Entry VW brand decision looms

VOLKSWAGEN is expected to make a decision within the next 12 months on whether to proceed with an entry-level brand for Europe as well as emerging markets.

Volkswagen Group chairman Martin Winterkorn told GoAuto at the company’s traditional Paris Motor Show eve media event this week that research into the viability of such a brand has yet reach its conclusion.

“It is something we are looking at,” he said. “But we have not decided anything yet.” It is no secret that Volkswagen has looked on in envy at the success that Renault has enjoyed with the Romanian Dacia brand in Europe and Northern Africa over the past decade – particularly with the Sandero hatch, Duster compact SUV and Logan sedan/wagon/van ranges.

The Sandero is upwards of 30 per cent cheaper than the least expensive Volkswagen in Europe, the Up, helping Dacia find nearly 430,000 buyers mark last year, compared with only 95,000 in 2004.

Earlier, at the pre-show event speeches, Mr Winterkorn spoke of the increasing financial pressure facing the industry, particularly European-based companies such as Volkswagen.

Left: Volkswagen Group chairman Martin Winterkorn.Skoda Auto was acquired in 1990 in the aftermath of the Soviet Union’s collapse, specifically to fill the role as the group’s entry-level marque.

But increasingly high specification levels have seen the Czech brand move progressively more upmarket, to the point where most models now overlap with their Volkswagen counterparts on price and features, while eclipsing them on space.

As a result, the gap between Skoda and Dacia has widened significantly, adding urgency to a decision either way, according to some reports.

It is likely that a ‘yes’ vote by the group’s board members would eventuate in the rehash of old technology such as the PQ24 and PQ34 platform and drivetrain components that date back from the latter 1990s in models such as the Mk4 Polo and Golf respectively.

The cost advantages of using long-amortised technology has already been demonstrated by Renault. The runaway success of the Dacia – employing underpinnings first seen in the 1998 Renault Clio II – not only saved money but also helped keep the French firm afloat during the global financial crisis.

The inexorable growth of developing markets over the past decade has already led VW to try – and fail – to forge a partnership with Suzuki and Malaysia’s Proton.

It has been speculated that Volkswagen could leverage its quarter-century old partnership with China’s massive FAW Group, though it is believed the Germans might go it alone to ensure the future marque’s vehicles reaches a certain standard of refinement, performance and safety expected from a Volkswagen Group product.

If a new sub brand gets the green light, it would take the company’s nameplate count to 13 – Audi, Bentley, Bugatti, Ducati, MAN, Porsche, Scania, SEAT, Skoda, Lamborghini and Volkswagen and Volkswagen Commercial Vehicles.