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At launch, the brand's cars will only be distributed in China.

Volkswagen's on-again, off-again budget brand has finally received the proverbial green light.

The yet-unnamed division is being envisioned as Volkswagen's answer to Renault's popular Dacia brand. Its first two models will be a small sedan and a compact crossover, according to British magazine Auto Express. Both cars will ride on the PQ chassis that underpinned the fifth- and sixth-generation Golf, the original Tiguan, and the second-gen Audi TT, among other models.

The PQ platform is undeniably showing its age. However, Volkswagen decided not to build its low-cost models on the more modern MQB platform in order to keep costs in check.

The budget brand's first model will debut on the Chinese market in 2019. Pricing will start at under 70,000 RMB, which represents about $10,000 at the current conversion rate.

Volkswagen officials told Auto Express that the brand will launch in China, where the low-cost models will be assembled, and it will eventually spread to other emerging markets like Russia, Brazil, India, and North Africa.

U.S. sales are unlikely at best, and Volkswagen executives stress there are no plans to sell the budget brand's models in Europe. However, given Dacia's success on the Old Continent we wouldn't be surprised if they change their mind sooner or later.

Photo by Ronan Glon.