Volkswagen Group is believed to be considering a tie-up with Chinese car maker Great Wall to produce a budget car.
Manager Magazin says that Volkswagen is looking for ways to produce a budget car aimed at the Chinese market.
One scenario involves VW co-operating with Great Wall on such a project, with the German conglomerate possibly taking a financial stake in Great Wall.
The German financial publication understands that Volkswagen’s chief sales officer, Christian Klingler, has discussed a collaboration and possible partnership with Great Wall chief executive and co-owner Wei Jianjun about a collaboration and potential partnership.
According to Manager Magazin, Volkswagen has tried unsuccessfully several times to start a budget car project.
In 2009, it bought almost 20 per cent of Suzuki and the companies said they would work together on emerging market vehicles, as well as hybrid and electric drivetrains.
The partners then fell out spectacularly. Suzuki accused VW of not sharing its technology as promised, and Volkswagen took issue with Suzuki’s use of Fiat diesel engines in its SX4 crossover.
Great Wall has concentrated largely on utes and SUVs, and began producing passenger vehicles only in 2010.
VW now produces cars wearing VW badges with two Chinese joint venture partners, FAW and Shanghai-based SAIC, which also owns and operates the MG and Maxus brands.
The cheapest models sold by Volkswagen in China are the Polo, which starts at ¥75,900 ($16,144) and the Santana at ¥84,900.
Low cost models from South American, such as the Gol, are not made or sold in China.