Volkswagen cheap brand will enter the market

A few days ago, Manager Magazin of Germany stated in a report that, after experiencing waves of twists and turns, VW’s plans to create entry-level brands for emerging global markets will soon be approved by the group’s management committee. According to the magazine, the senior management of the Volkswagen Group may approve this plan in the coming weeks and present it to the Group Supervisory Committee for review. It is expected that this summer, Volkswagen’s new entry-level brand will be officially launched.

As early as last year, the industry has already reported that Volkswagen will create a low-end entry brand for emerging markets such as China, India, and Southeast Asia. But because the cost of new cars has not been well controlled, the plan was once ran aground. Through more than a year of hard work, the Volkswagen project team has kept the cost of new cars within the plan. It is reported that the estimated price of the new car will be between US$6,000 and US$8,000, and it is very likely that it will be put into production in China in the future.

This new entry-level brand, if approved, will become the 13th sub-brand of the Volkswagen Group. Volkswagen hopes to build the brand and better compete in the Chinese market with joint venture brands such as Baojun of SAIC-GM-Wuling. It is reported that Volkswagen plans to produce 500,000 such entry-level models in the country each year. New cars may enter the market by the end of 2016 or early 2017. If the market responds well, Volkswagen will also introduce this model to other Asian markets including India.

Volkswagen brand R&D director Heinz-Jakob Neusser said during the Geneva Motor Show held last month that the cost control of entry-level new models has become more and more difficult, but if the new models cannot Effectively controlling costs will completely lose the value of continued investment.

Due to the lack of competitive entry-level models, Volkswagen has not been able to achieve the desired market performance in emerging markets outside China. Some analysts even questioned whether the public would still be able to deliver on their promises by losing large chunks of emerging market share and surpass Toyota to become the world’s largest automaker by 2018.

For the new entry-level brand, a spokesman for the Volkswagen Group responded that the project team is working hard to develop new low-cost models, but the company’s top management has not made a final approval for the plan.