Volkswagen Ready to Add Low-Cost Car Brand

12 years ago - 17 December 2012, The truth about cars

Volkswagen is making most of its profits with pricey Audis, but it is looking towards making volume with low cost cars. Plans for a budget-brand, reported at TTAC in October, are “entscheidungsreif”, ready for a decision as they say in Wolfsburg. In January, Volkswagen’s board could give its go-ahead.

A team under former Opel CEO Hans Demand will present plans for a family of low-cost cars, based on China’s new Jetta/Santana, says Der Spiegel. The plan starts with a sedan. A hatchback, a wagon, and a SUVlet will follow. If the plans are approved, Volkswagen will pretty much copy Renault’s Dacia strategy.

Volkswagen will have to sell a lot of cars to make money. According to the report, the break-even point is at half a million units per year. The worldwide market for budget cars is seen at 8 million units per year, rising to over 10 million by 2018.

The cars will be sold under a separate brand. It will be interesting to find out which one Volkswagen takes. Will it follow Nissan’s Datsun example and resurrect DKW? Will it throw logic to the side, add value and call them Wanderer? Or will a lot of money be poured in to creating a new brand of cheapo cars?

The cars won’t be super-low cost anyway. According to the report, they will cost “less than 8,000 EUR” or around $10,000. Renault is rumored to work on something that costs about half.