In the 1990s, Ferdinand Piëch embarked on an ambitious strategy to create more premium positioning in each segment of Volkswagens conservative product portfolio.
The strategy didnt work, as it drove prices of VW models to unsustainable levels. As a consequence, the Wolfsburg brand had to resort to incentives to keep market shares up in crucial segments.
The all-important fifth-generation Golf required incentives. The entry-level mini model, the Lupo, was overpriced and wasnt able to be a serious competitor to similar-sized European rivals.
Meanwhile, other carmakers won market share with innovative concepts.
So Volkswagen had to return to its roots: building peoples cars.
Changing tack in a capital-intensive environment such as the car industry isnt easy and takes time. But VW group Chairman Bernd Pischetsrieder has listened to the demands of the market and the company now has at least three models that can restore its competitiveness in key segments.
Pischetsrieder entered the lucrative minivan market, which was neglected by Piëch because he did not believe in it. The Golf-based Touran medium minivan has proven a success.
The high-roof Golf Plus is another promising model breaking with VWs rigid model policy.
And now there is the Fox. Developed and produced in Brazil, the E9,000 car offers all the values that made VW Europes largest carmaker.
The Fox is much larger than the more expensive Lupo it replaces. It offers more space than the original Golf. And it offers VWs traditional high standard of build quality to the minicar segment.
VW is reluctant to announce any sales targets for the Fox. But with a production capacity of nearly 200,000 units available in Brazil and the likelihood of production in India, rivals might see a lot of Foxes on Europes roads.