Volkswagen's Budget Brand is Still Under Development

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Volkswagen Group continues working on a new budget brand and will publish an update in the foreseeable future, according to CEO Martin Winterkorn.

The VW boss said at the Geneva Motor Show last week that the Group has faced delays on the project as its engineers struggled to find ways in reducing the cost and maintain a sufficient profit margin at the same time.

The first model of this new brand is set to cost between 6.000 and 7.000 euros (about $6,500 to $7,600) according to the first release back in 2012. The new car will be manufactured in China and the basic concept and design have been finalized.

VW wants to pull the same trick Renault did with Dacia, offering simple cars that underpin existing, older platforms of the Group. According to the rumors, the plan contains three models: a compact sedan and an estate model, followed by a MPV. The new brand will be launched under a new badge and will be aimed at emerging markets first.

In order to achieve its goals, this new budget model will feature a back-to-basics approach, with things like air conditioning and side airbags to be optional equipment, in order to keep the price as low as possible.

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