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VW Developing $8K Budget Car For Chinese Market: Report

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Volkswagen up! production version

Volkswagen up! production version

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To the average U.S. car buyer, the Volkswagen Up minicar will seem pretty basic.

Deliberately designed to compete at the bottom of the European market, it always feels like a quality product--but always like a minimalist one too, with few of the bells and whistles found on most cars--unless you pay for higher-specification versions, of course.

The concept of something even more cheap and basic will seem quite alien to U.S. buyers, but Volkswagen is developing just such a car for the Chinese market.

According to Autocar, the new vehicle will have a price of between $8,000-$9,400--aimed at a segment of three million annual sales in China.

VW boss Martin Winterkorn says initial development will be carried out in Germany, then developed further in China with a partner. Development in the car's intended market is the only way it can be made competitive, built at local costs, with local parts and materials.

The car will sit below the already pared-down Up in Volkswagen's range, but is unlikely to be sold outside of markets like China. It's also to be sold under a new budget brand name, yet to be decided, and will use existing VW technology to minimize costs further.

Despite its positioning and low pricing, VW says it won't look cheap--it's merely being developed to fulfil basic mobility needs.

“It has to have good styling and the owner should be able to upgrade the specification over time. The owner wants to be proud of the car", VW technical chief Ulrich Hackenberg told Autocar.

Volkswagen up! production version

Volkswagen up! production version

Enlarge Photo
How companies make basic cars work

Such vehicles are intriguing, as low-cost cars are some of the hardest vehicles for companies to make a profit on.

Superficially cheap cars like the Volkswagen Up are built to the same exacting standards as more expensive models in the range, and with barely fewer materials--yet have to be priced much lower.

Making a truly cheap vehicle, like the Tata Nano sold in India, requires a complete re-think of how cars are designed. The Nano does away with everything not absolutely essential to its market--including a tailgate, anti-roll bars, moving seats, carpets and more. All add cost on a vehicle sold at the absolute minimum price.

While the VW is aimed at the more prosperous Chinese market, similarly clever thinking will need to be employed to reduce costs over the already-simple Up.

That may mean losing equipment that Western markets take for granted--air conditioning, power windows, auto lights and wipers, snazzy interior trim and more. And that's why such a car would never be sold in the U.S market--even if the price was attractive.

When considering the "future of mobility", most modern thinking turns to alternative fuels and green transport. But for millions of drivers around the globe, the immediate future of mobility means back-to-basics cars like the upcoming VW, replacing their existing bicycles or mopeds.

It may never be sold in the U.S, but from an environmental standpoint, its those cars which could make the biggest impact--positive or negative.

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