Dacia and Datsun, both as budget-focused brands under the umbrella of the Renault-Nissan alliance, form part of a plan to increase global sales by embracing emerging markets.
German paper Auto Bild reports that the new brand would likely launch in Brazil, Russia, India and China, with models ranging in price from AU$6000 to AU$12,000.
"We're regularly looking at new segments and interesting markets which also include so-called budget cars," VW spokesperson Eric Felber told the paper. "But a decision has not been taken yet."
The report follows news that Volkswagen's partnership with Suzuki, which has a strong presence in the rapidly growing Indian market, fell apart last year.
In Australia, the most affordable model in the Volkswagen Group stable is the recently launched Up, priced from $13,990. The Skoda range, also owned by Volkswagen, starts here with the Fabia at $18,990.
Internationally, Volkswagen's most affordable offering is the Up-based and Skoda Citigo, priced at AU$11,255 in Germany.
The Auto Bild report adds that the range would take advantage of older (and less expensive) platforms and engines, while leaving out some of the modern safety features required in most Western nations.
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