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GERMANY: Volkswagen overhauls hybrid strategy

From just-auto.com| February 17,2007

Despite last week's European Commission proposals on CO2 emissions limits, Volkswagen's new management appears to be slowing down plans to fit hybrid engines to a range of its models.

New CEO Martin Winterkorn wants to wait and see how sales of a hybrid version of the Touran go before committing to hybrid versions of other models, according to Automobilwoche, citing a Volkswagen insider.

The Touran, badged 'Highbrid', will be Volkswagen's first hybrid model and will be seen as a test of how much extra consumers are prepared to pay to be environmentally-friendly. Winterkorn reportedly considers the current projections for the hybrid Touran are much too low to make a viable business case.

Automobilwoche said that Winterkorn also considers the business case for hybrid versions of the Golf and Jetta to be too weak. This is mainly because they would be priced at around EUR2,000 higher than standard models, a premium that customers in this price-sensitive segment would not be prepared to pay. Furthermore, fuel consumption would not be much lower than a diesel version.

This tentative approach to marketing hybrids goes against the plans of former CEO Bernd Pischetsrieder. He had planned to introduce a mild hybrid version of the Jetta for the 2008 model year in the US. Continental Automotive Systems would provide the components for this.

Volkswagen is continuing to work intensively on a hybrid version of the Touareg which should appear at the end of 2008. This would be the first application by Volkswagen of joint hybrid technology development with Porsche.

Bosch is reportedly developing a full hybrid solution for both the Touareg and the Cayenne. Both models are targeted mainly at the US, where the SUV market has been suffering because of high fuel prices.

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