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Report: Volkswagen Low-Cost Brand Delayed by Cost, Quality Issues

As car sales in developed markets are flattening, sales in emerging markets such as Russia, China, India and Africa are hotter than ever and growing. To appeal to consumers in these markets, automakers the world over have rushed to introduce lower-cost, value-oriented models. Nissan resurrected its Datsun brand, Renault acquired Dacia in 1999, and General Motors recently introduced the Baojun brand in China. Volkswagen wants in on the emerging-market action as well, and despite having an Eastern European brand under its umbrella already with Skoda, is looking to add another brand specifically for emerging markets. But Autocar reports the company is having a hard time meeting cost targets with internal quality and engineering requirements.

VW reportedly has benchmarked Suzuki's efforts, and is impressed with the quality of its offerings for a low cost. Suzuki is a dominant automotive brand in India through the Maruti subsidiary, even as it discontinued sales in the U.S. market at the end of 2012.
Plans for the lower-cost value brand for developing markets are reportedly still under consideration, and not canceled outright. The expansion of the VW Group's brand portfolio is part of its quest to be the largest automaker by volume in the world by 2018.

VW recently made headlines in the developing world when its Polo subcompact topped several other popular subcompacts sold in the India market by being the only model to achieve a four-star overall crash test score.

Source: Autocar