Carmakers around the world will begin to offer low-cost vehicles within the next five years to tap the growing demand for budget cars in fast-growing markets, according to IHS Automotive analyst Christoph Stuermer. The move is seen as a viable strategy to offset dwindling demand for vehicles in mature, sluggish markets like Europe and Japan.
Renault took the lead by launching the Dacia brand, and its partner Nissan is planning to sell Datsuns for as low as EUR2,300. Volkswagen is also more than willing to enter the fray, as it is planning to unveil a low-cost brand. Ulrich Hackenberg, VW-brand product development chief has told German magazine Auto Motor und Sport that VW is planning to sell a low-cost car brand priced at around EUR5,000 to emerging markets.
He acknowledge that there is a challenging market segment between EUR5,000 and EUR7,000. Hackenberg said the challenge would take out the right amount of content out of a car to make it more affordable, noting that those low-cost vehicles would not be sold under the name Volkswagen, but with their own brand. However, Volkswagen has yet to make an official decision on whether to produce a low-cost car.
In another interview, Hackenberg said the planned low-cost vehicle would not be launched before 2016. He added that while the car would initially be introduced in emerging markets, selling the model in Europe is still a possibility.
On the other hand, Stuermer remarked that if carmakers want to survive, they will have to introduce low-cost models. He expects the global vehicle market to grow by 3.4 million cars between 2012 and 2015, adding that much of the growth could be tapped with affordable vehicles aimed at new buyers. He noted that now that VW is planning to sell low-cost cars, other carmakers will “ratchet up their efforts.”