German vehicle manufacturers are ignoring the market for low cost cars, according to one of Germany's leading automotive industry experts, Ferdinand Dudenhöffer.

He warned that "there is the danger that German car manufacturers have taken their eye off the world's largest growing automotive segment, " Dpa-AFX reported.

Dudenhöffer is managing director of B&D-Forecast institute in Leverkusen. The biggest low-cost car markets are expected to be China, India, eastern Europe and Russia.

The market for low-cost cars is divided into three segments - $US7-10,000, $5-7,000 and $2-5,000. By 2015, B&D Forecast is expecting 10m low-cost cars to be sold, 90% of which will be in the 'new markets'.

The two most important segments are thought to be the two lowest cost segments, but Volkswagen and Opel are entering the US$7-10,000 segment. Here the competition will be harshest, according to Dudenhöffer, with slim margins and low volumes.

"The German manufacturers are only working on stripped out cheap cars. They are forgetting the need for low-cost plant, low-cost logistics and low-cost sales networks," said Dudenhöffer.

This leaves room for new entrants such as Chinese and Indian vehicle manufacturers, who are expected to capture a 40% share of the market.