VW to approve budget car after solving cost issues, report says

Volkswagen's management board will sign off on a budget car for emerging markets after ending a long struggle to meet cost targets for the vehicle, a German business magazine said.

VW's senior executives will approve the car in the next few weeks and the supervisory board is expected to sign off on the project by the summer, Manager Magazin said in a report.

VW has been trying for more than a year to hit internal cost requirements for the vehicle, which would likely sell for between 6,000 euros ($8,300) and 8,000 euros and be built in China, the biggest market for budget cars.

The car would be sold under a new brand, which would become VW Group's 13th marque, the magazine said.  It would compete against the General Motors-SAIC Baojun and Toyota Avanza brands in China with annual production of 500,000 units planned, the report said.

The car would launch at the end of 2016 or early 2017 and would be sold in other Asian markets such as India if it is a success.

VW brand development chief Heinz-Jakob Neusser said at the Geneva auto show on March 4 that it was becoming more and more difficult to hit cost goals for the budget car, adding it made no sense to approve a vehicle that was not meeting in-house targets.

VW lacks a strong presence in markets such as India and southeast Asia which are dominated by no-frills models, and without a successful budget car, analysts have questioned whether the group will be able to meet its goal of becoming the world's biggest carmaker by 2018.

A VW spokesman said the carmaker was working vigorously to develop the budget car but that a decision had not been taken yet.

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Fiat plans seven new Alfa models by 2018, report says

Fiat Chrysler Automobiles will unveil seven new Alfa Romeo models and push to increase sales of the sports car brand fivefold, a report said.

Alfa plans to release a convertible Spider by 2016, followed by the sedan and wagon versions of the Giulia and Alfetta models in 2017 and 2018, respectively, Germany's AutoBild magazine reported Friday.

The Giulia sedan will compete with the BMW 3 series, while the Alfetta sedan would rival the BMW 5 series.

The pipeline also includes two crossover sport utility vehicles, a compact version and a larger one, which will come to the market in 2017 and 2018, respectively, the magazine said.

Alfa is developing a new rear-wheel- and all-wheel-drive architecture for its new models, Automotive News Europe reported in December. The architecture is code-named Giorgio, according to ANEsources.

The MiTo and Giulietta hatchbacks, which front-wheel drive, will not get replacements as previously anticipated, AutoBild said.

The relaunch of the 104-year-old Alfa Romeo brand, along with luxury Maseratis, is a key part of the group's plans to return to profit in Europe by 2016. Both Alfas and Maseratis will be produced in Italy, Fiat has said.

Fiat aims for Alfa sales of at least 500,000 vehicles a year compared with around 100,000 sold last year, AutoBild said. It did not mention a timeframe.

Fiat declined to comment. It is due to unveil a new industrial plan, outlining investments and new models the group will pursue over the next three years, on May 6.

CEO Sergio Marchionne is betting on the sporty Alfa brand because he believes it can deliver the global profile that his mass-market Fiat brand cannot and far greater sales volumes than top-end Maseratis, but the strategy has so far been met with skepticism.

Fiat acquired the Alfa brand in 1986, but has since failed to reinvigorate it despite repeated attempts. Ambitious plans to boost sales to half a million by 2014 have been gradually scaled back, partly because the auto market in Europe was hit by a six-year long slump in sales, leaving Alfa with a weak reputation for quality and just three models.

The recently launched Alfa Romeo 4C coupe was well received, however.

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