The PESTEL analysis is an analysis tool that allows the study of a company's external environment, thanks to six main criteria: political, economic, sociological, technological, ecological and legal. This study is relevant to improving both the competitiveness and the performance of a company or a sector of activity.
The group's key figures
The group has a turnover in 2024 of more than 250 billion euros worldwide, with more than 10 brands in existence. Worldwide, the number of employees exceeds 668000.
PESTEL analysis
Politics
The political and economic fields are closely linked. Indeed, for politicians, the economy is one of the most important sectors.
In the case of VW, at the political level, the tensions that may exist between certain countries at the commercial level can affect vehicle sales, especially with the protectionism in force in some parts of the world. Manufacturing costs are impacted, but also the price paid by the end consumer, and consequently, indirectly, the group's competitiveness.
It should also be noted that many governments offer citizens multiple aids for the purchase of electric vehicles, as well as manufacturers so that everyone turns to the design of more ecological ranges.
The political field is also related to the environment, since regulations are increasingly strict on the subject. VW, like many of its competitors, needs to push the manufacture of cleaner vehicles.
Economic
On the economic level, VW is a group that has multiple competitors; competitors that have not failed to grow in recent years with the arrival on the market of foreign brands. In 2024, it was a particularly complex year for the Volkswagen Group, as sales fell by more than 2% compared to 2023, especially in China, which is its main area of activity. Net profit fell by more than 60% in the same year.
We were talking earlier about the competition, VW's main competitors are Chinese, with the success of brands like BYD or Nio, which are taking more and more space on the market.
The market is increasingly focused on the manufacture and marketing of electric vehicles and Chinese companies are particularly competitive in this field.
VW has had to close several factories around the world, including in Germany. The group has alliances with Rivian, the American manufacturer, with whom it is talking about promoting more embedded software in vehicles, thus surfing on the trend of new technologies.
Sociological
At the sociological level, it is essential to consider consumer expectations as well as trends, which are constantly changing over time.
In 2025, customers are sensitive to environmental issues, so they are more interested in electric vehicles. However, this type of vehicle is reserved for an elite and the lack of a charging station remains an obstacle for a large majority of drivers. VW offers a lot of large cars, while consumers tend to prefer smaller, city-type models in recent years.
The VW brand has a good reputation, the vehicles are reliable and solid, and it offers very frequent innovations. Nevertheless, young consumers are more difficult to please and are increasingly attracted to trendy brands such as Tesla or BYD. Finally, it should be noted that consumers are buying less, and renting more, and that mobility services are taking an important place in their daily lives.
Technological
The VW Group has made great efforts in terms of integrating new technologies into some of its vehicles, showing a desire to boost the range among the younger generations.
Investments are more than 73 billion euros over a period of 5 years for everything related to technology. This is 50% of the group's total expenses. As mentioned above, VW has established a partnership with Rivian for the creation and implementation of on-board software for electric vehicles.
In several models, Chat GPT AI is integrated and prototypes of autonomous vehicles will soon be announced, such as the ID.buzz AD which has already been tested. Chat GPT aims to make the driver more autonomous as well, and to make the interactions between humans and machines more natural in a way, to make their daily life behind the wheel easier.
Ecological
The automotive sector is not known to be among the greenest in the world, so VW has made great efforts in recent years to achieve carbon neutrality within 25 years. This is in line with the Paris Agreement. Within 5 years, the group has already committed to reducing its carbon footprint by 30%.
In 2023, the group delivered more than 770000 electric cars, an increase of 34.7% compared to 2022. New charging stations will also be set up.
However, there are still many challenges in this area, as demand for electric vehicles in Europe tends to stagnate or even be lower than initially expected. Vehicles are expensive and consumers cannot afford to buy them. Many expect a significant price drop.
For drivers, transparency is important, and the ecological commitment of companies plays a decisive role in their choice.
Legal
It has been a rather eventful year for VW from a legal point of view.
Indeed, the regulations are constantly evolving, making decisions and organization more complex. The contract ends in France, except for a few brands, such as Cupra.
There was also a lawsuit over the rigged gas emissions, which may have impacted the group's reputation. We were talking earlier about the importance of transparency for consumers and this type of event is bad for a brand, especially today, with the proliferation of news on social networks.
In addition, VW was fined £5.4 million in the UK for failing to treat its customers equally. At the legal level, it should also be noted that the closure of several factories in Germany has put the German model to the test.
Conclusion
VW is a brand that is renowned for the quality and reliability of its vehicles, but many challenges remain, especially in the coming years, with the increase in demands in terms of ecology. The brand is indeed exposed to profound changes, at the political level, but not only. This is also the case at the economic, sociological, technological, ecological and legal levels, hence the need to strengthen innovations and pay constant attention to customer demands.)