High internal manufacturing standards blamed for new budget brand's delay; company chief says "we know we face a challenge"
28 February 2014

Volkswagen's chief of research and development, Dr Heinz-Jakob Neusser, has confirmed that the VW Group is still working on the launch of a budget brand to rival Dacia – but admitted it is yet to find a solution that will allow it to prepare for launch.

The mooted Volkswagen Group budget brand had previously been reported to have hit repeated problems as a result of the company’s own internal standards for manufacturing.

Speaking at the Geneva motor show, Neusser said, "We are still working on the issue of the brand, but we haven't made a decision on it yet. We know we are not prepared to launch cars that don't meet our maximum quality aspirations, and we know we face a challenge.

"But now is not the time to say more than this. We will work on a solution and then talk about it if we find it."

Insiders report that the company is struggling to hit budget targets for the proposed cars while still maintaining what senior management has deemed “necessary” quality and safety levels. As a result, there is currently no business case for making the vehicles.

However, the project is reported to be “still under consideration” as opposed to being put on hold or cancelled. Insiders say that VW’s technicians have been impressed by how rival brands – including partner Suzuki, with which it is at loggerheads – have managed to create high-quality budget cars without pushing costs up.

The low-cost brand is being investigated by VW because it would give the group a direct rival to Dacia and allow VW to further penetrate lucrative markets in China, India and across Asia and Latin America, as well as enhancing its offerings in Eastern Europe, the Baltic region and Africa.

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Comments
11

28 February 2014
Wouldn't Volkswagen be better off reviving a defunct brand with a bit of history behind it (e.g. DKW, NSU, Trabant, Wartburg, etc) and turning it around like they did with Skoda (remember the old jokes) instead of starting out with a clean sheet?

28 February 2014
It's not the brand that's the problem - it's the cost of actually making the car.

28 February 2014
Into the countries that didn't have them as a budget car. I bet if it were cheap enough people here would still buy one. (I think) they still sell the Mk1 Golf in South Africa, so it can't be that hard to do.

28 February 2014
Suzuki manages it by building their cars in India. It also pooled resources (ie. the Alto was also sold as Nissan Pixo, and previously as a Mazda in Japan) It is impossible to build a car in Europe to a budget. The original Mini was a loss maker. (The only reason the original Beetle may have drawn a bit of profit was down to the low tech and long production run.)

28 February 2014
You can be very clever with production processes and reducing the number & complexity of components, but if you're building the car in Europe you're still going to be hobbled by the comparatively huge minimum wage requirements - building it somewhere where you can still pay 50p an hour is probably the only way, and then you risk hitting the quality issues mentioned in the article.

28 February 2014
Not quite sure what VW's beef is with this project. They have factories in Eastern Europe like its competition, it has factories in South America and Asia, like its competitors. It also has a wealth of component and platform sharing, more so than its competitors. I am surprised that VW cannot do this when several others (namely Suzuki and Renault-Nissan) can. I suspect this is more to do with VW's ego than engineering or production efficiency and design.

28 February 2014
Wasn't Skoda their budget brand? The Group went after the perceived quality image in the 80s and 90s, and they succeeded. Now it seems that they are also suffering from the quality levels they attained... however, if you look at their recent Latin American lineup, the quality and safety of some of the models in the range leave to be desired: www.latinncap.com. I am glad they didn't cancel the plan and that they are looking for a solution, though.

28 February 2014
I don't think that's the reason why Volkswagen board members can't sign off the new budget brand, considering the Autocar story only a few weeks ago about the VW Polo failing safety standards rather spectacularly in India. The only consideration in the VW board rooms is PROFIT.

28 February 2014
. . . but it Wag can't do cheap enough without compromising to some degree it's standard. It would then be better for Wag, to produce that budget brand under a different name. Trabant or Wartburg could work quite well, for a pure budget brand - produced as cheaply as possible without at least compromising safety. It could be produced say in Slovakia or Poland. Not inside Germany. Hence giving a little more distance to it's other products, not compromising the made in Germany quality image.

1 March 2014
What will they call this new budget brand from Germay's largest car maker? It is a name that must have meaning and some history, and hark back to the great days of the past. While at the same time alluding to universal appeal. And of course it must be a name without pretension. A name absolutely impossible to imagine as a luxury brand but which is suggestive of modern social democracy, as exemplified by the New Germany of the late 20th and early 21st centuries. There can be only one name. What is the German for 'People's Car' ?

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