Somehow the words Budget Car and Volkswagen don’t sound right. But then that does not stop the German brand from working on one. Volkswagen's Budget Brand is set to get the green light as Germany's Manager Magazin reports that the company has solved the cost issues that have plagued the entry-level model. This budget car will be part of a new brand and is being called the 13th Brand from the Volkswagen Group.
We had written about Volkswagen planning on a budget car back in November last year. Three months later, we now have concrete evidence that the company is going ahead as planned.
It is being speculated that with the Budget Car Volkswagen is planning to attract emerging markets and a new segment of customers, and though the car will be launched first in China, the Indian market too is on their list. The magazine reports that the project aims for an annual sales volume of approximately 500,000 cars.
The report goes on to say the first model is expected to be launched in late 2016 or early 2017 with base price USD10,330 (Rs 6,30,491) or less. The car will reportedly be developed and built with one of Volkswagen's Chinese partners - possibly FAW or SAIC. This price is the trickiest part yet, we beleive. In India, the company will have to look way below this Rs 6 lakh figure as we already have cars cheaper than that and plus their own product, the Polo, retails in the Rs 5 lakh bracket. So Volkswagen will have a tough time finding a middle path to satisfy customers of both products.
Previously at the Tokyo Motor Show, VW’s head of development, Heinz-Jakob Neusser said: “We are still working on the cost side. What’s clear is that we will only make this car if it meets our standards on safety, ride, handling, comfort and so on – and that it can be made profitably. It must be durable, precise and meet all the quality standards people expect from us.”
The company with the new brand will aim to target companies like General Motors, Nissan and Suzuki all of whom make budget brands for various markets. What we are more interested in is how Volkswagen manages to lower costs and take out this budget car. Will it let go of its high level of featurisation and comforts that it normally offers in its cars (one of the reasons for the green light being delayed)? One possible scenario is that Volkswagen may have to rework the localisation of the Polo and bring down costs of this car so that it does not lose out on customers.