New car sales price Volkswagen Up

Volkswagen to continue $12,990 drive-away pricing on Up next month

The cheapest European car on sale in Australia – the Volkswagen Up – just got cheaper. The tiny city runabout started at $13,990 plus on-road costs when it arrived in showrooms last October, translating to a drive-away price of more than $17,000 according to the company’s online calculator.

However, Volkswagen is advertising the Up at $12,990 drive-away – a saving of at least $4000 – on 2012-build models. The only catch is that you must be able to drive a manual transmission, as Volkswagen has no plans to introduce an automatic version of the Up in Australia.

When asked how long the company could maintain this low price, the boss of Volkswagen Australia Anke Koeckler told News Limited: “It will extend into February, we are not doing something like that for just two weeks.”

When asked if Volkswagen was losing money by selling the Up at that price – it is effectively a $10,000 car before on-road costs are added – she said “no, we don’t”. When asked how long the $12,990 price would continue, she added: “We will see how it will be accepted.”

Volkswagen said it was obliged to trim the Up’s price to match the cheaper Asian brands. Suzuki’s Alto has been on “special” at $11,990 drive-away for several months, while Mitsubishi last week launched the Mirage at $12,990 drive-away – with a $1000 gift voucher or bonus to cut the cost of the car to $11,990 drive-away.

“There is a lot of movement unfortunately in this segment right now from competitors; we needed also to move into this spot,” Koeckler said. “We knew the Japanese competitors might get onto the tacticals [discounts] immediately after the launch [of the Up] and this is what is happening. In this price-sensitive sub-light segment, customers are looking at prices. We have to make sure we are in the game.

The Volkswagen Up was designed and engineered in Germany but it is made in Slovakia. It is key to the company's plans to become the world's biggest selling automotive brand by 2018, and has won numerous awards, including World Car of the Year.

Meanwhile, Volkswagen Australia is yet to confirm if will introduce the turbocharged GT variant of the Up, a pint-sized version of the Polo and Golf GTI hot hatches. “We are also looking into derivatives but it’s a bit too early to say which derivatives we are looking into in Australia,” Koeckler said.

This reporter is on Twitter: @JoshuaDowling