Volkswagen Plans To Introduce a 'Budget' Brand


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The Volkswagen Group is close to announcing the establishment of a new low cost brand to rival the likes of Dacia, according to a report by Germany’s Der Speigel magazine.

Citing comments made by Volkswagen spokesman, Eric Felber, Der Speigel says the German car maker harbours firm plans for a future Dacia-rivalling brand to complement those already within the Volkswagen Group portfolio, including volume driven brands such as Volkswagen, Skoda, Seat and Audi.

“The idea of a low cost brand has been on the agenda at Volkswagen for some time,” Felber said, adding, “A decision has not yet been made.”

Rumours are the Volkswagen Group could use a new low cost brand to further penetrate potentially lucrative Asian, Indian and Latin American markets, as well as expand its sales presence in Eastern Europe, the Baltic region and Africa.

One scenario, according to an insider at Volkswagen’s Wolfsburg-based headquarters in Germany contacted by Autocar, is using models developed for the Chinese market, including the soon-to-be-revealed replacement for the long serving Santana, as a basis for the new brand.

The Santana replacement is based around a low cost front-wheel drive platform structure similar to that found beneath the recently introduced Skoda Rapid and Seat Toledo.

Adding to speculation that the Volkswagen Group is close to announcing plans for a new low cost brand are comments by the company’s union boss, Bernd Osterloh. In an interview with Germany’s Handelsblatt newspaper earlier this month, Osterloh indicated his support for such a move. “We need a cheap model positioned underneath the Up for third-world countries.”

VW plans budget brand to rival Dacia | News | Autocar India
 
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Thanks Visran for sharing this information! Indeed useful.

India is one of the biggest market for of cars (Not for all segments currently). In last few years car manufacturers had struggled for survival in terms of maintaining continuous growth & profits due to slow economic growths worldwide. Many European car makers now thinking grab high potential car market in India (biggest chunk is small and economy cars of course). It is already exponential growth you can see in last 10-12 years in Indian Automobile market and still have potential for multi-fold growth in future (God knows what is going to be happened with Indian roads and space). So no doubt India is one of the biggest market and all automobile manufacturers now coming with special strategies for India.

Only thing I can say to every Indian is to Drive Safe.
 
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If Volkswagen want to compete with Renault's Dacia, then they should leverage Skoda brand.

Dacia and Skoda have similar back ground (East European) and almost similar brand image.

VW will get an advantage (due the image and awareness about Skoda in India) if they introduce low priced models in Skoda stable.

May be they are going over board and want to blindly imitate Renault-Nissan-Dacia combine.

Sometimes VW forget that they are the leaders.
 
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In Indian context, Budget brand probably means poor ASS, not so good buying experience, low quality plastics. Eg.poor man's pajero-safari, other tata cars, rio etc.

I am afraid, if vw brings such type of car in India, it will definitely cause damage to their leader image.
 
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In Indian context, Budget brand probably means poor ASS, not so good buying experience, low quality plastics. Eg.poor man's pajero-safari, other tata cars, rio etc.

I am afraid, if vw brings such type of car in India, it will definitely cause damage to their leader image.
Not necessarily. Coz they are launching as a completely different brand. Means even if the owners are same, it is of 2 different companies! IMO, it can well do in the current market.
 
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VW, Nissan, others look to tap growing demand for budget cars

Volkswagen's desire to launch a low-cost brand and Nissan's plan to sell Datsuns for as little as 2,300 euros underline the rising interest from automakers to tap demand for budget cars in fast-growing markets to offset falling sales in mature, stagnant markets such as Europe and Japan.

Following the lead of Renault's Dacia brand, more and more carmakers will begin offering low-cost models within the next five years, IHS Automotive analyst Christoph Stuermer said. "If they want to survive, they will have to," he said.

Stuermer expects the world auto market to grow by 3.4 million cars between 2012 and 2015. "Most of that growth can be tapped with affordable types of vehicles aimed at new buyers," he said. "Now that VW is entering, I think everybody's going to ratchet up their efforts."

Volkswagen is planning a low-cost car brand for emerging markets priced about 5,000 euros, Ulrich Hackenberg, VW-brand product development boss, told a German magazine Auto Motor und Sport earlier this year. "There is a market segment between 5,000 and 7,000 euros, which is a real challenge," he said.

The trick is finding the right amount of content to take out of the car to make it affordable. "Here you really have to closely look at what can be done away with, but those cars would not be sold under the name Volkswagen, more as their own brand," he said.

Volkswagen has not yet made an official decision on whether to build such a car. In a separate interview, Hackenberg said that a budget brand would not be introduced before 2016. It would initially be launched in emerging markets, although European sales have not been ruled out.

Analyst Stuermer said that developing affordable new cars for high-growth markets poses a significant challenge to companies such as VW, General Motors and Ford.

"They would normally fire with their full engineering power to develop the smartest product," he said. He added that selling a car for less than 8,000 euros means that companies must innovate on the business side and put as little new technology into the vehicles as possible. When Automobilwoche, a sister publication of Automotive News Europe, recently ran an online survey asking if VW should offer low-cost models in western Europe as well as in emerging markets, more than 60 percent of respondents said yes.

IHS' Stuermer, however, cautioned that such a move could have wide-ranging implications for the used-car market. "Only when their cars have good demand in the secondary market can they offer competitive leasing and financing rates, because their cars have good residual value," he explained. "So trying to cap off the secondary market is an extremely risky business."

Datsun learns from Dacia

Renault's alliance partner, Nissan, hopes to attract first-time buyers with its new lineup of Datsuns, which will be launched in 2014 in Russia, India, and Indonesia. Vincent Cobee, who heads the Datsun global business unit, told Automotive News Europe that the company is tailoring the completely new vehicles to each of these markets, based on the differing needs people in these countries have. He added that Datsun has worked closely with Dacia to develop best practices for the new iteration of the Nissan marque, which was established in 1932 before being phased out in 1981.

Peugeot's and Citroen's new entry-level models for fast-growing markets were unveiled at the Paris auto show last September. With more room for passengers and a bigger trunk, the Citroen C-Elysee and the Peugeot 301 have been designed to appeal to families in Mediterranean countries, China and Russia.

With the success of its Dacia brand, Renault has proved that low-cost cars can be profitable. Renault Chief Operating Officer Carlos Tavares calls Dacia a "cash cow" for the company, with an operating margin above 6 percent. Arnaud Deboeuf, director of Renault's entry-range program, expects to sell 950,000 to 1 million cars based on the company's low-cost MO platform this year, up from 813,000 in 2011. Renault is also looking to expand production of its low-cost models, which include the Logan sedan, Sandero hatchback and Duster compact SUV, in new locations. Said Deboeuf: "We feel that our experience in this field gives us a competitive edge."



Read more: http://www.autonews.com/article/20121231/ANE/312259991#ixzz2GhNsP1w8
 
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Some more news on this front:

VW will either create a new brand name or use the Tantus badge chosen for the Chinese electric car programme.

VW is approaching the critical phase of its plan to launch a range of aggressively priced base products. How aggressive? Well, we´re looking at €7000 for a four-door family saloon, €7500 for a boxy estate and about €8000 for a basic MPV.

Also on the wish-list are an even cheaper three-door hatchback for India, and a trendier five-seat crossover offered at around €9000. ESP and air-conditioning will probably cost extra, but the above prices include at least two airbags and ABS as well as the local taxes. Keeping complexity at a minimum, options will be bundled in three or four equipment packs. Since China calls the shots in this vehicle category, VW may tap its partner, First Automotive Works of Changchun, for assistance.

Is there a market gap for these bargain basement motors?

The segment for entry-level cars costing up to €10,000 will have grown to eight million units worldwide by the end of 2012. This equals a 13% share of the total sales volume. The biggest budget car market by far is China where every third vehicle is entry-level – that's over 3.8m units per year. Number two is India with 1.2m units and a 48% market share, followed by Russia with 900,000 units and a 38% share. A car sales goldmine surely awaits...

With 400,000 units and a meagre 3% take rate, Europe's love of premium badges ranks it at the bottom of this list. The biggest global players in the bargain basement are Dacia, Lada, Proton, Chevrolet and Suzuki, along with licensees like Perodua and Maruti. The Chinese dominate the local market, but at this point Geely, BYD, Hawtai and Brilliance are not yet ready to start any kind of serious export offensive.

Will these budget cars wear the VW badge?

The new low-cost cars will definitely not be marketed under the Volkswagen nameplate. Instead, VW will either create a new brand name or use the Tantus badge chosen for the Chinese electric car programme.

Interestingly, the new budget VW will measure up longer than the entry-level Up city car: 4200mm plays 3540mm. Underneath, it’ll be based on a version of the outgoing PQ platform which still serves the current Polo and Passat. Thanks to the no-frills engineering concept, the long written-off tooling and the inexpensive componentry, the cost benefit over the more flexible and space-efficient MQB is substantial. We're potentially talking about more leftovers than Boxing Day dinner here.

Want some numbers? The rear axle of the old Polo is for instance €250 cheaper than the hardware fitted to the future 2016 Polo VI. VW may save even more dosh by replacing the rear disc brakes with drums and binning power steering. Theoretically, the ‘Budget Car’ could be based on the ancient Jetta that’s still built in China. But since this model is a heavy beast and meets none of the upcoming crash or emission norms, it should make more sense to start from scratch.

Just how much car can I expect from a budget brand?

Standardisation is key when it comes to development of these bargain-basement ventures. CAR’s sources report each ‘VW-lite’ will get an identical 2500mm wheelbase, and see production in cheap labour countries (allowing a relatively low level of automation). Expect plenty of common components including spring-strut front suspension and straightforward electronics.

Whereas the body panels of a Polo or Golf go through five different stamping steps, the shape of the ‘Budget Car’ must be defined in only two to three stamping cycles. The result is a basic, still stiff, compact car. On the powertrain front, VW intends to use the older normally-aspirated, indirect-injection two-valve 1.2 to 1.6-litre three- and four-cylinder petrol and diesel units. They'll be revamped for improved fuel economy and reduced emissions. A five- or six-speed manual will be standard, but there is also a seven-speed DCT auto in the offing.

So, is VW’s budget brand going to get the green light?

According to the Wolfsburg grapevine, the VW group will soon announce the birth of its thirteenth brand. No, it´s not going to tug at the heartstrings like Lamborghini, but while the ‘Budget Car’ may lack emotional appeal, it could score big in terms of quality, reliability, driveability and profitability.

Volkswagen
 
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Volkswagen confirms low-cost car for 2015

Volkswagen boss Martin Winterkorn has stated that production of a new super-budget car will start in 2015.

During an interview for a German magazine, Winterkorn said,“We are developing a budget car for the price range between €6000 and €7000 (Rs 4.3 and 5.1 lakh). Some three million cars are sold in this segment each year in China alone.”

The development of the new car, according to Winterkorn, won’t be carried out entirely by Volkswagen. He told Der Speigel, “We have to adopt new methods. The base development will be carried out in Germany. It will then be further developed in China with our partner and produced from 2015."

Keeping the cost of the car so low is only possible by building and partly engineering the car in a low-cost country, with both parts and materials also being sourced locally. It’s likely that existing Volkswagen technology will be used in the new budget car, further helping to keep costs down.

Volkswagen’s technical chief, Ulrich Hackenberg, has previously confirmed that the car will eventually come in different body styles. The car will be sold under a new brand name that is yet to be confirmed.

Currently Volkswagen is focusing on creating the first example of the super-budget car for China, where it would also be built. Hackenberg told Autocar the car wouldn’t look cheap and it wasn’t designed to simply fulfil the need for mobility.

“It has to have good styling and the owner should be able to upgrade the specification over time. The owner wants to be proud of the car.”

Production of the new car is expected to begin in 2015. Initially available only in China, it may also later be offered in India.

Volkswagen confirms low-cost car for 2015 | News | Autocar India
 
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