The VW Group for years has been mulling whether to launch a low-cost brand to challenge the Renault Nissan Mitsubishi Alliance’s successful Dacia brand as well as some popular emerging market brands such as India’s Tata and several offerings from China.
The biggest hurdle remains manufacturing low-cost cars profitably. The VW Group has looked to India as a solution, which was one of the main reasons the automaker last decade bought a sizable stake in Suzuki which has a strong presence in India. However, the partnership didn’t work and ultimately came to an end in 2015.
It seems the VW Group’s quest to launch a low-cost brand isn’t over, though this time the focus will be very much on China.
Speaking recently with Motoring, Frank Welsch, head of development for the Volkswagen brand, said the VW Group will introduce a budget brand in China within two years. The brand will start with a sedan and then add two SUVs by 2021. The targeted starting price for the sedan is about $10,500.
The vehicles will be built in China, with VW teaming up with local partner FAW for production. The Chinese market will be the priority but the cars will eventually be sold elsewhere. Just don’t expect to see them in the United States.
The VW Group also isn’t giving up India, like some others have. If all goes to plan, the low-cost brand will eventually launch in India. However, the VW Group’s focus for India at present is the Skoda brand. The VW Group in March formed a partnership with Tata to investigate ways to expand Skoda in India.