VW brand development boss Dr Heinz-Jakob Neusser told Auto Express that it was still assessing the business case, but the project looks certain to get the go-ahead next year.

Earlier this year, CEO Martin Winterkorn had indicated that VW would go public with its plans by the end of 2013, but Neusser says VW is not quite ready make an announcement just yet.

“We are conceptually developing the budget car, but we haven’t decided up to now go into production development,” he stressed.

“We are still working on the cost side, and that is the biggest issue. We will only make this car when it is profitable.”

The car, intended for China initially, will not be badged as a Volkswagen. But Neusser added: “It has a special brand in the Group, but it has to fulfill our criteria. It has to be durable, it has to be precise, it has to be safe. We will come to a decision next year.”