May 14, 2014 1:55 pm JST

VW to roll out discount cars in China in 2017

TAKAYUKI KATO, Nikkei staff writer

VW unveils a concept car at the Beijing Auto Show in April. © Reuters

HANNOVER, Germany -- German automaker Volkswagen plans to roll out low-price models in China in 2017, targeting first-time car buyers.

     The plan was revealed at the company's shareholder meeting on Tuesday. CEO Martin Winterkorn said it will likely start production in 2017. Though he did not touch on specifics, such as pricing, he hinted a final decision will be soon made.

     Low-price models will target consumers who have never owned a vehicle. VW is expected to keep the price under 7,000 euros ($9,643) and to use a different brand name.

     VW group topped the Chinese ranking of vehicle sales in 2013, selling 3.27 million units, up 16% on the year. It plans to invest a total of 18.2 billion euro in the country, which is responsible for a third of its global sales, over the next five years through 2018. It is also working to boost its annual output capacity in China to 4 million units. Along with this initiative, it hopes to make the introduction of discount models a key growth strategy.

     VW is leading rival BMW and solidifying its top position in the Chinese luxury car market through its Audi brand. It also hopes to broaden a reach in the low-end market by introducing inexpensive models ahead of General Motors of the U.S., Hyundai Motor of South Korea, the third largest player in the Chinese auto market, as well as Japanese automakers.