VW Ponders New Ultra-Low-Cost Cars for China

If Volkswagen AG goes ahead with developing no-frills vehicles for emerging markets, the first models would probably debut in China, Reuters reports.

The company has said it expects to decide by year-end whether to enter the ultra-low-cost segment.

R&D chief Ulrich Hackenberg tells the news service that VW is studying whether it could produce a small sedan, minivan and wagon cheaply enough. Such vehicles would compete with cars from the likes of Nissan's Datsun, Renault's Dacia and a host of new Chinese joint venture brands.

Hackenberg disclosed last March the company was aiming for a price between €7,000 and €5,000. VW would probably keep costs low by using components from its previous-generation models, Reuters says.

The company has decided it would team with one of its two Chinese joint venture partners SAIC Motor or FAW Group on such a project, according to Hackenberg. He says VW is still considering whether it would sell those vehicles under its namesake brand or create a new marque.

German news reports suggest the budget cars could be sold in Europe as well as Brazil, China, India and Russia. But Hackenberg notes that the company is leery about selling lost-cost models in Europe, where they might cannibalize sales of its SEAT and Skoda brands.