Volkswagen budget brand to launch in China in 2018

The Volkswagen Group’s long-anticipated budget brand will launch in China in 2018.

Speaking at the announcement of the Volkswagen Group’s 2016 financial results, Jochem Heizmann, board member responsible for China, confirmed that the first vehicles produced in partnership with Chinese car maker First Automobile Works (FAW) would launch “with a focus on the SUV segment.”

“We want to be competitive in that segment,” said Heizmann. It is believed that the first launch will be a mid-sized SUV, and that a saloon and hatchback are likely to follow.

Heizmann claimed that no name for the economy brand has yet been decided, but confirmed that “at the moment it will not be VW.”

The Volkswagen Group has previously struggled to meet its internal minimum standards for manufacturing while still meeting the financial constraints imposed by building a budget car to be profitable. A partnership with Suzuki to work on similar vehicles was dissolved in 2015.

Although the cars will initially be sold in China, emerging markets like India, Latin America, Eastern Europe, the Baltic region and Africa could be subsequently targeted. However, presently, there are no plans to sell the cars anywhere else in Europe.

In a separate project, the Volkswagen Group is also working with Tata Motors on vehicles for the Indian market. Development is being led by the Skoda brand, with Volkswagen Group CEO Matthias Müller confirming that a range of body styles would be launched on a small, A0-sized platform from 2019.