German auto behemoth Volkswagen has reportedly come to an agreement regarding the basic concept and design of the budget car that it plans to first launch in China in a couple of years time. Aimed specifically at emerging markets across the globe, the cars in the budget car range will be priced lower than all other cars across brands in the Volkswagen umbrella.
The German car maker will produce all components for the budget car in China, the first market for the budget car brand. Volkswagen’s approach with parts sourcing seems similar to what the Renault-Nissan automaking alliance is taking for Brand Datsun.
Renault-Nissan has a policy of sourcing parts locally and also producing the cars under the Datsun brand locally, at a few earmarked production hubs in order to maintain a tight leash on costs, one of the biggest challenges in the budget car category.
In China, the Volkswagen budget car will be priced between 6,000 and 8,000 Euros. Despite meeting this stringent cost, Volkswagen has been indicating that it isn’t ready to compromise on the traditional strengths of its brand such as a tough build and high level of structural safety. In fact, Volkswagen’s steadfast belief in the Teutonic level of build quality and safety is said to be the reason why the budget car project has run into delays.
Notably, the German car maker is yet to officially announce the budget car brand. However, the announcement is likely to come in the next few months as the feasibility project is said to be close to conclusion. Also, the budget car brand could stand independent from the Volkswagen brand, as a new sub-brand in the ever-growing umbrella of automotive brands under the Volkswagen group.
Like China, India is another emerging market where Volkswagen is likely to debut an entry-level car under its budget car brand. As the car maker is going slow on investments and new projects in India until 2015, the new budget car brand from Volkswagen will not hit India before 2016.