Volkswagen Group chairman Martin Winterkorn has confirmed that the German group will be launching a budget car brand by 2018. This yet unnamed brand will be based out of China, and will have three cars across different segments as a part of its initial line-up.
The budget cars will initially be sold only in the Chinese market, though eventually the brand will also cater to other emerging markets like India, Brazil, Latin America and Africa. By 2018, the company plans to develop an SUV, a saloon and a hatchback, with prices ranging from EUR 8,000 to EUR 11,000 (Rs 5.69 lakh to Rs 7.83 lakh). This budget brand will be the 13th automotive company under the German group’s control.
Speaking to a German newspaper, Bild am Sonntag, Mr Winterkorn said, "We will bring a budget-car family to market in 2018, with an SUV, saloon and hatchback." Volkswagen Group’s decision to take this approach to build budget cars seems to be influenced by the global success of Dacia and Datsun brands. These two companies are budget brands of Renault and Nissan respectively, created specifically for emerging markets. While the response to Datsun in the Indian market has been quite dismal, it has been performing pretty well in other emerging markets. A budget brand will allow Volkswagen to generate volumes for its profitability, without affecting Volkswagen brand image, which should be a win-win situation.