Fuel prices and interest rates have been rising across the world and it has been hampering operations of car makers. Thereby, sustenance of profit levels has become a big issue for companies and to ensure the same, they are looking to explore several new avenues. One strategy that has been adopted by a number of companies is the introduction of low cost models. This concept was applied in the Indian car market recently by luxury vehicle makers BMW, Mercedes-Benz and Audi. Conditions were not conducive for auto makers as demand was sluggish, sales figures were dropping and the economy was going through a crisis. In order to counter this and ensure sustenance, these firms introduced low-cost models like 1 Series, A-Class and Q3 S. Now, according to reports, German automobile giant Volkswagen is looking to join this bandwagon by introducing a low-cost brand.
According to a report by Auto Express, a company official, speaking at the Tokyo Motor Show, said that Volkswagen would be looking to create a low cost brand. This brand or model line-up, according to sources, will be targeted especially towards buyers who are influenced highly by price of a vehicle. It is believed that no concrete step has been taken towards the development of this plan at an execution level. The team at Volkswagen, reportedly, is still working on conceptualising this brand/product line. Some experts feel that the German automobile group might have taken a cue from Japanese company Nissan, which is set to revive the Datsun brand to target budget buyers across the globe. Notably, Volkswagen Group is one of the largest entities in the automobile business as it owns a number of popular brands. Interestingly, some of the brands owned by this group fall in the luxury car segment, such as Bentley, Lamborghini, Audi, Porsche and Bugatti.
Industry experts feel that this company has superb business acumen and a terrific understanding of the global market. It has been known for producing cars that are top class in terms of performance, efficiency and technological advancement. Thereby, it would not be a surprise if this group comes up with a low-cost brand that takes the market by storm. Experts believe that Volkswagen would be looking to target regions like China, India, Brazil and Indonesia, wherein the demand for budget cars is quite high.
Analysts are of the opinion that Volkswagen will have to do away with a number of features and technologies in order to keep an aggressive pricing strategy. This concept has been followed by a few luxury brands in India, who have kept pricing in check by not providing some trademark features in their models.
