Volkswagen’s low cost cars: Too much, too late

Match that: Datsun’s Redi-Go concept

 

After many years of soul-searching, Volkswagen finally wants to build a low-cost car. This summer, management will submit a plan to Volkswagen’s supervisory board for as good as assured approval, Germany’s Manager Magazin learned. Under a new brand (which will be Volkswagen Group’s 13th,) Volkswagen plans to sell cars to the undermotorized masses in emerging markets. In the eyes and budgets of said masses, the car won’t be low-cost at all.

According to the reports, the car will see the light for the 2017 model year, and it is supposed to cost not more than €7,500. Converted to dollars, that’s  $10,000. For that, no big engineering feat is required. All you need to do is go to a car dealer.  Just to name a few, a Chevy Aveo, a Nissan Versa, or a Dacia Sandero can be had in that bracket, and that’s with all the expensive safety gizmos mandated by first world governments.

Volkswagen’s low-cost car is targeted at less demanding emerging markets. According to the reports, the var will be first introduced in China. There, the bar is even lower. A cheap car can be had for around $5,000. The Wuling Sunshine minivan, sold by GM’s Chinese joint venture starts in that bracket, and literally sells by the millions.

All of these offerings are what comes to mind when we think “low cost car:” Technology from the last millennium, sitting on long amortized platforms, stripped down to the bare essentials. This also is about to change. Time does not wait for Volkswagen, and when its not-quite-low-cost offerings hit the market, they will have to contend with new entries like the Datsun redi-Go. This new from the ground-up car has been shown at the Delhi motor show in concept form.  It is expected to hit the Indian market some time next year.

Slotted below Nissan’s Versa, and developed by Gerard Detourbet, the father of the modern Dacia, the car is expected to disrupt emerging car markets. Most of what is known about this car has been documented end of last year by yours truly in a long article written for SAE Magazine. The article is here in its entirety.

Ostensibly targeted at emerging markets, low cost cars will be very much needed in Europe. A huge demographic shift is about to happen. Well to-do baby boomers are buying their last BMW, Audi, or Mercedes before retirement.  We are entering the age where car design follows the path blazed by M&M and Uniqlo. Already, lower cost cars by Dacia and Skoda have the highest growth rates in Europe.  This requires a complete re-think of cars. Basic transportation at a price you don’t have to sign the next seven years away for, cars that require little or no service, cars that are cheaper to replace than to repair. Simple, functional, made in huge volumes. This will be the true disruption of the industry.

If you have to worry about cannibalizing your way too expensive cars with something everybody can afford, your future will be as bright as that of Magnavox.