* VW working on hitting cost targets for budget car
* May cooperate with Chinese joint venture partner
* To decide on budget car in course of 2013 - CEO
(Adds background, details)
By Andreas Cremer and Jan Schwartz
WOLFSBURG, Germany, Jan 25 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 Dacia and
More than 3 million so-called budget cars are sold in China
every year, making it the biggest market in that segment, and VW
would tap growing demand by teaming up with one of its two
Chinese joint venture partners if the project is approved, VW
brand development chief Ulrich Hackenberg told Reuters.
"That's an issue we're currently looking at," Hackenberg
said in an interview at VW's Wolfsburg headquarters.
Europe's biggest car maker is looking at a price range of
between 5,000 and 10,000 euros ($13,300) for the cars, which may
include a van, estate and a small sedan, company sources said on
This may undercut VW's 9,850-euro Up! city car, the brand's
smallest and cheapest model that is only sold in Europe and
Japan. The two-door vehicle came to market in December 2011 and
will be launched as VW's first electric-powered car at the
Frankfurt auto show in September.
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, 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 Jan. 13 that a decision on a budget car for
emerging markets would be taken this year.
The German multi-brand group is working on hitting cost
targets for the budget car and has not decided yet whether it
would keep the VW badge or have a different brand.
"If one enters this segment for the first time, it's
necessary to keep investments very low," Hackenberg said.
VW would use pre-existing mechanics from models that have
gone out of production or are nearing the end of production,
rather than develop new costly underpinnings for the brand from
scratch, he added.
Hackenberg said 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.
($1 = 0.7530 euros)
(Editing by Mark Potter)