VW weighs budget car pact and stake in Great Wall, report says
Volkswagen AG is considering a partnership with China's Great Wall to develop a new budget model, Germany's Manager Magazin reported, citing company sources.
The magazine on Wednesday also reported that the two companies have discussed the possibility that Volkswagen would take a stake in the Chinese carmaker.
Volkswagen declined to comment. A Great Wall spokeswoman said the company was not aware of the issue.
Volkswagen has struggled to develop a budget car for emerging markets because it found it difficult to keep vehicle costs low enough.
"VW has a proven inability to engineer and build low-cost cars," Singapore-based Bernstein analyst Max Warburton said in a report published Wednesday. "VW doesn't know how to do cheap and cheerful. A company like Great Wall does."
Volkswagen China chief Jochem Heizmann said on Sunday that the company was considering development of budget SUVs and minivans in China to keep up with shifts in the market.
Retail sales of SUVs in China soared more than a third last year to 3.8 million vehicles, rapidly outpacing growth in other segments, according to the China Passenger Car Association.
Volkswagen declined to comment. A Great Wall spokeswoman said the company was not aware of the issue.
Volkswagen has struggled to develop a budget car for emerging markets because it found it difficult to keep vehicle costs low enough.
"VW has a proven inability to engineer and build low-cost cars," Singapore-based Bernstein analyst Max Warburton said in a report published Wednesday. "VW doesn't know how to do cheap and cheerful. A company like Great Wall does."
Volkswagen China chief Jochem Heizmann said on Sunday that the company was considering development of budget SUVs and minivans in China to keep up with shifts in the market.
Retail sales of SUVs in China soared more than a third last year to 3.8 million vehicles, rapidly outpacing growth in other segments, according to the China Passenger Car Association.
