Volkswagen’s low cost brand entry could take until 2016
Volkswagen, which aims to challenge the likes of Nissan’s Datsun and Renault’s Dacia low cost car brands, is expected to enter the market with its own low cost brand in 2016. The Volkswagen low cost brand will be centered around cars that will cost 5,000 Euros, a price that puts it between the INR 3 lakh to INR 4 lakh mark. Volkswagen’s low cost small car is expected to be made available in emerging car markets first, following which a European debut could ensue. Apart from these details, nothing much is known about Volkswagen’s exact strategy to capture the growing pie of the low cost car market.
Positioned as a premium brand, Volkswagen does have lower priced car brands in its fold. Czech car brand Skoda and Spanish car brand Seat are two such brands under the Volkswagen umbrella. However, these brands produce cars based on Volkswagen’s existing platforms and therefore are not low cost in the real sense of the word. Therefore, it seems likely that Volkswagen will create a separate low cost brand that will have an identity of its own, much like Nissan’s Datsun or Renault’s Dacia.
Low cost car brands are becoming commonplace across the world. While Nissan has the Datsun brand to sell low cost cars in emerging car markets, Renault uses the Dacia badge. On the other hand, car makers like Toyota and Honda have created low cost platforms like the Etios and the Brio instead of establishing a new low cost brand. That said, Toyota does have the Daihatsu brand, under which it sells affordable cars in South East Asian countries. Cars based on Toyota’s Etios platform and Honda’s Brio platform are sold in many countries including India, Thailand, Brazil and South Africa.
India is expected to be the center of the low cost car brand revolution due to the huge car market and low cost production capabilities. Already, many car brands like Nissan, Suzuki, Hyundai and Toyota export significant number of cars from India, leveraging the country’s advantage of high quality-low cost manufacturing. So, India could become a hub of low cost car brands. In 2014, Nissan plans to launch two low cost Datsun cars in India. Both these cars will have significant amount of localization and will be built in India, at Renault-Nissan’s Oragadam manufacturing facility.