VW and PSA both considering sub-brands

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The march of the sub-brand continues in China with both VW and PSA considering to launch their own models according to this report by the Wall Street Journal. The VW sub brand has all but been confirmed according to our sources and will be created under the FAW joint venture, of course renderings of their first vehicle have already made it to China Car Times. PSA’s plans for a sub brand are still unclear, although it is likely to use the out going Peugeot 206 platform, one major problem is that their partner at Dongfeng Auto has already set up its own sub brand with Nissan and has 5 joint venture partnerships so it may be overstretching itself to add another. PSA has another partner in China, Chang’an Auto, who themselves have partnerships with Ford, Mazda, Volvo and of course their own string of sub brands including Chang’an Vehicles, Hafei and Changhe, so Chang’an is also in a similar position to Dongfeng. If PSA do manage to pull of their own sub-brand it might be on a much smaller scale than those seen from Honda, GM and Nissan.

Volkswagen AG and PSA Peugeot Citroën SA are considering developing China-only brands with their local partners in the country, people familiar the situation said, joining a growing trend among foreign auto makers targeting surging demand for low-cost cars.Volkswagen is in discussions with one of its two Chinese partners about the possibility of starting a new jointly run brand, a person close to the German auto maker said.

“The talks have been going on for some time, and they are in their final stage,” the person said. He wouldn’t say which of VW’s partners, SAIC Motor Corp. or FAW Group Corp., it is discussing the matter with, or otherwise elaborate.

Separately, Timothy Zimmerman, a senior China-based executive at Peugeot, said parent company PSA Peugeot Citroen of France is looking into an opportunity to start an additional brand for China and is discussing it with partner Dongfeng Motor Group Co.

“We want to pursue this only if there is a place in the market for it, and if it is profitable,” the Beijing-based executive said. He said PSA Peugeot Citroen and Dongfeng have launched a joint study group to look into the move.

Other foreign companies already have launched new brands for China. At the auto show that opened in Guangzhou this week, a range of foreign makers and their Chinese partners showcased or discussed new efforts to go after emerging middle-class consumers in China’s less-developed hinterland by starting new brands.

Honda Motor Co. on Monday unveiled its first production model for the Linian brand, known as Everus in English. Honda and its joint-venture partner, Guangzhou Automobile Group Co., plan to launch the Linian subcompact sedan in mid-2011.

Nissan Motor Co.’s joint venture with Dongfeng Motor Group demonstrated a concept model at the show of its new China-only brand, Qichen. The small-car brand, whose English name is Venucia, is due to launch in 2012.

Last month, General Motors Co.’s Wuling joint venture, which makes low-cost microvans, started making the first model for its China-only brand, Baojun, which it plans to start selling early next year.

Japan’s Toyota Motor Corp. is also looking at the possibility of its own China-only brand and is developing a first car for it, according to a person familiar with the situation.

None of the auto makers have disclosed pricing strategies for these new no-frills cars.