VW's budget brand to be "announced next year"

So, VW is to search for the automotive industry’s “Holy Grail”, the production of a financially viable “budget range” of vehicles. It is reported that the Santana vehicle could be the basis of such a budget range of vehicles. The Santana vehicle ceased production in Europe in 1988, but since 1982 has been produced in China. Some have suggested that the VW Group’s Skoda brand, and Seat brand, (should) both fullfill this function, as producers/providers of “budget” vehicles. Both Skoda vehicles, and Seat vehicles, may be (a little) less expensive that their equivalent VW models. However, this price differential is relative. In some parts of the global market for cars, even Skoda, and Seat, would be regarded as sophisticated models - the products of a highly automated, skilled, and efficient “western” industrial infrastructure. Further, in its established “western” markets, the VW Group would not want to jeopardise the fine reputation for build quality and reliability that it has now established and nurtured in resuscitating both Skoda and Seat. Within various market segments, the three competing models from VW/Skoda/Seat are even produced on the same production line. They share the same common mechanical components and sub-assemblies; wiring looms; glass; and seat bases; etc. These different yet closely “related” VW/Skoda/Seat models within a single market segment, certainly all cost the same to produce. The production line does not speed up, and the assembly workers pay less attention, just because a batch of Skoda/Seat cars are sent down the production line! VW will produce as many VW variants as it thinks the market can sustain, and which will produce the appropriate financial return that is required. As the equivalent Skoda/Seat cars are sold at (slightly) lower prices, they will not produce quite the same amount of revenue for the Group, as the VW models. However - significantly - the Skoda/Seat cars help amortise the capital investment needed to produce the “full price” VW variant. The Skoda/Seat cars contribute to greater efficiencies and greater volumes/numbers in the production and purchase of sub-assemblies, and vehicles themselves. Importantly, whilst far from being “budget brands”, the Skoda/Seat cars offer a product to the consumer at a different (lower) “price point”, at which it might be considered inappropriate for the VW brand itself to compete. + + + + + + + + + It is known that VW’s interest in, and part ownership of Suzuki, was because VW wanted - not to learn how to make small cars, but - to learn how to make small cars PROFITABLY !! Producing vehicles in a low-wage economy, may be one contributing factor to producing vehicles with consequently lower “in-puts” and therefore at a greater profit. But, if more (cheap) labour is used in the manufacturing process - instead of the established level of automation than might be associated with manufacturing in developed “western” economies - consistently high quality control (and subsequent reliability), can become problematic. However, this is something that Suzuki does seem to have resolved, with many of its (small) vehicles produced in different SE Asian countries with “developing” economies - such as India. + + + + + + + + + It is possible to reduce the (technical) specification of a “budget” vehicle compared to those developed for “western” markets - to make the entry or “price leader” variant more affordable/accessible to customers. Omitting to fit as STANDARD such items as ABS, traction control; brake distribution; power steering; automated headlights/wipers/mirrors, may all (marginally) reduce the material “in-puts” of producing a given model. However, the VW Santana 3000 was also the first in the Chinese developed Santana series to be available with OPTIONAL ABS brakes, with electronic brake distribution, electronic differential system, a multi function display system, and a sunroof designed by the German Webasto company. To be successfully accepted by its intended customers, a low cost, low price, budget vehicle should not look - or importantly, should not be perceived - as though it was specifically designed and manufactured for a developing economy/market. The intended customers of such vehicles have the same aspirations and ambitions as customers elsewhere. Such potential customers would probably take offence if they were considered as “only” being able to purchase a budget vehicle! + + + + + + + + + It is possible to draw a direct comparison from within the mobile telephone market. Suppliers had intended to further exploit Generation ONE and TWO technology and infrastructure by (re-)utilising it in “developing markets” . . . as the G3 and G4 technology was “rolled-out” in more established economies. However, those “developing markets” were not satisfied with what they regarded as “obsolete” technology. + + + + + + + + + In addition to the Chinese Santana, VW as already produced a number of competent small “city cars”, that could complement the larger Santana in this range of “budget” vehicles. The small VW Lupo “city car” was produced by VW at Wolfsburg, and at Brussels, from 1998-2005, probably their most expensive production facilities! The Lupo was replaced by the slightly larger Fox “city car” which was produced from 2004, in the less expensive manufacturing base of Brazil; with a slightly longer variant produced in Argentina. Certainly, the adoption, “re-cycling”, of the proven - relatively contemporary - technology of an existing (earlier) design such as those mentioned above, would ensure the continuation of the proven dynamic qualities expected of, and associated with, all VW Group vehicles. Even if the “tooling” for such existing vehicles (as the Lupo, Fox, or Chinese Santana), is worn-out, new replacement “tooling” could be produced for the basic structural “body shell” of these vehicles at significantly less cost than designing and developing a completely different, new design. New “refreshed” front and rear “plastic” bumpers and grill, could be produced at relatively little cost - compared to new new/different “tooling” for metal body structures. Further, as the front wings and bonnet are not load bearing - or structural - these too could be relatively inexpensively produced from similar “plastic” materials as the bumpers and grill. Consequently, all the exterior panels forward of the “A-pillar” would/could be new and styled differently to the donor Lupo, Fox, and Chinese Santana. + + + + + + + + + As previously Ford, Renault/Dacia, and now BMW, have all discovered - VW will have also realised with the new three cylinder engine developed for, and used in, the Up, Citigo, and Mii, that it is less expensive - by definition - to assemble a engine with 25% less reciprocating parts than it is to assemble an engine with four cylinders, irrespective of the size/swept-volume of the engine. RCT(V)