Reports in October 2012 claimed Volkswagen had begun investigating the creation of its own budget brand. This came after having failed to purchase Malaysian car company Proton or produce a meaningful partnership with Suzuki, and after watching Renault-Nissan make piles of euro on Dacia and plot the return of Datsun.

For VW, more important than the question of what to call it was how to build it profitably and in a way that didn't damage the VW brand. According to a report in Autocar, a satisfactory answer still hasn't been found. The hurdle is how to hit "'necessary' quality and safety levels" at the price points needed to make the venture worthwhile. At the time of the 2012 report, German outlet Der Spiegel said VW was trying to get prices down to 6,000 to 8,000 euro ($7,784 to $10,379 US), about two thousand to four thousand euro under the price of the VW Up and in line with the cost of a 6,790-euro Dacia Sandero in Germany.

In March 2013, VW announced, "We want to bring a true budget car to the market in China in the foreseeable future," the most concrete move in that direction after years of planning to make a decision. Working with local Chinese maker FAW, it was predicted that the vehicle in question would appear around 2016, but as of November last year a final vote on it needed to wait until this year because "We are still working on the cost side" and profit possibilities for a car that "has to be durable, it has to be precise, it has to be safe."

Even Fiat, another automaker long considering a budget brand beneath its Fiat line-up, wasn't sure how to squeeze any extra money from lower-cost products but was sure that it couldn't be done by manufacturing in Europe. If VW hasn't yet made the math work with a joint venture in China, it will be interesting to see how it might build a European go-it-alone business case.


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  • 25 Comments
      ken
      • 9 Months Ago
      Just like the budget airliners, they are not here to make "cheaper" alternatives. They are here to allow the original to become more expensive while cutting costs to justify the poorer standards of services without actually cutting into revenue.
      Justin Campanale
      • 9 Months Ago
      If Skoda isn't a low budget car, then what is it? It definitely is a step down from VW.
      juanmj93
      • 9 Months Ago
      They Already own Seat and Skoda, why not take advantage of that instead?
      Michael Scoffield
      • 9 Months Ago
      VW is being dumb. Here in Europe they already have a budget brand which is called Seat. There isn't a single Seat that has an interior as nice as a VW or Skoda. And they're already quite expensive, with options easily jumping 20k (that's in Euros). What do they want more ?
        SpikedLemon
        • 9 Months Ago
        @Michael Scoffield
        Seat's not a budget brand in the same sense as Dacia. For similar money you can get a much nicer Skoda. Or for less money: a Kia. Both of which are nicer and ride on newer platforms. Why would you bother with a Seat?
        NG22
        • 9 Months Ago
        @Michael Scoffield
        Seat is a brand further upmarket, as you said. The whole point of a budget brand is for VW to get sales in Southeast Asia, South America, and other such developing markets. How does Seat help them compete with Proton and Suzuki in Malaysia? This venture is about Dacia-like pricing. Perhaps even lower if possible.
      Snark
      • 9 Months Ago
      Skoda should be a low budget car. It's pointless as is.
      Rotation
      • 9 Months Ago
      VW already has two budget brands, Skoda and SEAT. I don't get the quandary here.
        NG22
        • 9 Months Ago
        @Rotation
        Neither of those brands are low enough to compete against Proton, Suzuki, or Tata in developing markets. These cars are meant to be dirt cheap, but new, so people in Southeast Asia and South America could afford them over motorcycles or other forms of transportation.
      Noah
      • 9 Months Ago
      VW being concerned about quality. That's funny. Ask anyone with a 5+ year old VW how the maintenance and running costs compares to other brands. The electronics are less reliable than a twenty year old Hyundai and significantly more expensive.
        mmmoose
        • 9 Months Ago
        @Noah
        What's funnier is people like you who still think this is true. I'm going to wager a guess here and say you're probalby a Civic or Corolla owner who is so deeply engulfed in old stereotypes and superstitions that you've lost all sense of reality.
          Scr
          • 9 Months Ago
          @mmmoose
          It IS still true. VWs in the US are utter crapwagons. It is in part why their sales are dropping like a rock here. They are getting their old reputation for unreliability back. Not a single VW or Audi owner I know, and I know LOTS of them, has not had fairly serious and expensive problems with their cars. Some of them right from when they bought it. Others have had catastrophic failures after about year 3 (of course, the warranty is done), the interiors just fall a part, and parts break that should NEVER break on a car. It's funny because I drive them to the shop to drop off or pick up...while my 9 year old car with 110k on it has never been in the shop for any mechanical or electrical problems, nor interior repairs.
          Mike
          • 9 Months Ago
          @mmmoose
          I've owned the following: 1975 Swallowtail 2dr Rabbit 1983 GTi 1987 Golf GT 4dr 1997 Jetta GT 2007 Passat 4Motion Wagon 1999 A6 Avant 1991 Toyota 4x4 extended cab pickup V6 1996 Toyota Land Cruiser w/ F/R locking diff 2005 Toyota 4Runner w/ full time 4WD and center locking diff The only issue my VW/Audi's have more often are I need to replace headlight and taillight bulbs more often than my Toyota's. Having to drive rental cars makes me irritated as it's either Nissan, GMC/Chevy, Chrysler or if I'm really lucky I find a Ford. I'd take a Ford over any other domestic brand and definitely over a Nissan. That Nissan Tritan 4x4 is a POS.
      Jesus!
      • 9 Months Ago
      lol wait...they want to make a new line of vehicles that are less reliable and have poorer quality materials than VW already sells? Doomed from the beginning!
      cooter
      • 9 Months Ago
      I don't get it... what about Scoda?
        Hek!
        • 9 Months Ago
        @cooter
        It seems VW just wants to have 50+ brands.
        Michael Scoffield
        • 9 Months Ago
        @cooter
        What about Seat ? I've been in many and have cheaper interiors than both VW and Skoda.
      Philip Kozakieiwcz
      • 9 Months Ago
      wait a minute, VW itself is the budget brand ! besides, the company has gobbled up just about every european brand throughout the past decade. skoda and seat are pretty much just VWs with alternate badges these days. audi's are the premium VWs while VWs are the budget VWs, that's how it goes! here in VWs motherland (germany) they have long been commanding premium-segment like prices (in America you can get a fullsize V8 sedan for the cost of a nicely equipped 1.4 liter VW Golf 7), don't know about pricing of VWs in the American market, but i've got this feeling that the 30% overpay which the euro customer has to pay for a VW product, goes directly to subsidize more reasonable pricing policies in overseas markets. but i guess in VWs quest to rule the world, they are going to go all out. you know the germans call that "end sieg" (ultimate victory) lol :D
      eye.surgeon
      • 9 Months Ago
      VW's biggest hangup in the US market is it is perceived by many as itself a budget brand, unlike it's more premium position in Europe Most of the VWs I see here are base model jettas. Their efforts to premium-ize their brand here have failed, ie. phaeton.
      Scr
      • 9 Months Ago
      Damage the VW brand? That is hilarious!
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