VW is approaching the critical phase of its plan to launch a range of aggressively priced base products. How aggressive? Well, we´re looking at €7000 for a four-door family saloon, €7500 for a boxy estate and about €8000 for a basic MPV.
Also on the wish-list are an even cheaper three-door hatchback for India, and a trendier five-seat crossover offered at around €9000. ESP and air-conditioning will probably cost extra, but the above prices include at least two airbags and ABS as well as the local taxes. Keeping complexity at a minimum, options will be bundled in three or four equipment packs. Since China calls the shots in this vehicle category, VW may tap its partner, First Automotive Works of Changchun, for assistance.
Is there a market gap for these bargain basement motors?
The segment for entry-level cars costing up to €10,000 will have grown to eight million units worldwide by the end of 2012. This equals a 13% share of the total sales volume. The biggest budget car market by far is China where every third vehicle is entry-level – that's over 3.8m units per year. Number two is India with 1.2m units and a 48% market share, followed by Russia with 900,000 units and a 38% share. A car sales goldmine surely awaits...
With 400,000 units and a meagre 3% take rate, Europe's love of premium badges ranks it at the bottom of this list. The biggest global players in the bargain basement are Dacia, Lada, Proton, Chevrolet and Suzuki, along with licensees like Perodua and Maruti. The Chinese dominate the local market, but at this point Geely, BYD, Hawtai and Brilliance are not yet ready to start any kind of serious export offensive.
Will these budget cars wear the VW badge?
The new low-cost cars will definitely not be marketed under the Volkswagen nameplate. Instead, VW will either create a new brand name or use the Tantus badge chosen for the Chinese electric car programme.
Interestingly, the new budget VW will measure up longer than the entry-level Up city car: 4200mm plays 3540mm. Underneath, it’ll be based on a version of the outgoing PQ platform which still serves the current Polo and Passat. Thanks to the no-frills engineering concept, the long written-off tooling and the inexpensive componentry, the cost benefit over the more flexible and space-efficient MQB is substantial. We're potentially talking about more leftovers than Boxing Day dinner here.
Want some numbers? The rear axle of the old Polo is for instance €250 cheaper than the hardware fitted to the future 2016 Polo VI. VW may save even more dosh by replacing the rear disc brakes with drums and binning power steering. Theoretically, the ‘Budget Car’ could be based on the ancient Jetta that’s still built in China. But since this model is a heavy beast and meets none of the upcoming crash or emission norms, it should make more sense to start from scratch.
Just how much car can I expect from a budget brand?
Standardisation is key when it comes to development of these bargain-basement ventures. CAR’s sources report each ‘VW-lite’ will get an identical 2500mm wheelbase, and see production in cheap labour countries (allowing a relatively low level of automation). Expect plenty of common components including spring-strut front suspension and straightforward electronics.
Whereas the body panels of a Polo or Golf go through five different stamping steps, the shape of the ‘Budget Car’ must be defined in only two to three stamping cycles. The result is a basic, still stiff, compact car. On the powertrain front, VW intends to use the older normally-aspirated, indirect-injection two-valve 1.2 to 1.6-litre three- and four-cylinder petrol and diesel units. They'll be revamped for improved fuel economy and reduced emissions. A five- or six-speed manual will be standard, but there is also a seven-speed DCT auto in the offing.
So, is VW’s budget brand going to get the green light?
According to the Wolfsburg grapevine, the VW group will soon announce the birth of its thirteenth brand. No, it´s not going to tug at the heartstrings like Lamborghini, but while the ‘Budget Car’ may lack emotional appeal, it could score big in terms of quality, reliability, driveability and profitability.