Why did Volkswagen separate Jetta?
4 Answers
While numerous independent brands are targeting young consumers and the mid-to-low-end market, the Jetta brand can effectively compensate for the shortcomings of the previous FAW-Volkswagen Audi and Volkswagen brands. Together, these three brands form a German matrix that will contribute to FAW-Volkswagen's sales. Additional information is as follows: 1. Definition: Jetta is an automobile brand under FAW-Volkswagen Automotive Co., Ltd., a joint venture of the German Volkswagen Group in China. 2. Brand Introduction: All models under the Jetta brand adopt the same technical standards and product development capabilities as Volkswagen vehicles, offering higher cost performance with more affordable prices.
This reminds me of the conversations I often hear from regular customers at my auto repair shop. Volkswagen spun off Jetta as an independent brand back in 2019, right when China's auto market started playing the market segmentation game. The Jetta name had resonated here for nearly three decades, with the older generation recognizing its durability and reliability. Volkswagen figured instead of letting Jetta compete with its newer models in the mid-to-low end market, it made more sense to establish it as a standalone brand targeting budget-conscious buyers under 100,000 RMB. This freed up the Volkswagen main brand to focus on premium electric vehicles. I've seen many young people choose the Jetta VS5 as their first car - attracted by its German heritage and affordability. That distinctive 'J' emblem is instantly recognizable from across the parking lot.
From a business perspective, Volkswagen's move actually mimics the dual-brand strategy of smartphone manufacturers. Back then, the Jetta model accounted for a quarter of Volkswagen's sales in China, but its profit margin was as thin as paper. After spinning it off as an independent brand, they directly repurposed SEAT's technology for production, even saving on R&D costs. Now, the entire Jetta brand lineup is priced between 60,000 to 120,000 yuan, forming a relay with the Santana. Last year when I traveled to Chengdu, Jetta taxi drivers everywhere said maintenance for this car is even cheaper than Japanese brands, with a bumper replacement costing just 300 yuan. Clearly, Volkswagen has nailed the mindset of pragmatic consumers.
As a market researcher, data speaks volumes. Before the spin-off, Volkswagen conducted a survey and found that the Jetta had an 87% recognition rate in third- and fourth-tier cities, but consumers generally felt that the Volkswagen badge 'costs 50,000 yuan more.' After the independence, the new Jetta VS7 sold over 10,000 units in its first month, proving the low-price strategy worked. Even more cleverly, they played the nostalgia card—I’ve seen dealerships display old Jettas alongside Wang Shuo’s novels. Now, the Jetta brand contributes an additional 300,000 units annually to the Volkswagen Group without affecting the premium pricing of the Tiguan or ID series. This move was truly brilliant.
