VW for strategic 'budget' brand for India!

Everyone thought that Ferdinand Piech was the fastest gun in Motown, swiping his credit cards to buy up top brands and add them to the VW Group kitty. However he had very categorically stated that there wouldn't be any more acquisitions, especially in the light of the fracas with Suzuki but with Porsche and Ducati now firmly within the VW Group as also Scania with MAN very much there and thereabouts, the word out of Germany is that there could be yet an additional new brand which would be an all new set-up given the changing economic realities and also keeping firmly in mind the Group's 2018 target to achieve global leadership.

The present scenario in Europe is dismal with all the French car makers plus also GM and Fiat in dire trouble with massive drops in sales. The market there has seen many now beginning to opt for smaller vehicles and in this melee the realisation has dawned that in both the mature markets as well as the emerging markets, a brand offering slightly lower tech but packed with value that bargain hunters would be more than happy to lap up. Considering the fact that Renault already has the Dacia brand and there are a few more iterations on the theme which the French car maker plans to reveal, he theme was already under evaluation within the precincts of power at Wolfsburg. The move actually gathered pace once VW and Suzuki fell apart and now this 'nameless' 13th brand in the VW Group has been given the green light.

Work has already begun on developing a slew of cars which would start from around the €6000 mark using past platforms already having been amortised double or triple fold in the  VW Group. Word has is that the PQ24/25/35 platforms that underpinned the earlier Polos and Fabias would be the ones which would lend themselves to being kitted out for the price killer segments according top expel within the know in the VW Group. All of them would employ small engines and would be front wheel driven and the objective would be to harness not just the old box of bits within the VW empire but also take smart cues from the firm's innovative MQB platform process. And yes that critical 4-metre tax buster length would have to be factored in, for some if not all of the models this budget brand would need in its arsenal.

The first vehicles include a hatchback, a saloon, an estate and a mini-MPV and while the talk centres around bare basics mobility with just airbags and ABS as standard equipment and the rest being options (including air conditioning), I for one fail to see the budget brand with such prices (from around Rs 5 lakhs to around Rs 7 lakhs) doing well at all here in India. However, this is mere speculation at this stage because what the VW Group needs in India are cars priced below the Polo and the Vento but with refinement, performance, fuel efficiency and equivalent level of equipment to take on the likes of Maruti-Suzuki, Hyundai and a recharged Honda. And also of course a strong and efficient after sales network which delivers.

"We need a budget car below the Up for developing markets," suggested Bernd Osterloch, head of the VW works council but it is hard to see the price points which constitute budget for the VW Group. In fact Skoda was always termed the budget brand but consistently VW's wholly-owned Czech brand has continued it's upward end and thus the need to search for an all new alternative without devaluing either Skoda or Volkswagen.

VOLKSWAGEN UP!

Given the fact that Nissan has already started to do well with its so-called 'budget' offerings in Indonesia, the plan to resurrect the Datsun name plate and affix it on low cost small cars not just to tackle Maruti-Suzuki in India but also to provide automobiles at bargain rates in these tough economically-challenged times is another trigger. It is a well know fact that the Datsun brand will make its appearance in India in the coming year and will aim squarely for the sweet spot presently dominated to overwhelming extent by Maruti-Suzuki and it is here that the VW Group is on thin ground, having no expertise of. Trying to rehash its older models from the previous generation Polo and Golf portfolio could be a daunting task. I do however see this emergent brand being set-up just as emphatically to deliver for the Group in Europe where the VW Up costs around €9975 which is appreciably more than the €6790 one pays for the Dacia Sandero hatch! And that is also a reflection of the market wherein ultra high levels of sophistication have not gone on to deliver value while the price tags have kept on getting larger.

Another issue is also about manufacturing costs and there is already turmoil underneath the surface with labour at many manufacturing plants set up in Eastern Europe already beginning to be vocal at the disparity in wages they get compared to their counterparts just the proverbial stone's throw away! India and China, not to mention Indonesia and Thailand could be the potential manufacturing bases even for these budget machines destined for Europe.

Brings one then to the name of this budget brand, ironically the 13th in the group. Like so many others in the business, the VW Group has a stirring supply of historic marque's in its portfolio, some of them like DKW and NSU having made their name not just with small bargain-priced cars but also two-wheelers. If it is overall mobility across the segments that the VW Group is intending to go then resurrecting either DKW or NSU would be ideal and these also have a strong connect with India, having operated here in the first half of the last century. However, I do tend to think on lines with many others that a fresh new name would crop up for this budget brand and that it would be distanced and operated differently so that it doesn't go on to devalue either Volkswagen or Skoda yet helps brings in the numbers to help the group attain its leadership objectives.

VOLKSWAGEN UP!