Cheap Cars

VW targets emerging markets

China and India have a lot of cars but they still need a lot more. Source: Reuters

It started out as the People’s Car, a bare bones tin can with a motor for a population impoverished by the Great Depression and hyperinflation. In the meantime, Germany’s Volkswagen has become one of the world’s biggest carmakers with a full range of makes and models, including highly engineered vehicles that compete with the world’s best. Now it is returning to its roots with a simpler people’s car, only this time the people are the teeming billions in China, India and other emerging markets.

Plans are well advanced, Handelsblatt has learned from highly placed sources in the company, to bring low-priced budget models corresponding to customers’ needs and manufactured domestically in the two giant Asian markets by 2020. In China, the local VW unit, together with its partner FAW, will develop and produce two SUV models that will sell at somewhere between €8,000 and €10,000 (($9,400-$11,800). In India, the local subsidiary of VW’s Skoda unit will produce an even cheaper car, coming in as low as €5,000.

Both versions may be cheap, but the goals are wildly different. In China, VW hopes to gain a further slice of what is already its biggest market and a well-established battle ground for German carmakers, including Mercedes and BMW in the premium segment. India, by contrast, is only just getting started – and VW has yet to successfully enter the market.

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