The brand's first car is scheduled to hit showrooms in 2015 at the very earliest. To save as much money as possible, engineers in Germany will develop the car's basic structure and the rest of the design work will be carried out in China, likely by one of Volkswagen's joint-venture partners.
If everything goes as planned, the car's base price will lie between €6,000 and €7,000 (about $8,000 and $9,300). Although it will not be badged as a Volkswagen, the no-frills car will help the company reach its ambitious goal of becoming the world's number one automaker by 2018.
"More than three million cars a year can be sold in this segment in China alone, as well as a million in India," said Volkswagen CEO Martin Winterkorn in an interview with Germany's Der Spiegel newspaper. "Africa is a very promising market, too," he added.
Winterkorn has not confirmed this but the car will likely not be sold in Europe or in the United States.
A final decision on the matter is expected to be made in the coming months.