A new report indicates Volkswagen has approved a low-cost sub-brand set to come out in 2017 in China.

When Volkswagen purchased Skoda at the beginning of the 90s they wanted a low-cost brand but over the years the strategy changed and now Skoda is going further upmarket. Seat was also supposed to be an affordable offering from the Volkswagen Group but nowadays their cars are not significantly cheaper than the equivalent VW.

VAG now wants a proper low-cost sub-brand targeting first-time car buyers and apparently they will launch it in the second half of the decade but only in China, at least initially. A name for the new brand has not been finalized yet but we do know all cars will have a sub 7,000 EUR (9,500 USD / 5,700 GBP) starting price. Chances are these models will be manufactured by one of VW's Chinese partners, SAIC or FAW.

This plan was presented on Tuesday during a shareholder meeting when Volkswagen's CEO Martin Winterkorn announced production will kick off in 2017.

Gallery: Volkswagen low-cost brand set for 2017 launch in China with sub 7,000 EUR price - report

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