Volkswagen budget brand likely to get go-ahead

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19 Apr, 2014 10:00am Graham Hope

New Volkswagen budget brand to produce a low-cost car for Chinese market.

A decision on Volkswagen’s budget brand for China will be made soon – and it looks likely to get the go-ahead. 

The German company has been debating the project internally for a couple of years. The move would involve making a locally produced, low-cost car for China with a local partner, and introducing a new name for the brand. 

At a press conference before the Beijing Motor Show, Dr Jochem Heizmann, member of the VW Executive Board for China said: “We have been working on development of a budget car, and we are making very good progress, but there is still some homework to do.

“The project has to be economically efficient – but we are well underway and on the right track.”

VW budget brand: a long time in the planning

Back in the winter of 2013 VW brand development boss Dr Heinz-Jakob Neusser told Auto Express that Volkswagen was still assessing the business case for a budget brand targeting China and was not quite ready make an announcement.

“We are conceptually developing the budget car, but we haven’t decided up to now go into production development,” he stressed.

• VW budget brand “to get go-ahead”

“We are still working on the cost side, and that is the biggest issue. We will only make this car when it is profitable.”

The car, intended for China initially, will not be badged as a Volkswagen. But Neusser added: “It has a special brand in the Group, but it has to fulfil our criteria. It has to be durable, it has to be precise, it has to be safe. We will come to a decision next year.”

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The car will be manufactured locally in China, and sell for the equivalent of around 6,500 Euros. Volkswagen sold over 3 million cars in China for the first time in 2013.

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I don't get this. Skoda should have been their budget brand but they have steadily increased quality, and with it cost, in an attempt to push it up market.

In fact Skoda now rivals their other brands (Skoda Citigo is more expensive than the Sat Mii for example).

I fail to see the point in Skoda, Seat, VW, when they share similar designs, the same parts and sell for around the same cost.

With annual sales of 450.000 Dusters, 600.000 Logan/Sandero's and 100k Lodgy's / Dokker's at 6% margin Dacia proves how profitable a BUDGET brand can be.

One of the peculiarities is that the "cheaper" VW Group makes appear to be less troublesome than the "dearer" ones. Presumably this has a great deal to do with aptitude levels in individual production lines. Any new budget brand would have to ensure that the product does not demand higher skill levels from the workforce than they can give.
Much of the current anguish seems to arise from technical innovations, like the turbo/supercharged engine and DSG transmission, which appear to have
been released a little too early. Another reason for a "budget" brand to be as basic as possible.

It is so people have a choice. Skoda sit in the middle ground now, above SEAT and on a par with VW. If you are a badge snob, you buy the VW, if you want the best car you buy the Skoda, if you want the imageless car, you buy the SEAT.

A good budget car for the VW group would be to re-release the MK1 Octavia Tour, that found many buyers in all the markets it was sold in, offered excellent space and quality and reliability. If they released the car with the 1.9 TD PD engine and 1.6 MPi, with just the basic necessities such as music, electric front windows and central locking plus 6 airbags for around £8995, they's have a surefire winner on their hands. Taxi drivers adored them for the longevity of the engine and all the space. Slightly update the styling, and instead of selling under the Skoda name, find a new name and gradually introduce other cars from the VW groups portfolio that went out of production a decade or so ago. Makes a lot of sense to use tried and tested methods like Dacia are doing - recycling old Renaults etc.

I think the base Model Skoda's & Seat's are Budget enough when it comes to The Materials that are used there Recyled enough, & they have no Standard Equipment 'NO FRILLS' The Price should just be cheaper but unfortunately it is'nt, They're to Expensive for What they are, Why do we need a 100% recycled car for ? I know recycling is big business but the plastics in a Dacia are discusting, Saying that i don't Mind The Dacia Sandero & it's Price, The plastics & the fact that i would'nt want to be in an Accident in one is a bit Scary, SAFETY is an Issue Definately.


Strange the Seat are probably the lowest of the VAG models now especially since they are the only ones with any style or a badge that doesn't give out some sort of stigma.

Vag overload? Wrong website mate.

What music would it have? If it's progressive rock, I'm in! It's been ages since I've heard Marillion.

Probably Vera Lynne or Gracie Fields

SEAT are not exactly making the VW Group a profit though, they only build around 300k cars a year, as opposed to Skodas 1 million a year, which will rise to 1.5 million by 2018. The stigma of the Skoda badge only came about in the UK due to the british publics preconception that because something is cheap it must be rubbish. They didn't realise that before communism, Skoda were building luxury cars.

In my Skodas I have anything from Lady Gaga to Ellie Goulding to Aviici to Jessie J blasting out.

Skodas do not use budget materials and basic equipment! Nor are they too expensive. I'd hardly call bluetooth, DAB and alloys on the base model Octavia at £15,990 expensive, especially as it's a better built and better allround car than the Golf it shares its platform with. I think you'll find it's VW and Audi that strip their cars specs and charge you a few grand extra for the badge!

A WW then!!! - Wonder Wagon!!!

Great point, but that still doesnt change the fact they are generally better cars than its VW bigger brother.

I would argue your last point though, the cars produced under communism were poor, this is why and rightly so at the time they had that reputation. If anyone sticks to that reputation now you can dismiss their opinion as they clearly know nothing about cars just image.

thought VW was a people's car that was affordable and easily repaired. Now with Skoda, I thought this was VAG's new budget brand. what could possibly be a budget brand now? if VW don't watch it, it may possibly misplace the VW brand as well as Skoda.

I think that VAG has maintained rights to NSU and the formerly used Audi brands: Auto-Union, DKW, Horch. DKW and NSU used to be budget cars.

Is this an admission that VWs are overpriced in Europe?
Interesting to see what they charge in North America.

What a load of biased opinion against SKODA! I thought that we had got over those prejudices 15 years ago.
All mechanical parts that go into modern Skoda are identical to the equivalent part in an Audi.
I bought a new Octavia at exactly the same time as a friend bought a new Mercedes C Class. Without prompting he admitted the interior finish was better on my car and it was more comfortable. The paint on mine was also better than his.....

I can't agree with you about the Octavia and C-Class. Mine is far superior to an Octavia. Better made, better engine, quieter, smoother riding, better seats. I could go on. I recently did 2,000 mile journeys on a fortnightly basis, and I can comprehensively say that after a 4 hour airport run in an Octavia, I was more refreshed and comfortable after my longer drive in my C Class than the journey in the Octavia. The current Octavia feels like a massive step back and is somehow less refined than the previous version, despite costing more to buy. It is not quite true that Audis and Skodas have the same parts. Even through it may technically be the same engine, tiny changes mean that several parts are not interchangeable. However the last 2 generations of VW Polo and Golf platforms were debuted on their Skoda equivalents.