Bring­ing back the past for bud­get range

IN­TER­VIEW/ Volk­swa­gen to start all-new brand by 2019 and it will first launch in China, writes Michael Tay­lor

Business Day - Motor News - - FOCUS ON HAVAL -

The saga of Volk­swa­gen’s on-again, offa­gain bud­get brand is of­fi­cially on again. And, ac­cord­ing to the brand’s head of de­vel­op­ment, it’s never been “off again” at all, in spite of re­ports in­sist­ing on its demise.

Frank Welsch has re­vealed the bud­get brand will be launched in China within two years, start­ing with a small sedan and ad­ding com­pact and larger SUVs be­fore 2021. He in­sists re­ports of the death of the pro­gramme mixed a can­celled Skoda-Tata pro­gramme for an In­dian bud­get car with Volk­swa­gen’s own ges­tat­ing bud­get brand.

“The thing that you might think of is this TataSkoda story,” Welsch says. “This is In­dia and this is not a bud­get car for China. This is dif­fer­ent and I can­not com­ment what Skoda is do­ing.”

He first ad­mit­ted to the bud­get brand pro­gramme at the launch of the Golf 7.5 in 2017, then re­it­er­ated its sched­ul­ing be­fore the Frank­furt Mo­tor Show.

“The only thing that is not chang­ing in the past six months is the bud­get car. There is no change, no change in tim­ing or engi­neer­ing or con­cept.”

Welsch and Volk­swa­gen brand CEO Her­bert Diess are aim­ing to use the brand to em­u­late Re­nault’s suc­cess with Da­cia and are engi­neer­ing it down to a tar­get price of about 70,000 to 80,000 ren­minbi (about R140,000 to R162,000). It is also unashamedly tar­get­ing Chi­nese SUVcrossover player Haval.


It will build the brand, and mod­els, with its Chi­nese joint-ven­ture part­ner FAW, to tackle the Chi­nese mar­ket as a pri­or­ity be­fore go­ing global. The orig­i­nal Volk­swa­gen plan called for a bud­get sedan, but Haval’s suc­cess forced it to flesh it out from one model to three, with two bud­get SUVs.

“Ev­ery­body knows China is a sedan mar­ket, but it’s not. The Chi­nese peo­ple who have less money, what do they like? They dream of SUVs. Look at the Haval H6,” Welsch pointed out months ago. “We want to be as suc­cess­ful as Haval in that mar­ket. If we had added one SUV, then it’s easy to have two ver­sions if we change the wheel­base and add a third seat­ing row. Also, we have to keep in mind the econ­omy seg­ment will be a strong seg­ment not only in China.”

China takes about half of the Volk­swa­gen brand’s 6-mil­lion car sales a year, but it also has ideas to use it to tackle Mex­ico, and In­dia. It will face tough com­pe­ti­tion on the sub­con­ti­nent, with Re­nault launch­ing a sec­ond stand­alone brand there be­cause the Da­cia range is too ex­pen­sive to gen­er­ate mass vol­umes.

In a mar­ket dom­i­nated by Suzuki, Re­nault launched its Kwid cross­over with a busi­ness model at odds with car-in­dus­try tra­di­tion. The Kwid’s de­vel­op­ment cen­tred on new ar­chi­tec­ture us­ing the plat­form of the Dat­sun Go and a Spar­tan-like dis­ci­pline to keep costs down, rather than pri­ori­tis­ing a launch date as al­most all car de­vel­op­ment pro­grammes do.

Volk­swa­gen won’t do that, but will avoid the more ex­pen­sive MQB ar­chi­tec­ture that sits be­neath all of its small-to-medium cars and SUVs, in­clud­ing the Polo, Golf, Tiguan, Pas­sat, Ar­teon and the Ter­a­mont-At­las. It will in­stead use su­per­seded pieces to keep costs low and Welsch’s team is tweak­ing the Golf Mark 6’s core engi­neer­ing,

“But for the bud­get car, which is lower end, why not use com­po­nents that are work­ing prop­erly but they have in­vested in pro­duc­tion for 10 years al­ready? This is much bet­ter for a project,” Welsch said ear­lier in 2017. “The eas­i­est thing would be to stay in pre­mium prod­ucts and stan­dard­ise and leave the low price things to other play­ers.

“But in cer­tain parts of the world, we will need such econ­omy cars and in China, 40% al­ready is with econ­omy cars. To of­fer cars for 60% of the mar­ket or with 65% of the mar­ket? If we want to be num­ber one in China we have to ad­dress this bud­get mar­ket as well.”


Could VW’s bud­get brand come to SA? asks

Well, there are ru­mours that Volk­swa­gen SA (VWSA) is look­ing at an­other brand but it will have to tread care­fully af­ter the fail­ure of Seat. Tak­ing on the new VW bud­get brand could im­pact on not just sales of the VW Polo Vivo but also its pro­duc­tion and VWSA will not want to jeop­ar­dise that.

GM of group com­mu­ni­ca­tions at VWSA, Matt Gen­nrich, told us that “Volk­swa­gen SA cur­rently man­u­fac­tures the Polo and the Polo Vivo and will con­tinue to do so with the new mod­els ex­pected in early 2018. Ide­ally we would like to be able to add a third model in the fu­ture, if this would be a com­mer­cial or pas­sen­ger de­riv­a­tive would de­pend on many fac­tors. While a num­ber of stud­ies have been con­ducted, no con­crete plan or de­ci­sions have been made or de­cided on.”

The fact that the new bud­get brand will prob­a­bly be based on the Golf Mk 6 means it will be big­ger than the Polo Vivo, a new ver­sion of which is likely to be based on the out­go­ing cur­rent Polo. Pric­ing might make it dif­fi­cult for there to be a Volk­swa­gen Golf Vivo in SA, but what about the bud­get SUVs? Tiguan Vivo any­one?

A new Volk­swa­gen bud­get brand will prob­a­bly be based on the Golf Mk 6, right. Volk­swa­gen SA wants to add a new model to its pro­duc­tion line in Uiten­hage, left.

VW SA will not want to jeop­ar­dise its Polo Vivo range.

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