German automobile giant Volkswagen plans to get a grip over low cost automobile segments starting 2017. The country to play host to this aggressive move first up will be none other than the world’s most populous one, China. Volkswagen will start rolling out low cost cars in China come 2017 and these low cost cars will be sold under a new sub-brand that the German automaker will create specifically for its low cost car range.
The cars under Volkswagen’s low cost brand will be aimed squarely at first time buyers and will come with a sub-7,000 Euro price tag, which translates into Rs. 5.7 lakhs. The low cost cars will be built under a joint venture with SAIC, which already is involved in the manufacture of the Passat, Tiguan, Santana and Lavida in China.
The plan to launch a low cost car brand in China was revealed at a recent shareholder meeting of the company and the finer points of this move will be finalized shortly. One third of Volkswagen’s global sales come from China and Volkswagen is the numero uno automobile manufacturer there. Therefore, it makes sense that the company touches new price points to expand its market share in the world’s largest car market.
Volkswagen intends to invest about 18.2 Billion Euros in China over a period of 5 years and the budget car range will form an important part of that investment. Volkswagen had plans of launching the low cost brand a tad earlier but the automaker ran into a slew of costing issues which now seem to have been sorted out. To accommodate the big volume, low cost car brand, Volkswagen is planning to increase its production capacity in China to 4 millions units.
What does all of this mean for India, a major emerging car market, which is closest in proximity to China?
Volkswagen India has been making positive noises about launching low cost cars here as well. However, it remains to be seen if the low cost car brand that will be launched in China in 2017 will be country-specific or whether it will be a global brand that also caters to other emerging markets such as India and Brazil. Whatever be the case, the first crop of Volkswagen’s low cost cars will hit roads only in 2017, which is the earliest such cars could come to India.
Source – Asia.Nikkei.com