Literally, the word "volkswagen" means "people's car." In Germany, the idea of a people's car wasn't exactly a new one. Before the 1930's, there had been many efforts to create simple cars that everyone could afford, but none met with profound success. Almost all cars before 1930, even if they were designed to be simple enough for the average person, ended up costing more than the average worker's yearly wage.
Meanwhile, the year is 1930, and Ferdinand Porsche had just set up an automotive design company, which became known as the Porsche Büro. The company patented a sophisticated independent front suspension system, which consisted of transversely mounted torsion bars connected to two trailing arms on each side. At the time, this was lighter than most other common types of suspension. In 1931, a German motorcycle company, Zündapp, asked Porsche if he could design a suitable car for them. Porsche came up with a streamlined 2 door sedan, which had lines similar to the Beetle. It was designated the Type 12. Zündapp wanted to put in a 1.2 liter radial engine from one of their motorcycles...this was the end of the line for this design, as it didn't make it any further.
Porsche then designed a car for NSU in 1933 that was known as the Type 32. This car looked even more similar to the upcoming KdF Wagen than the Type 12 did. This car looked similar to the Tatra V570, and shared many mechanical similarities. After World War II, the Volkswagen company paid Tatra for compensation, since Tatra believed its technology and design was pirated in development of the KdF Wagen. Eventaully, NSU dropped the Type 32 project.