Volkswagen’s “low-cost” line coming to China in 2017. Branded how?

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Volkswagen’s supervisory board approved plans for a range of low cost models, and they will be launched in 2017 onto the Chinese market, The Nikkei reports from Volkswagen’s shareholder meeting in Hanover, Germany. CEO Martin Winterkorn said the car will be targeted at first-time car buyers. At a rate of around 60 cars per thousand people in China (USA: more than 800), there is no shortage of first-time buyers in the Middle Kingdom. According to the Nikkei, Winterkorn “did not touch on specifics, such as pricing, he hinted a final decision will be soon made.”

Volkswagen has been thinking more or less aloud about a lower priced brand for several years now, so the decision does not come as a big surprise. The Nikkei, along with the better informed parts of the industry, expect Volkswagen “to keep the price under 7,000 euros ($9,643) and to use a different brand name.”

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It will be interesting to see what brand name is used, and the choice will indicate how serious the company is about the budget range. From Horch and Wanderer all the way to DKW, Volkswagen has a bunch of storied brands in its portfolio, which it could resurrect like Nissan did with Datsun. As counter-intuitive as it may sound to some, heritage is an important part of car branding. If Volkswagen picks one of those, then their hearts will be behind the plan.

In Germany, there had been rumors that Volkswagen would resuscitate Beetle as a brand name for the low-price venture. Should that be taken, then you should read it as a sign that VW is not fully committed. Apart from the fact that anything else than an egg-shaped car would cause serious cognitive dissonances, “Beetle” never was a brand at VW. They called their bug a Beetle only after it was destined to be killed.

Another guess is that Volkswagen will use the lower-cost line as belated compliance with China’s mandate for joint venture brands, a la Nissan’s Venucia, or GM’s Baojun. VW has successfully dragged its heels in that regard. Starting one in 2017 would be less than timely. And it would require two JV brands, one with FAW, one with SAIC.

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If industry watchers are right and the price will be in the $10,000 range, then the cars hardly will deserve to be called low-cost. There are many cars on the Chinese market – and elsewhere – that cost less. A cheap Chinese car can be had for around $5,000. The Wuling Sunshine minivan, sold by GM’s Chinese joint venture, starts at 38,300 yuan ($6,150). Chevrolet’s Sail starts at 56,800 yuan ($9,120).

To become truly disruptive, Volkswagen’s low cost line would have to sell at roughly half of its target price. This is where Datsun’s redi-Go is rumored to sell. This new from the ground-up car has been shown at the Delhi motor show in concept form. It is expected to hit the Indian market some time next year. Slotted below Nissan’s Versa, and developed by Gerard Detourbet, the father of the modern Dacia, the car could truly disrupt emerging car markets. Most of what is known about this car has been documented end of last year by yours truly in a long article written for SAE Magazine. The article is here in its entirety.

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