The German car maker Volkswagen (VW) failed to find a true successor to the Beetle, so it tries to attack the cheap car market, popular with the Up models, as part of a strategy to reach annual sales of 10 million vehicles by 2018, according to Bloomberg. After the failure of VW Fox and Lupo, theGgerman car manufacturer decided to transform the city car Up into a entry-level family vehicle to gain market share from Fiat and to reach the goal of selling 10 million vehicles per year by 2018.
“Clones” of Up will be marketed under the brands Skoda and Seat and a cheaper version will be built for first car buyers in countries like China, Brazil and India. “Up is an essential car for VW in the strategy to achieve its sales target. Expanding the range will increase pressure on competitors”, said Albrecht Denninghoff, an analyst at the research firm Silvia Quandt Research in Frankfurt.
Subcompact car sales are increasing due to car buyers who want city cars, while the government encourages manufacturers to build vehicles with lower fuel consumption. Sales of mini cars, such as Up and Fiat Panda could increase by 25% worldwide, to 11.2 million units by 2015, according to IHS Automotive. After launching expensive models, such as the Phaeton sedan for €68,300 euros and the new Beetle for €16,950, the return to popular cars marks a major test for the general manager of VW, Martin Winterkorn, who in 2007 ordered the development of Up as part of the strategy of transformation the group into the largest producer of automobiles in the world.
VW has become a force in global car market with the Beetle, “the people car”, which was removed from production, as cheap car, in 2003, after more than six decades. German group failed to succeed on the cheap car segment with the Up, sold for €9,850, marking the third unsuccessful attempt to build an attractive subcompact car. The expansion of Up models is designed to reduce the cost per vehicle to compete with Fiat Panda, Renault Twingo and Peugeot 107.
In 2013, VW will launch five-door models and electric cars in the so-called New Small Family category, which already includes Skoda Citigo and Seat Mini so that the Up sales will exceed the sales of Panda, Twingo and Peugeot 107 by the end of that year, according to IHT Automotive estimations. VW could increase by more than double the sales of Up family car by 2015, to 390,000 units from 181,400 this year, supported by the sales in emerging markets, IHS expects, but they will be profitable only if sales will exceed 500,000 units.
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