VW to approve budget car after solving cost issues -magazine

Thu Mar 20, 2014 10:14am EDT

* Executive board to approve budget car in few weeks-report

* Supervisory board to sign off by the summer -report

* VW keeps working on budget car, no final decision yet -VW

HANOVER, Germany, March 20 (Reuters) - Volkswagen's management board will sign off on a budget car for emerging markets after ending a long struggle to meet cost targets for the vehicle, Germany's Manager Magazin reported on Thursday, without citing sources.

The carmaker's senior executives will approve the budget car in the next few weeks and the supervisory board is expected to sign off on the project by the summer, Manager Magazin said.

A VW spokesman said the carmaker was working vigorously to develop the budget car but that a decision had not been taken yet.

Europe's largest carmaker has been trying for more than a year to hit internal cost requirements for the vehicle, which would likely sell for between 6,000 euros ($8,300) and 8,000 euros and be built in China, the biggest market for budget cars.

VW brand development chief Heinz-Jakob Neusser said at the Geneva auto show on March 4 that it was becoming more and more difficult to hit cost goals for the budget car, adding it made no sense to approve a vehicle that was not meeting in-house targets.

VW lacks a strong presence in markets such as India and southeast Asia which are dominated by no-frills models, and without a successful budget car, analysts have questioned whether the group will be able to meet its goal of becoming the world's biggest carmaker by 2018. ($1 = 0.7189 euros) (Reporting by Andreas Cremer. Editing by Jane Merriman)