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Old 10th January 2013, 10:35   #1
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Default VW's budget brand for Emerging Markets

Nissan started the trend with the revival of Datsun and now Volkswagen too is considering the same.
Volkswagen is scripting plans of launching a budget brand for emerging economies where base products constitute 40% of the market

Volkswagen has finalized three core products/platforms to start the brand
  • A 6 lakh rupees sedan
  • A 6.5 lakh rupees wagon based on the sedan
  • A 7 lakh rupees MPV
  • A 7.8 lakh rupees crossover
  • Affordable, entry-level three-door hatchback
Most of these products will having designs from old VW models such as the past generation Polo, Jetta and Golf would be recycled. This would make them cheaper to build and more reliable because they have been tried and tested for ages

The same 1.2L petrols and 1.6L diesels that are present in the current Polo and Vento sold in India will build homes under the bonnet of the new ‘VW lite’ cars.
Volkswagen will work extensively on getting more mileage from these old engines. A five-speed manual will be standard across the product range. But surprisingly, VW has plans to offer a 7 speed DCT as an optional extra for people who can afford it

Because these new VW-lite cars will not be anywhere close to VW’s future range of ultra-hightech and super-safe cars, it makes little sense to sell them under the VW badge .

UK’s CAR magazine says that the new range of VW low cost cars will consist of INR 4,65,000 entry level sedan, INR 5,00,000 estate and INR 525000 mini MPV
VW may use the ‘Tantus’ badge to sell these budget cars in the emerging economies. 2016, will see a fierce battle between Datsun and Tantus in India



Cheers!



Last edited by moralfibre : 10th January 2013 at 13:02. Reason: As requested
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Old 10th January 2013, 11:23   #2
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Default Re: VW's budget brand for Emerging Markets

This is definitely good news for the consumer. With all the competition, it is the end-user who is benfitted.

On the flip side, India should not becoming the dumping ground for all older-design cars!
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Old 10th January 2013, 11:33   #3
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Default Re: VW's budget brand for Emerging Markets

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Originally Posted by vasanthn21 View Post
On the flip side, India should not becoming the dumping ground for all older-design cars!
To minimize costs, the new cars will use older components from the VW parts bin. They will be based on the PQ platform that has been superseded by the MQB.
They will also share many components, such as the MacPherson strut front suspension and simple electronics. Reuse of the existing part design with the reliability factor is what VW will encash upon.

[FONT=Verdana]Equipment will be basic, too. Expect at least front passenger airbags and ABS to be standard, with options being offered in three or four trim levels rather than separately, all in the name of cost-saving.[/FONT]

Target market is China and expected to extend to India.

Cheers!
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Old 10th January 2013, 12:26   #4
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Default Re: VW's budget brand for Emerging Markets

Out here in India, people want something that's cheap on their pockets and yet sturdy and reliable. If VW brings in Tantus at affordable prices, people buying the VW brand will switch to the cheaper alternative offered by the same company. The only problem I see happening here is cannibalizing VW's own brands in due time. But from a consumer's perspective, healthy competition works! So, good move VW. Bring it on.
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Old 10th January 2013, 12:38   #5
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Default Re: VW's budget brand for Emerging Markets

@volksman10

A li'l correction perhaps? Perhaps you meant 450000 and 500000 respectively? Or is VW trying to out beat the Nano ?
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Old 10th January 2013, 12:51   #6
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Default Re: VW's budget brand for Emerging Markets

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Originally Posted by 9thsphinx View Post
Out here in India, people want something that's cheap on their pockets and yet sturdy and reliable. If VW brings in Tantus at affordable prices, people buying the VW brand will switch to the cheaper alternative offered by the same company. The only problem I see happening here is cannibalizing VW's own brands in due time. But from a consumer's perspective, healthy competition works! So, good move VW. Bring it on.
C'mon - cars here are priced higher than most countries so we should lose these misleading presumptions.

More than cheap what matters is value, cheap cars do not necessarily do well as we can see from Ethios and Liva, and of course often we have so called cheap bare basic cars being sold at inflated prices. All markets are value and price sensitive.

I do not think of this as positive, inspite of selling their main stream cars at higher prices here than in developed markets, they want to profit even more by offloading lower quality products.

I think regulators need to step in and clearly define minimum safety and technology standards from quality of steel to other components.
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Old 10th January 2013, 13:07   #7
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Default Re: VW's budget brand for Emerging Markets

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Originally Posted by soonya View Post
@volksman10

A li'l correction perhaps? Perhaps you meant 450000 and 500000 respectively? Or is VW trying to out beat the Nano ?
Thanks and corrected.

Cheers!
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Old 10th January 2013, 13:30   #8
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Default Re: VW's budget brand for Emerging Markets

Isn't Skoda fit the bill for step below than VW like their world wide strategy ? Why a complete new brand? Confused..
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Old 10th January 2013, 13:35   #9
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Default Re: VW's budget brand for Emerging Markets

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Originally Posted by hrishig View Post
Isn't Skoda fit the bill for step below than VW like their world wide strategy ? Why a complete new brand? Confused..
The budget brand will be a few lower genration designs ( reliable and proven) from the past to contain the cost.

Skoda brand will have designs to the MBQ platform with will have designs of the current generation.

Cheers!
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Old 10th January 2013, 13:37   #10
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Default Re: VW's budget brand for Emerging Markets

In Europe itself, it's the budget brands that are growing in a depressed market. Skoda, Dacia, Kia etc. are having quite the party, while the regular brands are languishing.

Recommended Read : Business Week Article
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Old 10th January 2013, 18:25   #11
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Default Re: VW's budget brand for Emerging Markets

Thread exists (VW Plans Budget Brand To Rival Dacia)! Or, has something new come up?!
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Old 11th January 2013, 10:27   #12
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Default Re: VW's budget brand for Emerging Markets

Quote:
Originally Posted by raul View Post
C'mon - cars here are priced higher than most countries so we should lose these misleading presumptions.

More than cheap what matters is value, cheap cars do not necessarily do well as we can see from Ethios and Liva, and of course often we have so called cheap bare basic cars being sold at inflated prices. All markets are value and price sensitive.

I do not think of this as positive, inspite of selling their main stream cars at higher prices here than in developed markets, they want to profit even more by offloading lower quality products.

I think regulators need to step in and clearly define minimum safety and technology standards from quality of steel to other components.
Cheaper variants are not necessarily cheap cars. They're toned down, stripped down, bare basic cars that take you from one place to another. Etios and Liva both have very good engines - is what matters for a select few who are not interested in the bells and whistles a luxury/top end car may offer. Many manufacturers have cheaper alternatives/budget brands for different markets and from what GTO mentioned and in that article, they apparently sell well too! A growing market like India can accommodate anything between a humble Maruti to a Maybach or from a Rio to a Rolls. India has so much potential and because of a such a diverse economy car manufacturers have so much freedom to sell budget brands as well their luxury models.

My point was if and when VW launches the Tantus brand, will it eat into the existing VW portfolio? i.e., will a consumer opt for a Tantus hatchback against Polo hatchback or can both survive together? I am assuming both can survive since the market exists for both, simultaneously. Also, by bringing in budget brands, a company is trying to gain more foothold in the existing market, brings in healthy competition and in the end provides better options to the end consumers to get exactly what they want!
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Old 11th January 2013, 10:45   #13
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Default Re: VW's budget brand for Emerging Markets

[quote=9thsphinx;3012932]
My point was if and when VW launches the Tantus brand, will it eat into the existing VW portfolio? quote]

IMO, they will complement well, as seen currently in the VW and Skoda Portfolio. But agree it could lead to cannibalization.

But in the budget brand I guess the difference will be visible for this to happen!

Cheers!
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Old 11th January 2013, 13:14   #14
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Default Re: VW's budget brand for Emerging Markets

I would think the new budget brand would eat into the share of more modern and current product portfolio. Case in point being Ford Figo and VW Polo. Both compete for the same pie and Figo is nothing but the pre-gen Fiesta. Agreed, Figo sells more than Polo but look at the problem it causes to other modern siblings under its roof. What must have been a new and modern Fiesta hatch at Polo prices, Ford sells old Fiesta at marginally lower prices. Due to this strategy, the new hatch has not been launched yet and premium Ford charges on new Fiesta Sedan over Fiesta Classic or Vento and Rapid is unjustifiable. No wonder the New Fiesta sedan has bombed so badly in the market space and there exists no space for the new Fiesta hatch.

VW brand along with Skoda is still an aspirational brand in India backed by the quality and sophistication of all its products at their respective segments. This new strategy could easily dilute its perception. Thanks to Etios and Liva, nobody looks at Toyota as an aspirational brand which doesn't mean Toyota lacks the depth of engineering or technical know-how as compared to VW. Also, VW could land up into the same product classification confusion as Ford if they come up with this strategy. Instead, they could possibly look at minimizing the costs further on modern portfolio through localization and exports than bring in old outdated products.
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Old 31st January 2013, 07:30   #15
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Default Re: VW's budget brand for Emerging Markets

Volkswagen says may enter low-cost market with China-built car- could it mean for India too?

Volkswagen may build its first low-cost car in China, a company executive said, as the German group ponders a move into no-frills vehicles to compete with Renault's (RENA.PA) Dacia and Nissan's 7201.T) Datsun.

Quote:
VW lacks a strong presence in markets such as India and Southeast Asia, with their growing small-car segments. A 2009 partnership with Suzuki Motor Corp (7269.T), designed to benefit from the Japanese manufacturer's leading position in India, fell apart in 2011 in a public squabble.

VW Chief Executive Martin Winterkorn said at the Detroit auto show on January 13 that a decision on a budget car for emerging markets would be taken this year.
It was unclear whether the group would bring a new budget car to Europe's embattled market because it could cannibalize its cheaper brands Seat and Skoda, and the firm was not yet sure if there would be demand for such a vehicle.

http://www.reuters.com/article/2013/...90O0J820130125
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