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April 15, 2005

GERMANY: Volkswagen abandons super-economy car project

Volkswagen reportedly has abandoned its costly effort to develop a 'super-economy car', admitting that there is no mass market for the product even at current high petrol prices.

Volkswagen reportedly has abandoned its costly effort to develop a ‘super-economy car’, admitting that there is no mass market for the product even at current high petrol prices.

According to the Daily Telegraph, VW CEO Bernd Pischetsrieder said the two-seater vehicle, which is shaped like the cabin of a Messerschmitt fighter, had little chance of ever making money. “The vehicle can’t be produced at a reasonable cost,” he reportedly said.

The report said the carbon-fibre car is designed to drive more than 60 miles on a single litre of diesel (almost 300 miles per gallon), and can reach speeds of up to 75mph – 20 engineers have been working on the high priority project for the last three years, though only a handful of prototypes have ever been built.

Volkswagen said it could not produce the 0.3 litre engine car for less than €20,000 (£13,600) each, putting it beyond the range of potential buyers, the Daily Telegraph said, noting that the failure of the project is a fresh setback for Europe’s biggest car maker after a string of poor results – profits fell 31% last year as the German economy stalled and the strong euro eroded margins in the US.

The paper added that Volkswagen would continue producing its fuel-saving Lupo TDI, which can do more than 20 miles per litre, even though it is being sold at a cost of around €15,000.

The company reportedly said it always knew there would be a limited market for a costly prototype built with exotic materials and technology, but had hoped the project would spin off a viable super-economy model for ordinary buyers. So far it has not.

“People just won’t pay these sorts of prices to get a few extra miles of fuel efficiency, but it’s another matter if the price of fuel really shoots up,” a VW spokesman told the Daily Telegraph.

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