Volkswagen Group Looks to Expand Family of Brands With Low-Cost Entrant

Intending not to let rivals outdistance it in emerging markets, Volkswagen may launch a new low-cost brand by about 2015. Surprisingly, one of the world's best small-car makers so far has lacked a major presence in important emerging markets such as India and Southeast Asia.

Now Volkswagen reportedly is aiming for a price range of $6,500 to $12,900 for the budget cars, which may include a minivan, wagon and small sedan. They would be aimed at the BRIC nations and also, perhaps, Europe. "We're regularly looking at new segments and interesting markets which also include so-called budget cars," Volkswagen Group America spokesman Eric Felber commented to Reuters. "But a decision has not been taken yet."

If VW moved in this direction, it would join new efforts by major European rival Nissan-Renault to capitalize on growth in emerging markets. Nissan CEO Carlos Ghosn has made a personal crusade out of bringing the company's venerable Datsun brand out of mothballs and using it to create a platform for selling a new line of such vehicles. Meanwhile, corporate sibling Renault is looking to expand sales of its Dacia low-end brand.

The gambit could make sense for VW for at least three reasons.

First, its partnership with Suzuki that began three years ago, designed to take advantage of the Japanese company's expertise in inexpensive cars, has fallen apart, leaving VW with a gaping hole.

Second, VW CEO Martin Winterkorn knows he has to fill such blank spots in VW's lineup in order to compete seriously with GM and Toyota for global sales supremacy by 2018.

And third, just about any proposition for sales growth these days is looking better than Europe, which has slid into a car-sales slump because of all the eurozone financial woes and an overall economic slump, not to mention price cuts by Volkswagen AG and Renault SA.

Succeeding in the smallest-and-cheapest car markets will take some doing for Volkswagen and its rivals. At least now it looks like game on.