Volkswagen leaves bargains behind as it targets key rival Mazda in the 'upper mainstream' segment

The days of bargain Volkswagens are long gone and not set to return according to VW Australia's passenger vehicles brand director, Michal Szaniecki.

The German behemoth will continue moving up in the price-scale in alignment with its global divisions, as well as what it says is customer behavior. This has been seen most recently with the updated Golf, Tiguan, and Polo all receiving significant price-hikes for their respective updates in the last 12 months.

Polo will see the largest price hike of the three, with the incoming, deeply facelifted model jumping 30 per cent in price to a new starting point of $25,250 before on-road costs, up from $19,290.

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While this would seem to put the brand’s city hatch in danger of competing with its Golf 8 big brother, Mr Szaniecki said it was actually in-line with what its customers now expect. 

“We’ve tried introducing more affordable models before, nobody buys them,” he said.

The brand’s local strategy synchronises with the latest comments from VW headquarters, with the brand’s global chief financial officer, Arno Antlitz, stating its objective was no longer to be the world’s biggest automaker, but a more profitable one with higher margins.

VW Group has indicated this will lead to some rationalisation of its range, with smaller models related to the Polo like the Audi A1 and Q2 set to be discontinued at the end of their current generations.

When asked if the same fate would befall the Polo, particularly in Australia where the city hatch segment was rapidly shrinking, Mr Szaniecki said the storied hatch would stick around for a while yet.

“For sure we will keep Polo for the short- to mid-term” he said. “For now Polo has a strategic role, and certainly has its loyal fans. What the future brings? We will see.

“Look at how we’ve re-positioned what we have, Golf, Tiguan, this is in line with buyer behavior.”

When pressed on where Volkswagen is moving to in the price-range locally, and who it now sees as its prime competitors, Mr Szaniecki had more to say.

“Volkswagen will not be positioned differently in Australia as it is in the global marketplace. We have no interest in compromising on our product, we will always be upper mainstream and have no desire to play in that bargain segment,” he said.

“From customer intention we do see Mazda as a volume rival, there is a lot of crossover there.”

Mazda has also moved its portfolio upmarket in recent years, with its Polo-rivalling 2 hatch now costing from $23,390 for an equivalent base Pure automatic, well and truly leaving the sub-$20,000 market behind it. Similar to VW, Mazda has also left the ‘budget’ end of the market behind generally with the latest generation Mazda3 taking a huge jump in starting price, a trend which is expected to continue with the introduction of its CX-60 SUV, which will be positioned above the popular CX-5.

Mazda is also bullish on its move upward, telling CarsGuide earlier in April that the changes to its range have “exactly played out the way we thought it would”.

For now VW’s strategy appears to be paying off, with the brand informing CarsGuide at the launch of the updated Tiguan last year that half of all sales are expected to go to the $55,990 R-Line grade, and that the mid-size SUV now outsells Golf by a significant margin.

The taste for SUV in this price-bracket will continue into the electric era, with VW focusing on bringing the allegedly Tiguan-priced ID.4 and ID.5 SUVs to Australia before the ID.3 hatch or ID.Buzz van some time in 2023.