A 1946 "people's car." VW is looking at ways to repeat its success by targeting emerging markets with a new bare-bones car line.
It’s first “people’s car,” the Beetle, was originally designed to help get a new generation of German drivers on the road – and during the ‘50s and ‘60s became the car of choice in the U.S. and many other markets for first-time buyers.
But the latest version of the Volkswagen Bug is anything but an economy car. And with automakers anxiously eying opportunities in today’s emerging markets, that has VW thinking about ways to repeat its past success – possibly by launching an all-new line of economy models that could be sold for as little as $6,500, the maker has confirmed.
The maker has considered several ways to get there, possibly by partnering with erstwhile competitors such as Malaysia’s Proton or Japan’s Suzuki, but VW officials are now focused on launching a new sub-brand of their own, they’ve confirmed in several interviews.
Pressure on the German maker to come up with a low-cost alternative is growing as competitors target the same low-price segments. In China, for example, Nissan and its Chinese partner recently introduced the new Venucia line, while the alliance between General Motors, SAIC and Wuling has introduced the basic Baojun, or “Treasured Horse,” brand.
Nissan and French alliance partner Renault have also taken a controlling stake in Russia’s Dacia, targeting it at the heart of the old Soviet Union and other emerging markets.
VW had also hoped to find a partner specializing in econocars but failed to pull off a deal with Proton. And an alliance with Suzuki collapsed this year with finger-pointing and legal briefs flying in all directions. So, it appears VW is ready to go it alone, perhaps as early as 2015, according to one report in the German news publication, Der Spiegel.
Unlike the proposed acquisition of Proton, the idea of launching an all-new brand apparently has the support of the VW labor board – German unions having a strong say in such management issues. “For emerging markets we need a car cheaper than the VW Up,” Der Spiegel quoted the head of that board confirming.
Wire service Reuters quotes VW’s European spokesman Eric Felber cautioning that, “A decision has not been taken yet,” though he added that, “We’re regularly looking at new segments and interesting markets which also include so-called budget cars.”
Exactly how low could the new line go? Reuters quotes a price range of $6,500 to $12,900 for models that might include a small sedan, a wagon and possibly some other options. Other sources move the base up closer to $8,000 – which would still be a far cry under the current starting price of around $13,000 for the Up microcar.
Such a sub-brand would be definition skimp on the niceties – and possibly leave off such features as anti-lock brakes, airbags and air conditioning where legal possible. But it would unlikely attempt to match the ill-fated Tata Nano, the bare-bones machine that has done surprisingly poorly in home market India – perhaps because of a series of well-publicized vehicle fires.
While the so-called BRIC markets – Brazil, Russia, India and China – have fueled much of the industry’s recent growth, industry analysts believe a second wave is set to follow in the next generation of emerging economies, including Indonesia, where Nissan is targeting fourfold growth by 2014 with the launch of Dacia there.