Volkswagen’s new budget brand hits cost problems

Volkswagen's new budget brand hits cost problems

High internal manufacturing standards blamed for new budget brand’s delay

The mooted Volkswagen Group budget brand is reported to have hit repeated problems as a result of the company’s own internal standards for manufacturing.

Insiders report that the company is struggling to hit budget targets for the proposed cars while still maintaining what senior management has deemed “necessary” quality and safety levels. As a result, there is currently no business case for making the vehicles.

However, the project is reported to be “still under consideration” as opposed to being put on hold or cancelled. Insiders say that VW’s technicians have been impressed how rival brands – including partner Suzuki, with which it is at loggerheads – has managed to create high quality budget cars without pushing costs up.

The low-cost brand is being investigated by VW as it would give the group a direct rival to Dacia, and allow VW to further penetrate lucrative markets in China, India and across Asia and Latin America, as well as enhance its offerings in Eastern Europe, the Baltic region and Africa.

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