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Volkswagen is reviewing the fate of its Volkswagen Polo car in Europe at the end of the decade as emissions regulations begin to drive up the cost of producing gasoline-engine cars.
The decision to replace or extend the Polo’s life, or phase it out entirely, is being “openly discussed” within the company, according to two people familiar with its strategy.
“Everything is still up in the air, nothing is confirmed yet,” said a person with direct knowledge of the decision-making process.
Volkswagen has produced the Polo since 1975, and the current version of the model will last until 2026.
Priced from around 20,000 euros, the Polo is the world’s second-best-selling Volkswagen model and is produced at plants in Brazil, China, Spain and South Africa. Its demise would be the latest affordable model to disappear from Europe, following Ford’s discontinuation of the Fiesta earlier this year.
It is increasingly difficult for automakers to produce small cars profitably, in large part because of rising engine costs due to emissions regulations.
As electric car production increases, most European car groups plan to phase out gasoline models by 2035, when the European Union plans to ban the sale of new gasoline and diesel cars.
Faced with various forecasts for the share of electric vehicles in new car sales in 2030, many automakers are wondering whether demand for gasoline models will be enough to invest in new models by the end of the decade.
Cars are typically produced for seven years, after which they are either updated or scrapped.
Volkswagen already plans to produce a 25,000-euro electric model called the ID2 in 2026. The company plans to launch a cheaper 20,000-euro electric car by the end of the decade, tentatively called the ID1, which could fill a gap in the market if the Polo exits the market.
In Europe, Volkswagen has committed to producing the electric ID2 at its Martorell plant near Barcelona, part of Volkswagen’s Spanish Seat brand. Analysts expect the ID1 to be built at the Pamplona plant where the Polo is built, but the group has yet to comment on plans for electric models at the plant.
Discussions are currently focused on the Polo’s future in Europe, which is due to implement stricter and therefore expensive Euro 7 engine regulations later this decade.
The industry has warned that the new rules will disproportionately push up the price of small petrol cars as the cost of expensive emission reduction systems needs to be absorbed.
Sigrid de Vries, head of ACEA, the European car industry trade body, said the new rules “increase costs and are not good for competitiveness”, especially targeting China, which threatens to import cheaper electric cars into Europe. enterprise.
Two people familiar with VW’s strategy said Euro 7 costs will play an important role in determining the model’s longevity.
The automaker hopes there will be enough leeway in Euro 7 regulations to allow VW to keep the Polo on the market “for longer,” a person familiar with the matter said.
“It depends on global sales,” another person added, adding that sales in South America and other markets could mean the model lasts longer.
Volkswagen declined to comment.
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