China first market for budget VW

Volkswagen Polo. Photo / Supplied
Volkswagen Polo. Photo / Supplied

Europe's largest carmaker, Volkswagen, is planning to build around half a million units a year of its planned cut-price car model, according to a German magazine.

Quoting top VW executives, Manager Magazin said the group's executive board was due to give the green light for the "budget car" project within a few weeks, paving the way for final approval by VW's board.

A VW company spokesman declined to comment on the Hamburg magazine's report.

Presenting VW's annual results a few weeks ago, VW chief Martin Winterkorn said the project was "on the last lap".

The report said the budget car would be sold under a new brand name, joining the 13 marques which make up the VW Group. The budget car would carry a price tag equivalent to €7500 ($11,863).

The car will go on sale first in China at the end of 2016 or beginning of 2017 and be built there with a business partner. The budget car may later be marketed in India and Southeast Asia. There are no plans to sell the vehicle in Europe.

The European cut-price sector is dominated by Renault's budget brand Dacia and by Suzuki of Japan.

-AAP

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