Currently reading: VW's budget brand to be "announced next year"
Volkswagen bosses say the firm's budget brand is progressing, but cost and quality standards are still under scrutiny
Jim Holder
News
1 min read
22 November 2013

The Volkswagen Group’s budget car plans are likely to be revealed within the next 12 months, according to VW’s head of development, Heinz-Jakob Neusser.

However, the project is currently undergoing conceptual investigation as to whether a suitable car can be built to a sufficiently high standard and still be sold at a budget price, allowing it to take on the likes of Dacia.

Speaking at the Tokyo motor show, Neusser said: “We are still working on the cost side. What’s clear is that we will only make this car if it meets our standards on safety, ride, handling, comfort and so on – and that it can be made profitably.

"It must be durable, precise and meet all the quality standards people expect from us.”

Despite this, Neusser confirmed that, if launched, the budget brand would be marketed under a new name. “It will be a special brand within the group,” he confirmed.

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RCT V 24 November 2013

I am certain that we have already had this discussion . .

So, VW is to search for the automotive industry’s “Holy Grail”, the production of a financially viable “budget range” of vehicles. It is reported that the Santana vehicle could be the basis of such a budget range of vehicles. The Santana vehicle ceased production in Europe in 1988, but since 1982 has been produced in China. Some have suggested that the VW Group’s Skoda brand, and Seat brand, (should) both fullfill this function, as producers/providers of “budget” vehicles. Both Skoda vehicles, and Seat vehicles, may be (a little) less expensive that their equivalent VW models. However, this price differential is relative. In some parts of the global market for cars, even Skoda, and Seat, would be regarded as sophisticated models - the products of a highly automated, skilled, and efficient “western” industrial infrastructure. Further, in its established “western” markets, the VW Group would not want to jeopardise the fine reputation for build quality and reliability that it has now established and nurtured in resuscitating both Skoda and Seat. Within various market segments, the three competing models from VW/Skoda/Seat are even produced on the same production line. They share the same common mechanical components and sub-assemblies; wiring looms; glass; and seat bases; etc. These different yet closely “related” VW/Skoda/Seat models within a single market segment, certainly all cost the same to produce. The production line does not speed up, and the assembly workers pay less attention, just because a batch of Skoda/Seat cars are sent down the production line! VW will produce as many VW variants as it thinks the market can sustain, and which will produce the appropriate financial return that is required. As the equivalent Skoda/Seat cars are sold at (slightly) lower prices, they will not produce quite the same amount of revenue for the Group, as the VW models. However - significantly - the Skoda/Seat cars help amortise the capital investment needed to produce the “full price” VW variant. The Skoda/Seat cars contribute to greater efficiencies and greater volumes/numbers in the production and purchase of sub-assemblies, and vehicles themselves. Importantly, whilst far from being “budget brands”, the Skoda/Seat cars offer a product to the consumer at a different (lower) “price point”, at which it might be considered inappropriate for the VW brand itself to compete. + + + + + + + + + It is known that VW’s interest in, and part ownership of Suzuki, was because VW wanted - not to learn how to make small cars, but - to learn how to make small cars PROFITABLY !! Producing vehicles in a low-wage economy, may be one contributing factor to producing vehicles with consequently lower “in-puts” and therefore at a greater profit. But, if more (cheap) labour is used in the manufacturing process - instead of the established level of automation than might be associated with manufacturing in developed “western” economies - consistently high quality control (and subsequent reliability), can become problematic. However, this is something that Suzuki does seem to have resolved, with many of its (small) vehicles produced in different SE Asian countries with “developing” economies - such as India. + + + + + + + + + It is possible to reduce the (technical) specification of a “budget” vehicle compared to those developed for “western” markets - to make the entry or “price leader” variant more affordable/accessible to customers. Omitting to fit as STANDARD such items as ABS, traction control; brake distribution; power steering; automated headlights/wipers/mirrors, may all (marginally) reduce the material “in-puts” of producing a given model. However, the VW Santana 3000 was also the first in the Chinese developed Santana series to be available with OPTIONAL ABS brakes, with electronic brake distribution, electronic differential system, a multi function display system, and a sunroof designed by the German Webasto company. To be successfully accepted by its intended customers, a low cost, low price, budget vehicle should not look - or importantly, should not be perceived - as though it was specifically designed and manufactured for a developing economy/market. The intended customers of such vehicles have the same aspirations and ambitions as customers elsewhere. Such potential customers would probably take offence if they were considered as “only” being able to purchase a budget vehicle! + + + + + + + + + It is possible to draw a direct comparison from within the mobile telephone market. Suppliers had intended to further exploit Generation ONE and TWO technology and infrastructure by (re-)utilising it in “developing markets” . . . as the G3 and G4 technology was “rolled-out” in more established economies. However, those “developing markets” were not satisfied with what they regarded as “obsolete” technology. + + + + + + + + + In addition to the Chinese Santana, VW as already produced a number of competent small “city cars”, that could complement the larger Santana in this range of “budget” vehicles. The small VW Lupo “city car” was produced by VW at Wolfsburg, and at Brussels, from 1998-2005, probably their most expensive production facilities! The Lupo was replaced by the slightly larger Fox “city car” which was produced from 2004, in the less expensive manufacturing base of Brazil; with a slightly longer variant produced in Argentina. Certainly, the adoption, “re-cycling”, of the proven - relatively contemporary - technology of an existing (earlier) design such as those mentioned above, would ensure the continuation of the proven dynamic qualities expected of, and associated with, all VW Group vehicles. Even if the “tooling” for such existing vehicles (as the Lupo, Fox, or Chinese Santana), is worn-out, new replacement “tooling” could be produced for the basic structural “body shell” of these vehicles at significantly less cost than designing and developing a completely different, new design. New “refreshed” front and rear “plastic” bumpers and grill, could be produced at relatively little cost - compared to new new/different “tooling” for metal body structures. Further, as the front wings and bonnet are not load bearing - or structural - these too could be relatively inexpensively produced from similar “plastic” materials as the bumpers and grill. Consequently, all the exterior panels forward of the “A-pillar” would/could be new and styled differently to the donor Lupo, Fox, and Chinese Santana. + + + + + + + + + As previously Ford, Renault/Dacia, and now BMW, have all discovered - VW will have also realised with the new three cylinder engine developed for, and used in, the Up, Citigo, and Mii, that it is less expensive - by definition - to assemble a engine with 25% less reciprocating parts than it is to assemble an engine with four cylinders, irrespective of the size/swept-volume of the engine. RCT(V)
sirwiggum 22 November 2013

VW was once the budget brand,

VW was once the budget brand, the Beetle being Germany's 2CV. Then it pushed upmarket. SEAT was then the budget brand, from producing licenced FIATS it then produced the likes of the mk1 Toledo which was seen as a more practical cheaper Golf. VW then tried to push this as the 'sporting' marque but mostly failed with the last generation when everything looked like people carriers, and they paniced and gave SEAT a second hand Audi A4. Skoda was the budget brand starting mid 90s, however this has been pushed upmarket, almost occupies where Rover used to sit.
winniethewoo 22 November 2013

Lord help us. A VW budget

Lord help us. A VW budget brand. It better come with AA recovery, unlimited taxi fares, unlimited rail and oyster card and accommodation thrown in. I wanted to announce that my 4 year old, 55k VW Golf MK6 has had its first full breakdown / warranty claim free year this year. It makes me anxious... I was starting to get lulled into a false sense of security, but then saw that the drivers seat foam has started sagging, meaning I can feel a metal bar dig into my bum/lower back if I sit properly in the seat. Never fails to disappoint!
sirwiggum 22 November 2013

winniethewoo wrote: Lord help

winniethewoo wrote:
Lord help us. A VW budget brand. It better come with AA recovery, unlimited taxi fares, unlimited rail and oyster card and accommodation thrown in. I wanted to announce that my 4 year old, 55k VW Golf MK6 has had its first full breakdown / warranty claim free year this year. It makes me anxious... I was starting to get lulled into a false sense of security, but then saw that the drivers seat foam has started sagging, meaning I can feel a metal bar dig into my bum/lower back if I sit properly in the seat. Never fails to disappoint!
I've found VAG product seats have always been uncomfortable, especially when twisting slightly to get out - the plastic at the side of the seat always catches me.
winniethewoo 25 November 2013

@sirwiggum

The same! I find have to be careful getting out too, or else I end up pushing down on the lever next to the seat, making it go down a notch.