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Tony O'Kane | May, 08 2014 | 8 Comments

Skoda Australia has ruled out the tiny Citigo for Australia, with local head Michael Irmer saying that the numbers don't stack up for the VW Up-derived sub-light hatchback.

After its European launch in 2012, the Citigo was officially "under consideration" for the Australian market.

However after Volkswagen's decision to discontinue the slow-selling Up in this country, the Citigo's chances for local distribution have also evaporated.

Though Skoda's recent launch of the $18,990 Rapid small car cements its status as the Volkswagen Group's budget brand in Australia, Irmer confirmed that the company has no plans to expand into the ultra-price-competitive sub-light market.

"We do not consider the Citigo at this point," Irmer told TMR at the local launch of the Rapid Spaceback.

"At the moment I don’t think the segment is developed in Australia that much.

"Once the segment picks up we might re-assess the situation, but not at this point. The segment size is tiny."

Volkswagen Group Australia's Managing Director John White added that the economics of the sub-light category, where profit margins are extremely slim, made the business cases for the Up (above) and Citigo unsustainable.

"From what we’ve seen with the Up in that segment is that the segment is going the wrong way in terms of growth," White said to TMR.

"It’s going backwards. The pricing is going backwards as well.

"We believe the Up is a great car and it fits a niche in certain markets, but when we look at what we’ve settled into in terms of realistic volumes, the prices, the margins that we make, the margins that the dealers make, [we have to] step back and realise it’s just something we’re better off backing away from.

"The decision [to drop the Up] wasn’t made to help us bring in something else with Skoda, it was made independent of that and it was made as part of the simplification of the VW brand in Australia.

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