One would think that with 12 brands in its portfolio, the last thing the Volkswagen Group needed was to create a new marque from scratch.
Yet that’s exactly what the German giant did in China earlier this year by elevating the popular Jetta budget sedan to the status of a standalone brand with a three-model lineup. This marks the first time in Volkswagen history that a model is transformed into a brand with its own model family.
The new brand targets the entry-level segment, specifically first-time young buyers from China’s large cities where vehicle ownership levels are still very low. So far, the gamble seems to have paid off as Jetta sold nearly 30,000 units in its first three months on the market – the most successful first three months of any new car brand in China.
That’s quite remarkable, especially considering this was achieved with only two models, the VA3 sedan (formerly known as the VW Jetta) and the VS5 compact SUV (a rebadged Seat Ateca), with the latter accounting for almost 80 percent of Jetta deliveries. Sales are expected to grow further with the launch of the brand’s third model, the VS7 midsize SUV (a rebadged Seat Tarraco) which made its market debut last month. All three models are built by FAW-Volkswagen in their Chengdu plant.
“The entry-level segment has so far been served almost exclusively by Chinese brands. The Jetta brand closes the gap between the entry-level segment and the volume segment, at the top end of which the Volkswagen brand is positioned,” explains Jürgen Stackmann, sales board member of the Volkswagen brand. “We see tremendous potential there, and the flying start of Jetta proves us right,” the executive added.
The entry-level segment currently makes up about one third of all passenger cars in China, and around 80 percent of customers buy a car for the first time in their lives. Interestingly, VW says first-time buyers in China are on average 20 years younger than those in Europe or America, and are willing to spend between €8,000 and €15,000 ($8,875 – $16,650) for their first car.
The Jetta brand is positioned independently in the world’s largest car market, with an almost completely digital sales process and its own dealer network with digitalized showrooms that are either standalone or integrated within existing Volkswagen dealers. By the end of the year, the number of Jetta dealers is expected to grow to 200.