • He renames the company town from its Nazi designation (“Stadt des KdF-Wagens”) to Wolfsburg, foreshadowing a new era. (07:21–08:03)
• Generating Demand:
  • Hirst persuades British authorities to order 20,000 Beetles for occupation forces—a lifeline for the fledgling company. (08:09)
• Workforce & Ethics:
  • Extreme challenges in rebuilding a workforce:
    • The old pool included Aryan youth (now at war or dead), Nazi loyalists, and former enslaved laborers.
    • Denazification: The Allies review records and fire 228 people for being “too Nazi.”
    • Quote:
      • “How Nazi is too Nazi? It is a question that is central to the rebuilding effort across the western part of Germany.” — Jacob Goldstein (09:13)

4. Extreme Hardship and Miracles (The 1946 Crisis)

• Dire Circumstances:

  • Workers borderline starving (“living on like a thousand calories a day”), living in ex-camp cabins.
  • A brutal winter, frozen ports, and supply shortages shut the plant for months. (10:35–11:21)

• Subpar First Efforts:

  • Hirst manages to deliver 10,000 Beetles, half falling apart almost immediately.
  • Quote:
    • “It’s like that moment in the comedy where the car rolls off the production line, everyone cheers and the wheels fall off and the windshield caves in.” — Robert Smith (11:49)

• Hidden Blessing:

  • The poor state of production means British engineers don’t requisition the plant for reparations, sparing it from dismantlement.
    • Memorable Moment:
      • “This is a terrible vehicle. People around the world are never going to want to drive these so-called Volkswagens. We'll pass.” — Jacob Goldstein, paraphrasing British engineers (12:29)

5. The Marshall Plan and Germany’s “Economic Miracle”

• Policy Shift:
  • Fears of both fascist and communist resurgence prompt Allies to create prosperity instead of poverty.
  • The Marshall Plan and new economic philosophy encourage investment and trade instead of punishment and isolation.
    • Quote:
      • “Let’s make Germany rich and trade with them so they don’t want to hurt us.” — Jacob Goldstein (14:16)
  • This is the beginning of the Wirtschaftswunder—the rapid German recovery. “Trade can bring nations together in a web of prosperity... I know it sounds naive, but I think it’s true.” — Jacob Goldstein (14:42)

6. The “De-Nazification” Leadership Dilemma

• Who Should Run Volkswagen?
  • The hosts detail the messy vetting of possible leaders:
    • Ferdinand Porsche and Anton Piech: Too closely tied to Nazi crimes and the SS, rejected despite their technical prowess; they go on to start Porsche.
    • Heinrich Nordhoff: Had opposed Hitler’s “people’s car” project, but later received Nazi commendations. Ultimately chosen because pragmatic needs outweigh purism. (20:03–23:31)
• Notable Quote:
  • “If Hitler gives you an award, it’s not a great look... but they had to hire someone.” — Jacob Goldstein (23:16)

7. Currency Reform and Productivity

• The Deutsche Mark Arrives (1948):
  • Currency reform stabilizes Germany, enables market economy, and boosts worker productivity. (24:54–26:09)
• Exports Gain Momentum:
  • A weaker new currency makes Volkswagens (and German goods) more competitive worldwide.
    • “Not long after this... in 1949, the British turned Volkswagen over to the newly formed West German government.” — Jacob Goldstein (26:38)

8. Nordhoff’s 3-Prong Expansion Strategy (1950s/60s)

• Domestic Sales:
  • Make car ownership mainstream—lower prices and introduce financing arms for Germans. (28:03–29:08)
  • Shared car ownership plans acknowledged as innovative and “very Western European” (29:08)
• Developing World:
  • Market the Beetle as rugged and easy-to-repair, building a plant in Brazil for Latin America. (29:41–30:26)
• Conquering America:
  • The riskiest bet: selling a “Nazi” car in WWII’s victor nation, now the epicenter of mass-produced automobiles. (30:36–31:15)
  • “Selling Volkswagens to America would be like trying to sell American beer in Bavaria.” — Jacob Goldstein (31:00)

9. The Beetle’s Unlikely American Triumph

• A Cultural Contradiction:
  • In 1950s America, cars are massive, flashy symbols of conformity; the Beetle is “small, round, and made in Germany”—ostensibly everything Americans didn’t want. (35:10–35:46)
  • Early adopters love the oddity, especially as a “second car,” and among women.
    • “My Volkswagen lets me be the boss when I'm behind the wheel.” — Ohio woman quoted by hosts (38:27)

10. Advertising Genius: "Think Small"

• Turning Weaknesses Into Strengths:
  • Doyle Dane Bernbach ad agency produces the iconic “Think Small” campaign (1959), weaponizing self-deprecating humor and minimalism.
    • “You look at the ad and the first thing you see is... nothing. And then in the top left corner... a little black-and-white picture of a Beetle.” — Jacob Goldstein (39:52)
  • The ad undermines American auto norms by lauding simplicity and reliability.
  • Other Ads:
    • “If it runs out of gas, it’s easy to push.” — ad slogan (41:25)
    • “Lemon.” — ad campaign on rigorous quality control (41:42)
    • These messages reinforce a new German national brand: precise, efficient, and reliable.

11. The Enduring Influence of the Beetle

• Manufacturing Advantage:
  • Postwar Japanese and German factories, newly rebuilt, are more modern than aging U.S. plants, giving them an edge just as the market opens up.
    • “American factories at this point were 30, 40 years old... The Japanese and German factories could put more modern techniques, modern machines...” — Robert Smith (44:56)
• Peak & Legacy:
  • The Beetle becomes the best-selling car of all time (surpassing the Ford Model T), with more than 21 million produced. (47:34–48:14)
  • Its basic design remained essentially unchanged for 70 years.
  • The car’s lineage returns to the Porsche/Piech family, a final twist in the saga.

12. Thematic Reflections

• Design and Resilience:
  • The lasting beauty and practicality of the Beetle is a testament to enduring design.
  • The German economic recovery—“the economic miracle”—is held up as an inspiring lesson for all societies:
    • “There is an amazement that when a country has nothing, with some wise decisions, good economics, world trade... you can rapidly improve.” — Robert Smith (49:20)
• History Transcended:
  • The story starts with evil and ends with joy, a rare arc in business or world affairs (50:02–50:07).

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Notable Quotes & Memorable Moments

• “How Nazi is too Nazi? It is a question that is central to the rebuilding effort across the western part of Germany.” — Jacob Goldstein (09:13)
• “Let’s make Germany rich and trade with them so they don’t want to hurt us.” — Jacob Goldstein (14:16)
• “Think small.” — (Advert, discussed at 40:16)
• “It’s like that moment in the comedy where the car rolls off the production line, everyone cheers and the wheels fall off and the windshield caves in.” — Robert Smith (11:49)
• “My Volkswagen lets me be the boss when I'm behind the wheel.” — Ohio woman quoted by hosts (38:27)
• “If it runs out of gas, it’s easy to push.” — Ad slogan (41:25)
• “Lemon.” — Beetle ad (41:42)
• “It’s a story that starts with Hitler and has a happy ending. I’ll take it.” — Jacob Goldstein (50:02)

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Timeline of Key Segments

• 01:57–04:12 — Postwar dilemma: destroy or rebuild Germany?
• 04:56–07:15 — British administration, luck, and the rise of Ivan Hirst at VW.
• 07:46–09:29 — De-Nazification, naming Wolfsburg, practical early recovery
• 10:35–12:44 — Struggles: hunger, broken cars, and a near miss with reparations
• 13:12–15:26 — Policy shift: Marshall Plan and economic philosophy
• 19:23–23:31 — The search for leadership: Porsche, Piech, and Nordhoff
• 24:54–26:38 — Currency reform: the Deutsche Mark
• 27:57–30:26 — Nordhoff’s 3-prong plan: local, developing world, American conquest
• 35:08–38:27 — The Beetle as America’s anti-car and quirky second car
• 39:07–44:42 — The “Think Small” campaign and the rise of German engineering
• 44:42–48:01 — Beetle’s production legacy, peak sales, and global status
• 48:01–50:07 — Reflections: enduring design, resilience, and a rare happy ending

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Episode Takeaway

This episode masterfully traces the journey of the Volkswagen Beetle from a symbol of Nazi ambition to an icon of peace, optimism, and counterculture. It confronts the complexities of historical accountability and the seductive power of consumer branding, and celebrates the resilience of both an industry and a people. The story is a testament to the potential for renewal after disaster, the internationalization of economies, and the ironies that history sometimes provides—where a car invented for fascism is lovingly patted by hippies in California.

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For newcomers:
This detailed, anecdote-rich episode provides both historical context and engaging narrative storytelling—you’ll come away with new appreciation for an object as humble as the VW Beetle, and the complicated threads that weave business, ideology, and culture together.

Transcript

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[Jacob Goldstein]

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[Robert Smith]

Pushkin. Too quick?

[Jacob Goldstein]

No, it was perfect. Pushkin, stop. You got it.

[Robert Smith]

How does a country that is completely destroyed end up making the best selling car of all time? This is business history. Last time on the show, Adolf Hitler had a to do list. It was a pretty evil to do list, but way down on the to do list, he was going to design a car for the German people.

[Jacob Goldstein]

For the German Volk, if you will. It was going to be a Volkswagen.

[Robert Smith]

An engineer named Ferdinand Porsche signed up to design and build the Volkswagen. His son in law, Anton Piech, ran the factory and he ran it with utter brutality. He forced enslaved workers to build the militarized version of the Volkswagen Beetle. And in the spring of 1945, the two guys running the factory flee. The Allies come in and the workers are freed.

[Jacob Goldstein]

And there is this question, a question for the Volkswagen factory and for all of Germany, which is what are the Allies going to do with the factories? What's going to happen to the German economy?

[Robert Smith]

It is tempting to say that what you should do after two world wars started by Germany, Perhaps you should make it so that Germany can never fight again. More than never fight again. Can never produce anything, can't produce a car, A rifle. You want Germany to basically make pretzels and beer and that's it till the end of time.

[Jacob Goldstein]

And this was not just some, like, populist emotional response, right? The. The Secretary of the treasury of the United States of America had exactly this response. His name was Henry Morgenthau. And he put together this plan called, reasonably enough, the Morgenthau Plan.

[Robert Smith]

And it said here.

[Jacob Goldstein]

Oh, you. Yeah, of course, of course.

[Robert Smith]

You get to read from it.

[Jacob Goldstein]

Come on.

[Robert Smith]

This is my favorite part. Within a short period, if possible, not longer than six months after the cessation of hostilities, all industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed. This is saying, like, if there is a machine in it, we will take that machine or smash it to bits.

[Jacob Goldstein]

Yeah. This is basically saying, let's make Germany a Country of 19th century Peasants farming the land forever.

[Robert Smith]

We know, of course, the United States decided not to pursue that plan.

[Jacob Goldstein]

We know, in fact, that the United States and its allies decided to pursue essentially the opposite plan. Instead of destroying the factories that supplied Germany's war machine, the Allies helped the Germans rebuild them better than ever. I'm Jacob Goldstein.

[Robert Smith]

I'm Robert Smith. And this is Business History, a show.

[Jacob Goldstein]

About the history of business.

[Robert Smith]

Love explaining that to people today on the show. How did we get from a moment of utter destruction to a German economic miracle where it became one of the big manufacturing powers in the entire world, world? And how did that lead to a little car that looked something like a bug being driven around the streets of California by hippies and surfers? The war is over.

[Jacob Goldstein]

The war is over. Good news.

[Robert Smith]

Cheers.

[Jacob Goldstein]

Cheers. Allies. The Soviets have occupied the eastern part of Germany and they know what they're going to do with the economy there. They're going to take everything. They're just taking the factories back to the Soviet Union. But the Allies, so the us, Britain and France, they have cut the western part of Germany into three parts, three occupation zones. And the Allies at this point can't really agree on what to do with the German economy.

[Robert Smith]

The Americans were super anti Nazi, fair enough.

[Jacob Goldstein]

The British are obviously also anti Nazi, but maybe they were, like, a little bit less anti Nazi than the Americans. Or like, you could at least say the British were more pragmatic about the situation. For one thing, Britain, unlike the United States at this moment was like flat broke. They had had their economy destroyed by the war, essentially, and they had this chunk of Germany that they were responsible for managing and they couldn't afford to, you know, feed and clothe the Germans forever, they couldn't afford for it to be a ward state.

[Robert Smith]

I mean, they're rationing food in London.

[Jacob Goldstein]

Yeah, yeah, yeah. The British still have a big empire in Africa and in Asia at this time. And so they are used to managing countries that they have subjugated. And they tend to do it without having to deploy that many troops. And what they do is they deploy some small number of people and then they get the locals to kind of run the economy on their own. So they think, maybe we can do this in Germany.

[Robert Smith]

And there's a little bit of luck that comes in for the Volkswagen factory because it happens to be in the British section of West Germany.

[Jacob Goldstein]

And so the British send in an army officer named Ivan Hirst to basically run this factory that the Allies have taken from the Nazis.

[Robert Smith]

I picture him in khakis. I just.

[Jacob Goldstein]

Do you have rolled up sleeves? A hat, a sharp hat.

[Robert Smith]

Time to get to work here, boys.

[Jacob Goldstein]

And he finds when he gets to the factory that about 70% of it is still in good shape, which end of World War II in Germany is pretty good. This is definitely a glass half full situation. And so while the Allies are sort of thinking their big thoughts about what should we do with the German economy, Ivan Hirst thinks, let's see if we can just start making some cars at this car factory.

[Robert Smith]

He is an engineer. What do engineers do? They see a factory and they're like, let's make some cars. We can drive them around.

[Jacob Goldstein]

He does have the good sense to change the name of the town where the factory is. It's a town that the Nazis had built. The Germans, as you remember from last time, had built the town alongside the factory. And they called it. I don't speak German. Stadt des kdf Wagens, which basically means strength through joy. Cars Town, extremely Nazi name.

[Robert Smith]

Yes.

[Jacob Goldstein]

And so Ivan and the British sort of look around town and they see that there's this castle in town or near town, and it's called Wolfsburg, perhaps a Wolfsburg. And so that's what they call the town. And that is still the name of the town where Volkswagen is headquartered.

[Robert Smith]

Slightly less Nazi.

[Jacob Goldstein]

It's not super warm and fuzzy. Right. Wolftown.

[Robert Smith]

Wolf town.

[Jacob Goldstein]

So, okay, so they've denazified the name. He's getting the factory going, and now he needs some demand. Right. If they're gonna make these cars, somebody's gonna have to buy them. The Germans don't have any money. And so Hearst convinces the British to order Beetles to be used for the occupation forces, which again, Very pragmatic. Right. It costs money to make cars in England, to ship them to Germany.

[Robert Smith]

If you even can do that. Right?

[Jacob Goldstein]

If you even can do that.

[Robert Smith]

Yeah.

[Jacob Goldstein]

So the British order 20,000 beetles, Volkswagens, to be delivered in a year, which is way more cars than the factory has ever built in a year. They're just putting the factory back together. And crucially, it is not clear at this point who is actually going to work in the factory and build these cars.

[Robert Smith]

To recap from last time, they had had Aryan youth building the cars. They were drafted off to the war. Then they were using enslaved prisoners, and they've obviously been freed and escaped. And so when you look around, there's also the people who enslaved those prisoners. Right.

[Jacob Goldstein]

The people running the factory who worked.

[Robert Smith]

For the Nazis or who were Nazis. You didn't want them in charge.

[Jacob Goldstein]

How Nazi is too Nazi? It is a question that is central to the rebuilding effort across the western part of Germany. Who can we hire and feel like at least okay about hiring? And who is absolutely too Nazi can never allow them back?

[Robert Smith]

There was the incident we talked about last time in the show, which was the nursery where babies born to the enslaved workers were brought. They were promised they would take care of the children, but they allowed the children to die. Those people clearly are too Nazi.

[Jacob Goldstein]

Right.

[Robert Smith]

Ten members of the staff were tried for murder. Two were sentenced to death.

[Jacob Goldstein]

And then you get to the factory itself, where there were some people, clearly, who were knowingly sending those babies off to die. And Hurst and his colleagues go through the records of the people who ran the factory, and they wind up firing 228 people, including the technical director and the head of operations at the factory. Two Nazi.

[Robert Smith]

So it kind of leaves you really with soldiers returning from the war.

[Jacob Goldstein]

Yeah. And there are lots of soldiers who have been demobilized who are, you know, looking for work. But they are very difficult people to manage. Right. Like now you have this factory with people who are just off fighting the Soviets on the Eastern front. Imagine being the manager and being like, hey, can you pick up the pace? Like, see what's going to happen if you tell a Nazi soldier to do that?

[Robert Smith]

And here they are in a destroyed factory. There's. There's no real housing in the town, so they're being housed in the cabins, I suppose, for the former enslaved workers. They're essentially working and living in a concentration camp.

[Jacob Goldstein]

Yes. And, you know, food is hard to come by. I mean, Germany is destroyed. Right. So you have workers just wandering off to try and find something to eat. People are living on like a thousand calories a day. And on top of all that, the winter of 1946 is particularly cold and the ports freeze over and the rail lines freeze over. And so you can't get food to the factory, you can't get supplies to the factory. Essentially the factory, the assembly line closes down for months.

[Robert Smith]

So the British Engineer Ivanhurst promised 20,000 vehicles. Not looking good for him.

[Jacob Goldstein]

He does deliver 10,000. Kind of a miracle, kind of a miracle. But they were 10,000 extremely bad cars. They were built partly with like sort of quasi salvaged parts that had been left over at the factory. And like something like half of them, immediately after driving out the factory gates, had to come back for repairs.

[Robert Smith]

It's like that moment in the comedy where the car rolls off the production line, everyone cheers and the wheels fall off and the windshield caves in. Everyone's like, awww.

[Jacob Goldstein]

It truly like doors wouldn't close, headlights wouldn't work. But in an interesting quirk of history, this proved to be kind of a lucky break for Volkswagen itself, Volkswagen as an entity, because British engineers were going around Germany looking at factories, thinking like, are there any really nice ones we want to take back to England piece by piece as reparations for the war? Right. This is still the spirit of the time to some extent.

[Robert Smith]

You could have a British people's wagon, you know, built in Manchester.

[Jacob Goldstein]

And so these engineers come to the Volkswagen factory and they see these garbage cars coming off the line and they're like, this is a terrible vehicle. People around the world are never going to want to drive these so called Volkswagens. We'll pass, thanks.

[Robert Smith]

I'm hearing the Benny Hill theme.

[Jacob Goldstein]

Drive in the tiny little car and the doors are falling off. And so this Volkswagen factory is removed from the reparations list. They leave it alone.

[Robert Smith]

So around this time we're getting to the later part of the 1940s, there is this big important shift happening in Germany and Europe and that is that the allies have decided that in general they want Germany to actually thrive and succeed.

[Jacob Goldstein]

Yeah. And it's interesting to think about why this is happening. Right? There are a few reasons. One is within Germany there is a threat from the right, essentially from the former fascists. People are painting swastikas on the walls of the Volkswagen factory. People, you know, they were Nazis three years before this, right? And that spirit is still there. And so the west is concerned about that. There is also a threat from the left, right? The Soviets are right there, right across the line in Germany. And furthermore, communism is popular In Western Europe. Right. Ciao, Italia. And so there is this idea which is we can fight the threat both from the right and the left, by helping the ordinary people of Germany and Western Europe get richer.

[Robert Smith]

They should rename the town Strength Through Capitalism.

[Jacob Goldstein]

Yes. Wagonstown. And you know, the Marshall Plan from the US is probably the most famous part of this. But especially in Germany, the Marshall Plan was not that big in terms of dollars. I think more important was this vibe shift away from let's make Germany poor and isolate it so they can't hurt us and toward let's make Germany rich and trade with them so they don't want to hurt us.

[Robert Smith]

And I know it's a different show that we'll do one day, but the same thing was happening in Japan too.

[Jacob Goldstein]

Yes, yes. And I love this shift. Like, it really makes me happy to think about. I guess partly because I believe in it. Right. For me, the central big idea of economics, of markets is the world is not zero sum. The pie can get bigger. Everybody can be better off. Trade can bring nations together in a web of prosperity. And I know this sounds like naive or unfashionable, but I think it's true.

[Robert Smith]

And this was the dream at the time, the that if you pulled this off in Europe and in Germany, there could be economic growth, shared prosperity, liberal democracy, a chicken in every pot, a Volkswagen in every driveway.

[Jacob Goldstein]

After the break, we know it's gonna happen, but it's really interesting how it happens. How Hitler's car wins over America's hippies. That's what we're gonna talk about later in.

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[Robert Smith]

Wrong.

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[Jacob Goldstein]

Okay, that's the end of the ads. Let's get back to what Ivanhurst is doing at the Volkswagen factory.

[Robert Smith]

So after a few years, Ivan Hurst in his khaki suit and jaunty hat, he started to turn things around at Volkswagen. He's created a network of dealerships, which is what you have to have, right? Trained mechanics. He's developed a nicer version of the Beetle for export. And orders are coming in at least nearby in Europe from Netherlands and Switzerland. And it's time, he feels, to hand Volkswagen Back to the Germans.

[Jacob Goldstein]

And so you gotta figure out then. Yeah, who's gonna run it. And we get back to our central question, how Nazi is too Nazi.

[Robert Smith]

There were the guys who ran the factory before. They're problematic.

[Jacob Goldstein]

They're pretty Nazi. Right. Ferdinand Porsche, who developed the Beetle, and his son in law, Anton Piesch. Pierre, who, who actually ran the factory, wound up joining the SS at the end of the war. They fled to their estate in the Austrian countryside and they actually, there's this interesting story about them that's worth telling for a minute. So the Allied soldiers caught up with them and arrested them and questioned them. But what the Allies were really interested.

[Robert Smith]

In, not what they did, but what they built.

[Jacob Goldstein]

Yeah, and what they knew.

[Robert Smith]

Right.

[Jacob Goldstein]

They had worked, I think Porsche in particular had worked on weapons systems. And as we know, the Allies after the war were obs obsessed with what German engineers and scientists knew about building weapons. So they talk to Porsche and then they release him. And then the French car company Renault comes to Porsche and Pierre and asks them if they want to come help Renault build a little people's car. What's people's car in French? Voiture. Djan. No, no, I just made that up. I haven't looked it up. It'd be wrong. And they say yes, because I think, you know, Porsche really does love designing cars and building these cars. So Porsche and Pierre and actually Porsche's son, Fairy Porsche, they go to the French controlled part of Germany to have talks with Renault. But the guys at Peugeot, the other big French car company, they hear about this and they're like, no, no, no way. They point out that during the war, when the Nazis had invaded France, Porsche had been given control of Peugeot factories and had, you know, sent some of the executives to concentration camps where some of them died. And so the Peugeot guys are like, there is no way we can work with this guy to build the car. He is too Nazi. And so they get arrested again, this time by the French. But eventually the French let him go and they go home and they start a little sports car company called Porsche. Porsche.

[Robert Smith]

Not too Nazi for the world.

[Jacob Goldstein]

Not too Nazi for the world, but too Nazi to run the Volkswagen factory. So they are not going to work. So, you know, Ivanhurst crosses them off the list of potential people to run the factory.

[Robert Smith]

So he's going through the names and he comes up with one. Heinrich Nordhoff. And he had helped run Opel, which I guess is a car and truck firm in Germany.

[Jacob Goldstein]

Yeah, GM. It was connected to GM, I think it was GM's German operations.

[Robert Smith]

Okay. But more importantly, he had been one of those German carmakers who had fought this idea of a Volkswagen. Right. Who had said, it's not possible. It can't be done. And it sort of resisted Hitler's push for that. Now, eventually, he would cooperate with Hitler, as many people did. He actually got an award from Hitler for meritorious service in factory. Whatever, Whatever, whatever.

[Jacob Goldstein]

The Verwertschaftfuhrer award. I think it means war economy leader, but all I hear is fuhrer is like a mini Fuhrer.

[Robert Smith]

And for the Americans, that's too Nazi.

[Jacob Goldstein]

Yeah, it's pretty Nazi. If Hitler gives you an award, it's not a great look.

[Robert Smith]

They're like, he gave out a lot of awards. We've gotta hire someone. So they hired Nordhoff. And say what you will about the Fuhrer's award, Nordhoff was great at running a car company. Yeah.

[Jacob Goldstein]

So he comes in and, you know, looks at the Volkswagen and says, let's, you know, let's polish this thing up a little.

[Robert Smith]

Which is amazing. Remember, they're emerging from the war. They can barely build these cars. But he's smart enough to know people like a little luxury. They like a little shine on there. They gotta have better hubcaps, you know, shiny. Right. You gotta have different colors. He has, like, a Bordeaux red, pastel green colors.

[Jacob Goldstein]

And like any factory boss, he wants to get productivity up. He specifically says he wants every worker to increase their productivity by 30%, which is a tough ask, but here, Nordhoff, and really, the entire German economy gets a big boost from monetary policy. Great moments in monetary policy. Right here. Germany, 1948.

[Robert Smith]

So at the time, Germany is running on reichsmarks, the currency. It was created in the 1920s, and it had been through a lot. There was a ton of inflation. They weren't worth very much. It was still the sort of German money from the war, Right. And so because it was sort of worthless and there was shortages, the country of Germany at this point, post war, is running on, you know, bartering and ration slips and all of this sort of stuff. And occupation currency introduced by the various allies.

[Jacob Goldstein]

And so if you're running a factory and paying your workers in reichsmarks worthless pieces of paper, you're kind of out of luck. You can be like, work harder, or else I won't keep giving you these worthless pieces of paper. And so the big break for Nordhoff and Volkswagen and really all of what's about to become West Germany comes In June of 1948, when the Germans got rid of the Reichsmark and introduced a new currency called the Deutsche mark. It's going to become the most important currency in Europe. And you could trade in 10 reichsmarks for 1 Deutsche Mark, which is the.

[Robert Smith]

Numerical part of it. But it was also, functionally, a devaluation of the currency. So anyone who had their savings could transfer their savings over to deutsche mark. But it was worth almost nothing. It took away people's savings, so not lucky for those people. But it allowed Germany to remove the price controls and sort of start their economy from scratch. You see this with a lot of economies in trouble. They devalue the currency and kind of start over.

[Jacob Goldstein]

And so now, to the extent people had savings, those savings are gone. But the money you get paid, if you say work at a factory can buy stuff.

[Robert Smith]

Is worth more.

[Jacob Goldstein]

Yeah, is worth something. Is functional. Right. So now they're back in the familiar world of you get a job, they give you money, and you can use that money to buy stuff. And so Nordhoff gets his productivity gain. Now people are showing up to work, they're motivated to make cars better, and the factory starts working better.

[Robert Smith]

And there is another quirk of macroeconomics, which is if you've devalued your currency, it also makes the objects you make much cheaper to the world. It helps exports.

[Jacob Goldstein]

Yes. And so not long after this, in 1949, the British turned Volkswagen over to the newly formed West German government. We go into the new decade. The new currency is propelling Germany forward. Exports are starting to grow, and it happens. The Wirtschaft Wunder, the German economic miracle. You know, the decade of the 50s was incredible for Germany. Foreign investment is coming in. The government is focused on economic growth, and Germany is catching up to its richer neighbors. In that one decade, living standards for Germans doubled. It was this incredible economic era, and the Beetle was. Was really at the center of it. I mean, you know, sales. Sales were growing, but also as a symbol, Volkswagen was like, you know, the national car maker. And the Beetle was like. Like the chrome ornament on the hood of the Wirtschaft wunder. And by 1955, Volkswagen had produced 1 million beetles. So Nordhoff is still running the company, and he wants to, you know, keep this going. He wants to keep growing. And so he comes up with a plan, a plan that specifically has three. Let's call them prongs.

[Robert Smith]

Did he call them prongs?

[Jacob Goldstein]

I have no idea.

[Robert Smith]

But let me do the prongs. I'm a good pronger. Okay.

[Jacob Goldstein]

Prong number one.

[Robert Smith]

Prong number one, domestic sales. So In Germany, remember, this was not a big driving culture before the war. So Nordhoff really has to change the idea of what it means to own a car. This is not a luxury thing. This is something that everyone needs and has to have. It's like a TV or refrigerator. If you live in the modern world, you have to have a car, which, of course, was Hitler's original dream. We should know here. He never made very many of those cars under Hitler. Right. So the way to do that is to essentially make the car cheaper. In the 1950s, the beetle cost what a typical worker would make in 13 months. So that's the equivalent of, like, a $65,000 car now. So that's. That's pretty expensive. That's not cheap. At the end of the decade, he had gotten the cost of the car to about 8 months salary for a typical worker. So that's progress. Right. And on top of that, something we're gonna see a lot in business history. Volkswagen creates a financing arm that essentially can lend people the money to buy the car so they can get into the car for relatively cheap and pay it off over time.

[Jacob Goldstein]

And there was also this plan where several people could buy a car and share it, which I love. It feels very Western European to me in a nice way.

[Robert Smith]

Why don't we do that again? I would do that. I would do that.

[Jacob Goldstein]

So all these things are happening. Beatles are like, I don't know, a third or so 30%, 40% of the cars on the road in Germany at this point. That is prong one, as you said. Sort of the core of Germany's economic miracle is not building stuff for Germans, but it's building stuff that people in the rest of the world are going to buy. And that is where prongs two and three come in.

[Robert Smith]

Prong two, pitch the Beetle as a rugged car for the developing world. Very, very smart.

[Jacob Goldstein]

Yeah. And, I mean, it was built as a rugged car. It was, you know, used by the military. It was, in fact, a rugged car. It was a car that was easy to work on. There were big parts of the developing world, of course, at this point in the 1950s, where the roads were bad, where there weren't very many mechanics. And so Volkswagen actually builds a factory in Brazil that winds up cranking out cars for Latin America. And, you know, the Beetle, fuel efficient, it is rugged, it is easy to work on, becomes a very popular car in the developing world.

[Robert Smith]

Yeah. You could open the trunk, and the engine is right there. You don't have to lean over it or get under the car. You can fix everything right away, which comes in useful if you're on the Pan American highway.

[Jacob Goldstein]

Prong 3. Prong 3.

[Robert Smith]

Prong three was, and this is the hard one. Sell the Beetle to rich countries and.

[Jacob Goldstein]

One rich country in particular.

[Robert Smith]

The one that kicked your ass in.

[Jacob Goldstein]

World War II and is the biggest car country in the world.

[Robert Smith]

Right. We're referring, of course, to the United States of America. And this is tough, right, because America had invented mass marketing of cars. They have, I don't know at this point, but probably at least the three big car manufacturers in Detroit churning out cars, they do not need another car in America.

[Jacob Goldstein]

Yeah. There was a German executive around this time who said selling Volkswagens to America would be like trying to sell American beer in Bavaria. Like, they don't want what you're selling. They don't need what you're selling. They got it already.

[Robert Smith]

Yeah. And especially if your car is associated with Adolf Hitler, it seems like it's not going to work. But of course, it did in a very delightful way.

[Jacob Goldstein]

We'll talk about that after the ads.

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[Robert Smith]

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[Robert Smith]

And we are back from the ads.

[Jacob Goldstein]

So let's talk about the cars Americans are buying. In the late 1950s, if you were.

[Robert Smith]

Shopping for a car, you wanted a car that was big. A big slab of car, boat of car, a big heavy rectangle to impress your neighbors.

[Jacob Goldstein]

Maybe. It had a lot of chrome, it probably had tail fins.

[Robert Smith]

Oh, absolutely. Big hood ornament, shiny hubcaps.

[Jacob Goldstein]

And almost certainly that car was made in America. So in every way we're talking about the opposite of the Volkswagen Beetle, which is small, round and made in Germany.

[Robert Smith]

When you put it that way, it's just funny, right? You could picture it as a quaint thing you see in the Netherlands.

[Jacob Goldstein]

Yeah, like on some little stone street.

[Robert Smith]

But in Dallas, Texas, on Dallas, Texas.

[Jacob Goldstein]

It'S going to get run over by a Chevrolet, like a little bug.

[Robert Smith]

And at the time, Americans were really the way they were shopping between cars was by looking at their amenities and their upgrades, right? Oh, does it have the new air conditioning? Does it have electric reclining seats? I mean, this is the height of luxury. And, Jacob, you've put a picture in here of the dashboard of a Volkswagen from around this time. What I love about it is the upgrade it has is the Blumenwassen. It is a ceramic vase. It looks to be bolted to. Bolted right next to the radio on the dashboard. And in this picture, there's three lovely, I don't know, Edelweiss or something in there.

[Jacob Goldstein]

Fresh flowers. There are fresh cut flowers in this German porcelain vase. That is an optional extra, right? And it's perfect, right? Put this little car with this little vase with the little flowers next to the giant Ford or Chevy with its electric seats and air conditioning, and it just looks like a joke. And this is how American auto executives saw this car, as a joke that they didn't care about because it's ridiculous. And this, again, as with the poorly functioning factory in the mid-40s, this again is a weird kind of lucky break for Volkswagen, because since the executives don't take the car seriously, they're not worried about it as a threat. They're not demanding tariff protection against it. They're like, sure, you want to sell your cute little car to 12 people in America, go ahead. And that is, in fact, what happens. But initially, it is a truly tiny percentage, as in less than 1%. But that tiny number of people, I guess as with, you know, sort of classic early adopter, maybe they love their Volkswagens.

[Robert Smith]

Right?

[Jacob Goldstein]

They feel like they have discovered this special, different car.

[Robert Smith]

And this came at a very particular moment in American history, which was lucky for Volkswagen.

[Jacob Goldstein]

Right.

[Robert Smith]

Americans are getting rich. It's the 1950s. Right. They won the war. Things are going very well in America. So they have extra disposable income. Plus women are starting to go in the workforce, so they are looking at having more than one car. And if you have your big boat of car parked outside of your suburban home, why not get a little tiny car to go with it? It makes total sense.

[Jacob Goldstein]

Yes.

[Robert Smith]

Yes.

[Jacob Goldstein]

Volkswagen was the second car, and it was particularly popular among women. There's this one woman in Ohio who's quoted in that excellent Bernard Rieger book, the people's Car. She said her Volkswagen lets me be the boss when I'm behind the wheel.

[Robert Smith]

It might have stayed a novelty car in America until Something happened in 1959. It was a big, big deal in a small, small place. It was a magazine ad.

[Jacob Goldstein]

How amazing. Can we just pause for a moment and say, given in our story, where a magazine ad meant anything, where anything in a magazine was important, I'll Take it.

[Robert Smith]

Have you seen page 49?

[Jacob Goldstein]

So this ad was made by an ad agency called Doyle Dane Birnbach. Bernbach was like, I think he gets shouted out in Mad Men. He was this guy central to this creative revolution in advertising going on around the time where ads are getting more interesting and more creative. And this particular ad is one of the most famous ads of all time. And in part, it's famous because it was so different.

[Robert Smith]

So car ads in the 1950s, if you've ever seen them, it's often a guy smoking a cigarette with a fedora on, right? And maybe he's wearing a tuxedo and there's a beautiful woman in an evening gown. It is the height of luxury. It is saying, you are going to live large in this automobile.

[Jacob Goldstein]

Yeah, there's a great big shiny, full color car, you know, sparkling. Let's look at this Beetle ad and just talk about it, right? You look at the ad and the first thing you see is nothing like it is mostly empty space. And then in the top left corner of the page, really small, kind of like off in the back, you could.

[Robert Smith]

Cover it with your thumb.

[Jacob Goldstein]

There is a little black and white picture of a Volkswagen Beetle, a little photo of a little car. And then most of the way down the page is the headline, think small, Think.

[Robert Smith]

Which is hilarious at the time. It is hilarious. All the advertising you've ever seen in your life is saying, think big. And at this moment, someone's saying, think small. And you smile and you read. There's a whole bunch of text talking about how great this car is, but it's also tiny.

[Jacob Goldstein]

Think about the time that this ad is hitting, right? 1959. What do we think of when we think of the 50s? We think of, like, consumerism. We think of, of conformity.

[Robert Smith]

Man in the gray flannel suit.

[Jacob Goldstein]

And so the calculation was that there was some number of Americans who, you know, who were ready for something different, who were ready for something that was counter to the culture, if you will. Perfect timing in this new decade of the 1960s.

[Robert Smith]

Perfect timing. Teenagers adore this thing. They start to put pictures of it, not, you know, racing cars on their walls, right? A little folks like that, you can.

[Jacob Goldstein]

Actually tear the ad out of whatever Life magazine and pin it on their wall.

[Robert Smith]

The agency has. If it runs out of gas, it's easy to push.

[Jacob Goldstein]

That one is really good, right? Like it is making fun of itself. There's another one that is sort of more sly. It's a big picture of a Beetle. And then the headline below it says lemon.

[Robert Smith]

Yeah, it says lemon. And the car sort of looks like a half lemon. So that's funny. But lemon is also a slang term for a terrible car, as in, that guy sold me a lemon, the wheels fell off.

[Jacob Goldstein]

Yes, but. So you think that's what they're saying. But then you read the copy below the headline and it says, you know, the problem with the car isn't a bad engine or unreliable brakes. It's a blemish on the chrome trim of the glove compartment spotted by Inspector Kurt Kroner at the Wolfsburg factory.

[Robert Smith]

Very, very interesting, right? It comes off as self deprecating, but when you read it, it's actually the opposite. It goes through point by point. How precise and exacting the engineers at Volkswagen are. It ends like this. This preoccupation with detail means that the VW lasts longer and requires less maintenance, by and large, than other cars. It also means a used VW depreciates less than other cars.

[Jacob Goldstein]

Right. So here they're not like, oh, you can push it or whatever. They're not pitching it as a smaller car or a cheaper car. They're pitching a better car, a more reliable car, a car that holds its value. And I think this is, you know, foreshadowing a couple things we're gonna see more broadly in global business in the years to come after is the rise of foreign carmakers in the US who are going to obviously build reputations for reliable cars. And two, even bigger is this global brand that is developing for German manufacturing in general. Right. Germany as this world leader at building precise, efficient, reliable stuff, which does drive their economy through the 20th century and into the 21st century.

[Robert Smith]

And it's essentially saying that American cars, and turns out all of American industry have not really had competition. And so they've been on top for so long that maybe they're a little bit lazy, dare we say, they're cutting corners.

[Jacob Goldstein]

And certainly, you know, the German economy is going to run on making fancy, complicated machines, cars, but also like big machinery that builds other machines and selling it to the rest of the world. Like they are in fact great at that.

[Robert Smith]

You know, I was talking to a professor who, a historian who studies the car industry, and I was talking about the amazement that the Germans and the Japanese in this era, the people whose countries were destroyed, the losers of the war, end up having this huge dominance in imported vehicles over the 60s and 70s. And he said one of the reasons is that the American factories at this point were 30, 40 years old. And even though they had to Rebuild them from scratch. The Japanese and German factories could. Could put more modern techniques, modern machines. You know, it's a brand new factory, and so could actually put out a product that was better than the old Detroit plants.

[Jacob Goldstein]

I buy it. It's interesting. And. And for purposes of our story, it means that the Beetle, with the push of this ad campaign, takes off in the US sales go from 100,000 a year to 150,000 to 200,000. Surfers are driving them. Teachers, moms, hippies. Of course, people start having Beetle races. And this is how we get to that moment we talked about at the beginning of the last episode, that moment in the late 1960s when Disney is testing cars for a racing movie.

[Robert Smith]

And remember, they park all these different cars outside the commissary on the lot and have the people who work at the studio walk around and just, like, try out the cars, open the doors, sit behind the wheel. And what they notice is that when people see the Volkswagen Beetle, they do something unusual. They pet the car. A little petting of the car, like, it's like it's a cute puppy or an animal.

[Jacob Goldstein]

They were gonna call the movie Car Boy Girl, but people loved the Volkswagen so much that they wound up calling the movie the Love Bug. The Beetle in the movie had a name. It was Herbie.

[Robert Smith]

Watched it when I was a kid.

[Jacob Goldstein]

And kind of amazingly, when Disney goes to Volkswagen is like, great news. We're gonna make your car the star of a movie. The executives are like, well, this car in the movie, it's gonna, like, be sentient and have a mind of its own and drive around San Francisco. Will that make people think Beatles are unreliable? We're not so sure about this.

[Robert Smith]

Or aggressive.

[Jacob Goldstein]

Or aggressive. And actually, if you watch the movie, of course it is a Beetle, but nowhere in the film is it referred to as a Volkswagen. Hmm.

[Robert Smith]

And yet it is a big, long commercial. That's what the New York Times pointed out in their review of the film.

[Jacob Goldstein]

Yes. And it was a hit. They were sequels and reboots. Shout out, Herbie goes bananas. And in 1968, the year that the Love Bug premiered, 399,674 Beatles were sold in the U.S. and this was it. This was actually peak Beetle.

[Robert Smith]

Not necessarily because of any problem with the Beetle, but there were other foreign cars now who are following Volkswagen's lead. Specifically, Toyotas and Hondas were coming in by the boatload at this point. They had entire ships that could carry four or five thousand cars unloading them in California and just rolling them off, right. And the Beetle did still have life left in it. In 1972, the 15 millionth, 7,000th and 34th beetle rolled off the production line, beating the record set by the Model T Ford for the best selling car of all time.

[Jacob Goldstein]

And I will note, sometimes people say the Toyota Corolla is the best selling car of all time. But the trick is, it's not the same car. Toyota has been making a car called the Corolla for decades. But if you look at a Corolla today and look at a Corolla 25 years ago, they look nothing the same. The amazing thing about the Beetle is if you look at the Beetle that Ferdinand Porsche designed in the 1930s and the one that came off the line in 1972, they looked basically the same.

[Robert Smith]

The last final Beetle rolled off the production line in Mexico In July of 2003, 70 years after Hitler started to rant about a people's car. 70 years?

[Jacob Goldstein]

Yeah. They made more than 21 million Beatles over the course of that time. And by the way, do you know who was the chairman of Volkswagen in 2003 when that last Beetle came off the line?

[Robert Smith]

I know, but I can't pronounce his name.

[Jacob Goldstein]

Ferdinand Piech. I can't either. Who was the son of Anton Piech and the grandson of Ferdinand Porsche. So that's the end of the Beatles story, right? Bestselling car of all time, dreamed up by Hitler, beloved of hippies and people around the world. We've talked about it for two episodes, and I'm curious, Robert, when you step back, where does it sort of land for you? What are you left with?

[Robert Smith]

So two things come to mind. The first one is about the design of the Beetle. When we looked at that first picture of Adolf Hitler looking at the very first model of the car, before they built a single one, it looked almost identical to the car we see today. There was something about it, a beauty about it that survived for 70 years and made the car successful.

[Jacob Goldstein]

Okay, so that's one. What's the other one?

[Robert Smith]

And the other one is about resiliency. Think about Germany after the war. There's probably rarely been a country that is as devastated as Germany was after World War II. And then this German economic miracle is happening within 20 years. And so in some ways I'm like, there is an amazement that when a country has nothing, using some wise decisions, good economics, world trade that we talked grows the pie, you can actually make a country, like, rapidly improve. I mean, it is an inspiring story for any country that's facing any sort of difficulty, like if Germany can do it, other countries can do it, too.

[Jacob Goldstein]

I love it. It's a story that starts with Hitler and has a happy ending. I'll take it.

[Robert Smith]

Our producer is Gabriel Hunter Chang, our engineer is Sarah Bruguer, and our showrunner is Ryan Dilley.

[Jacob Goldstein]

I'm Jacob Goldstein.

[Robert Smith]

And I'm Robert Smith. We'll be back next week with another episode of Business History, a show about.

[Jacob Goldstein]

The history wait for it of business.

[Robert Smith]

For delicious meals, you could go out.

[Jacob Goldstein]

To eat or spend hours in the kitchen.

[Robert Smith]

Or you could just make a Marie Callender's meal.

[Jacob Goldstein]

Yeah, you heard me.

[Robert Smith]

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[Jacob Goldstein]

Like Hollywood is buzzing. Award winning director Von Kovac is coming out of retirement, promising to redefine the superhero genre with his remake of Wonder Man. At the center is Simon Williams, a man desperate to be a star but hiding a dangerous secret. He has superpowers outlawed in Hollywood, with Trevor Slattery mentoring him. Hilarity and Hart collide in ways only Marvel could deliver. Starring Emmy Award winner Yahya Abdul Mateen II and Oscar winner Ben Kingsley. This is Marvel like you've never seen before. Don't miss Marvel Television's Wonder man, streaming January 27th at 6pm Pacific only on Disney. La vida no sedetiene tu trabajo, tu familia.

[Commercial Narrator]

Las responsabilidades.