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Chinese automaker FAW Group and its German partner Volkswagen may introduce a new brand for the low-priced market, said a senior executive at FAW.
Qin Huanming, FAW deputy general manager, recently told a local newspaper that both partners are studying the market for small cars priced between 60,000 to 80,000 yuan and plan to develop a new nameplate for the segment.
The brand would likely have four models with combined production of 450,000 to 600,000 units a year, Qin said.
"There is no real market leader in the 60,000 to 80,000 yuan segment, where total demand may reach 3.5 million units (a year)," he added.
FAW has already tried to tap the segment with its wholly owned Oley brand, which hit the market last April, but it now sells only about 100 units a month.
Foreign media reported that Volkswagen's first low-cost brand will come to production in China first.
Volkswagen's R&D head Ulrich Hackenberg said that the brand's vehicles would be priced between 5,000 to 10,000 euros with a debut expected in 2015, the reports said.
Volkswagen will join forces with FAW or SAIC Motor Corp to develop the cars once the project is approved within the company, the executive said.
Volkswagen CEO Martin Winterkorn said on Jan 13 at the Detroit auto show that a decision on a budget car for emerging markets would be made this year, according to foreign media reports.
With two successful joint ventures - one with FAW and another with SAIC - Volkswagen's sales in China grew 24.5 percent last year to 2.81 million vehicles. The country has been its biggest market in the world since 2009.
Its lowest-priced models in China are currently the Polo, Jetta and Santana, which sell from about 70,000 to 140,000 yuan.
General Motors' locally produced Chevrolet Sail was the best-selling model in the segment in China last year with a full-year delivery of nearly 280,000 units, according to statistics from China Association of Automobile Manufacturers. The small car is priced from 40,000 to 90,000 yuan.
(China Daily 02/04/2013 page18)