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VW budget sub-brand stuck in limbo over VW standards, costs

Reports in October 2012 claimed Volkswagen had begun investigating the creation of its own budget brand. This came after having failed to purchase Malaysian car company Proton or produce a meaningful partnership with Suzuki, and after watching Renault-Nissan make piles of euro on Dacia and plot the return of Datsun. For VW, more important than the question of what to call it was how to build it profitably and in a way that didn't damage the VW brand. According to a report in Autocar, a satisfactory answer still hasn't been found. The hurdle is how to hit "'necessary' quality and safety levels" at the price points needed to make the venture worthwhile. At the time of the 2012 report, German outlet Der Spiegel said VW was trying to get prices down to 6,000 to 8,000 euro ($7,784 to $10,379 US), about two thousand to four thousand euro under the price of the VW Up and in line with the cost of a 6,790-euro Dacia Sandero in Germany. In March 2013, VW announced, "We want to bring a true budget car to the market in China in the foreseeable future," the most concrete move in that direction after years of planning to make a decision. Working with local Chinese maker FAW, it was predicted that the vehicle in question would appear around 2016, but as of November last year a final vote on it needed to wait until this year because "We are still working on the cost side" and profit possibilities for a car that "has to be durable, it has to be precise, it has to be safe." Even Fiat, another automaker long considering a budget brand beneath its Fiat line-up, wasn't sure how to squeeze any extra money from lower-cost products but was sure that it couldn't be done by manufacturing in Europe. If VW hasn't yet made the math work with a joint venture in China, it will be interesting to see how it might build a European go-it-alone business case.

VW will delay projects to cope with diesel scandal

Volkswagen's diesel emissions scandal will require the sacrifice of far more than just executives and money. It's also going to result in the cancellation of various projects, a process that new CEO Matthias Mueller said "won't be painless." "We will review all planned investments, and what isn't absolutely vital will be canceled or delayed," Mueller said while addressing the embattled company's employees. The former Porsche boss also said the money set aside by the German giant – about $7.29 billion – won't be enough to cover recall expenses, fines from governments in affected countries, and the expected deluge of lawsuits from disgruntled TDI owners. According to Bloomberg, that figure probably won't even be enough to match the fines Uncle Sam is likely charge, pegged to be around $7.4 billion, according to one analyst. It's expected that VW could delay a further push for share in the North American market, which would include a $1-billion investment in its Puebla, Mexico, factory. But it will take more than cancellations and delays, analysts claim. "It's going to be tough to find projects they could chop that will actually move the needle," JPMorgan Chase's Jose Asumendi told Bloomberg. "What they really need to do is get costs under control." That, according to Bloomberg, is already setting up a showdown between management and labor. The latter wants a reduction in VW's $17.4-billion research-and-development budget – the world's largest and more than what Ford and General Motors spend combined – while the former wants to slash personnel costs. Bloomberg also spoke to analysts who claimed the company should look into reductions in purchasing costs as well as trimming sponsorships. It's impossible to know just how extreme Volkswagen will need to get with cancellations, delays, and cost-cutting, but it's becoming increasingly clear that the effects of this scandal will likely be felt far longer than the controversies that surrounded other automakers like General Motors and Toyota. Related Video: News Source: BloombergImage Credit: John Macdougall / AFP / Getty Images Earnings/Financials Green Plants/Manufacturing Recalls Volkswagen Diesel Vehicles vw diesel scandal matthias mueller

Watch Chris Harris in the electric VW ID.R waste a McLaren 720S

The Volkswagen ID.R doesn't have much in common with a McLaren 720S, other than the fact that they are both performance-crazed cars. One gets its power from batteries, the other from gas. One uses electric motors, the other a twin-turbocharged 4.0-liter V8. One is a halo prototype vehicle, the other is a road-legal supercar available for purchase. So when Chris Harris and "Top Gear" decided to "race" the two against each other, it was more of a demonstration of the VW's unreal capabilities than any sort of real competitive faceoff. In episode five of Top Gear's 28th season, which just aired February 23, the trio of Harris, Freddie Flintoff and Paddy McGuinness welcomed Youtuber KSI on the show and ventured out on a luxury sports car road trip with an Aston Martin, Porsche, and Ferrari. Separately, Harris took to the track to test out Volkswagen's golden egg of the moment, the ID.R. As VW fully launches into its electric-vehicle push, the ID.R is meant to exhibit what battery-electric technology is capable of. With two electric motors, one on the front axle and one on the rear axle, the 2,425-pound ID.R has four-wheel drive and makes a claimed 670 horsepower. As Harris notes in the video, the ID.R. was not built for a specific regulation-bogged racing organization or competition, and thus, it's only held back by the rules of Mother Nature and Father Physics. Since the car's debut, it has been annihilating records around the world, including at Pike's Peak, Goodwood, the Nurburgring, and Heaven's Gate. Chris Harris didn't set any records in the ID.R., but he certainly showed how outrageous this machine is. The 710-horsepower 720S can go from zero mph to 62 mph in less than three seconds, and the ID.R has a sizable lead within that same time. Again, this wasn't an instance of test-and-conclude, it was a show of perspective. The ID.R is a race car, so even though the 720S is one of the best supercars in the world, it never stood a chance. See for yourself above. Related Video: