Volkswagen’s Jetta, not as we know it

Keen to confirm its leader position in China, Volkswagen has announced the launch of not another new model, but an entirely new brand. “Jetta” will become an entry-level brand aimed at “young, confident, open and progressive 25-35 year olds.”

Although priced at a reasonable 5,000 to 6,000 euro, VW emphasizes that Jetta is not an economy brand. When digging into the marketing strategy, it’s clear that the price point is not what defines the new brand.

A special niche

The complexity of the Chinese market as well as the size of the country result in a relatively uniform go-to-market strategy for most global OEMs; they focus on the middle class, living in Tier 1 cities. Narrowing down the target allows carmakers also to rationalise distribution and dealerships.

Volkswagen, the country’s market leader, has understood that this strategy neglects a large potential customer base: the people who live in Tier 3 to 5 cities (up to 3 million people per city), who have a lower income than their peers in Shanghai or Shenzhen but still want a good car.

Registrations

Another good reason for VW to invest in Tier 3 to 5 cities is the registration regulation. The bigger cities have systems in place, limiting the number of car plates. This is done through auctions, lotteries or a combination of both. The smaller cities are not (yet) as crowded and it’s easier for locals to obtain a plate.

Brand identity

Regardless of its low entry pricing, VW highlights that Jetta is a quality brand with attention to detail. The vehicles can be identified as coming from the FAW-VW joint venture, but don’t have visible VW identifiers. This subtle hint to the mother brand underlines the value derived from the association with VW.

The Jetta brand is limited to China in a first phase. "If it turns out over the next seven or eight years that JETTA is extremely successful, then we could consider giving it its freedom, but for the starting phase it’s very important to maintain that connection," says Volkswagen’s sales chief Juergen Stackmann.

Production will start with combustion engines, but electric is on the roadmap; another advantage to focus on the smaller cities, as the transition to electric is less urgent than in Tier 1 or 2 cities.