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Dacia has been a successful budget arm for Renault, and the French company’s alliance partner Nissan has relaunched the Datsun name as a low-cost brand for emerging markets, with the cars to be revealed later this year. Looks like Volkswagen is about to get into the no-frills act as well, with China as base, although it’s not decided yet whether a new brand will be created.

Why China? The world’s biggest auto market sees over three million budget cars sold every year, making it a huge domestic market for the new venture. VW could team up with one of its two Chinese joint venture partners (SAIC and FAW) if the project is approved, development chief Ulrich Hackenberg told Reuters. “That’s an issue we’re currently looking at,” he said.

Volkswagen is looking at a price range of between $6,700 to $13,500 (RM20,582 to RM41,471) for the cars, which may include a minivan, station wagon and a small sedan, company sources said last October. The cars would be aimed at high-growth markets like Brazil, Russia, India and China, but may also be sold in Europe, according to German media reports.

VW CEO Martin Winterkorn said at the recent Detroit motor show that a decision on a budget car for emerging markets would be made this year. The company is calculating cost targets for the car and has not decided yet on branding.

“If one enters this segment for the first time, it’s necessary to keep investments very low,” Hackenberg said. VW would use underpinnings from models that are out of production or near the end of production, rather than develop costly new components, he added.