How Ford Won the Middle Class, and why Volkswagen Didn’t

Part 1. Ford Model T

In 1908, if the automobile were a citizen it would have been old enough to vote, but almost no workingman in America or anywhere in the world owned such a contraption. Trolley cars and buggies carried most people to the more well-paying jobs in the cities, while people in places like Chicago’s Packingtown or Pittsburgh’s Homestead led short, brutish lives struggling against the elements on foot. If you were a typical workingman, you made approximately 400 dollars a year, which is only $8,000-$10,000 in today’s dollars, a condition of extreme poverty.

Things changed when Henry Ford got there. His first car, the Model A, was just as boutique and artisanal as every other motorcar of the era. The automobile may have been adult by the wealthy enthusiast’s reckoning, but for the consumer, it had barely been born. Henry Ford changed all that, with the first assembly automation evident in the Model N, where a conveyor belt brought the parts that a fabricator needed in order to do his job. While the Model N cut the time to produce a car down from three days to two, the price tag remained stubbornly around two years of the average salary, albeit less for skilled workers.

The breakthrough came in 1913, when with the first Model T, Henry Ford and the first US-trained industrial engineers completed the process of breaking down the tasks of car assembly into 83 task groups. Ford’s team left the Piquette Avenue plant in Detroit, moving under a cloak of secrecy to a facility in Highland Park that featured an enormous assembly line, one that would be recognizable to auto manufacturing enthusiasts today. The time to manufacture a car chassis had plummeted to 93 minutes from three days for Ford and weeks for its competitors. This allowed Ford to fulfill his vision of making a car to take every working man out to enjoy the broad, open spaces. By the time the last Model T rolled off the assembly line in 1927, it cost $240, which meant that the average worker of the time could buy a car with two to three months’ income.

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Part 2. Volkswagen

Volkswagen (the “People’s Car”) was born in the mind of Adolf Hitler. Before he started building tanks, he asked Ferdinand Porsche to build “a car for the people (auto für Jedermann),” even giving Porsche some design specifications, and the Volkswagen Beetle we know had been born. Hitler even created a special passbook savings account for people to save money for the car. The vehicle wasn’t mass-produced until after the war, due to supply constraints placed on the company by more vital industries.

The basic Beetle changed very little from its inception to its demise, either in design or in marketing appeal. Anyone over a certain age knows why the Beetle, or the “Bug” as it is popularly known, understands the appeal of the car to the common man. It was cheap and easy to maintain. While Ford replaced the Model T with the Model A (Henry Ford said that this car was so revolutionary that it deserved to start with the first letter) when other competitors caught up, Volkswagen rode the Beetle almost to extinction.

What killed the Beetle?

Certainly, the Beetle had all the advantages of the Model T. It was cheap, easy to produce, and advanced for its time. However, as middle class prosperity increased after World War I, Ford started working on the new, more upscale Model A, while in a similar environment after the Marshall Plan, Volkswagen lived, and almost died, by the success of the Beetle among students and the working class. Every attempt to market the Beetle to an upscale version was thwarted by the brand definition as “the people’s car.” The Golf, a very late attempt to capture a large and growing middle-class market, turned out to be too little, too late.

Lessons from the Model T

In our last post, we discussed the revolution that Ford created with the original People’s Car, long before Hitler thought of the name. The Model T represented a sea change in social thinking about the consumer. Ford knew that the worker craved the freedom offered by family transportation. He built a product to meet a need that no one else saw. When Ford moved its product line upscale, Hitler recognized the need for a German Model T, and Volkswagen was born.

Finding a market that represents a huge unmet need is the Holy Grail of the inventor and the marketer. Top innovators of our day still look for these mountainous opportunities; think Google and Facebook. However, Ford and these new technology giants understood a rule that Volkswagen didn’t: “Innovate or Die.”


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