Tired of seeing Renault romp off with the budget market with Dacia, Volkswagen has green-lighted its still-unnamed budget brand, according to Auto Express. The publication says higher-ups at the company have confirmed that the on-again, off-again project has finally been fast-tracked, with the new marque set to debut in China first with a small sedan and a midsize SUV.

Volkswagen initially aims to improve its Chinese sales – which hit 2.99 million vehicles last year – with the brand, and will then look to offer it in other emerging markets such as Mexico, Brazil and India. The company claims that it has no intention of launching the brand in other countries; mind you, that was the same stance held by Renault early on before introducing Dacia in developed European countries.

One senior official also said that VW is looking to price the cars at less than 70,000 yuan (RM45,300), and has targeted Haval in terms of sales and quality. They will be built in collaboration with FAW, its joint-venture partner in China, using the Mk6 Golf’s old PQ platform rather than the Mk7’s modular MQB architecture.

“The budget car is still under development. Even more right now,” Volkswagen board member for development Dr Frank Welsch said. “Two years ago the car you heard about was a sedan. We changed this strategy early last year, because in China the market research was quite easy to see that when we need a budget car, we also need a budget SUV.

VW’s budget offerings will include a sedan and an SUV, much like the Dacia Logan and Duster

“If we had added one SUV, then it’s quite easy to have two versions of that if we change the wheelbase and add a third seating row,” he added. “We have to keep in mind that the economy segment will be a strong segment not only in China.”

The decision to use an older platform follows in Dacia’s footsteps, which builds cars based on the previous Renault Clio. The cars will be front-wheel drive, with the SUV gaining an all-wheel drive system with a hang-on clutch. “It won’t be off MQB,” said Welsch. “The brand will use some MQB components, but not the MQB architecture. If you compare this to Dacia and what it is doing, that’s more like it.”

The report stated that VW’s Chinese operation hasn’t been affected by the fallout of the emissions cheating scandal as buyers prefer petrol models, which the new brand’s offerings will be. “In certain parts of the world, we will need such economy cars, and in China 40 per cent already is with economy cars,” said Welsch.