Various factors, including a slowdown in EV sales, have prompted Volkswagen to rethink its plans for the sub-compact SUV segment
As may be recalled, Volkswagen had earlier stated that it won’t be entering the sub-4-meter SUV space. That task was given exclusively to Skoda, which has been accomplished with the Kylaq SUV. With a change in plans, Volkswagen will now introduce a Kylaq-based SUV in 2026.
Volkswagen sub-4-meter SUV – What to expect?
Upcoming sub-4-meter SUV from Volkswagen will have the same platform and powertrain as Skoda Kylaq. However, Volkswagen’s version will have a new skin, in line with the brand’s design language. This approach can be seen with previous Skoda-Volkswagen combos like Kushaq/Taigun and Slavia/Virtus. It is likely to get inspired by the sub 4m SUV Volkswagen is getting ready to launch in Brazilteasers of which are already out.
Working on the same lines, the VW sub-4-meter SUV will have a new grille, lighting elements, bumpers and tailgate. Some distinct features are also expected across the interiors. It is estimated that the cost to develop the Volkswagen version will be around 25 million euros (approx. Rs 227.5 crore).
In the past, Volkswagen has stated that they have plans to bring the Polo brand back to India. It is likely that this new sub 4m SUV could be launched as Polo SUV. Volkswagen Polo sub-4-meter SUV will be using the 1.0-litre turbo petrol engine that generates 115 hp. This is the same engine in use with Skoda Kylaq. For both SUVs, this will be the sole engine on offer.
Volkswagen Polo SUV – Too late in the race?
In a crowded segment with around 12 options to choose from, a 2026 launch date may seem a bit late. However, the positive aspect is that the sub-4-meter SUV segment continues to be one of the fastest growing segments. As more customers switch from hatchbacks to small SUVs, the sub-4-meter SUV space will continue to register strong growth in the coming years.
This segment has always welcomed new products, something that can work to the advantage of Volkswagen’s upcoming Kylaq-based SUV. The brand is likely to ace the design aspects, and when coupled with premium features, competitive pricing, and Polo branding, Volkswagen’s sub-4-meter SUV could emerge as a bestseller.
Earlier reluctance to enter sub-4-meter SUV space
There are multiple reasons why Volkswagen had earlier decided not to enter the sub-4-meter SUV segment. One of these was the not-so-great response to the Ameo that had cost around 70-75 million euros (approx. Rs 683 crore) to develop. From 2016 to 2020, only around 32,000 units were sold. The investment yielded even lower returns since Skoda chose not to launch its own version of the Ameo.
Another reason was the division of responsibilities in the Skoda-VW partnership. Skoda was tasked with development of ICE models, whereas VW was to focus on electric vehicles. As per an earlier plan, Volkswagen was to become an entirely electric brand in India by 2028. Things have changed dramatically now, as EV sales are slowing down. Moreover, brands like Skoda and Volkswagen are yet to launch dedicated mass-market EV products. As initial electrification targets are being extended, brands like Volkswagen are planning a comeback to the ICE segment.
Volkswagen entering the sub-4-meter segment will also help justify the cost associated with the new sub-4-meter platform. Development cost of Skoda Kylaq platform is part of the 250 million euros (Rs 2,276 crore) project which also includes increase in plant utilization. This is part of the company’s ‘India 2.5’ project. With VW adding volumes, it will become easier to achieve economies of scale.
