Frankfurt, October 4:

Carmakers are rushing to produce low-cost cars for well under 10,000 euros ($14,000) to tap growing mass markets in countries such as China, India and Brazil.

A range of small, compact and economical cars were presented at the recent Frankfurt Motor Show including Daihatsu Cuore, Fiat 500, Toyota iQ, VW Up and Opel Agila. French car maker Renault, which produces the low-cost Dacia Logan in Romania, announced in Frankfurt that it was looking at producing cars for countries such as China and Brazil for as little as 2,000 euros.

General Motors (GM) is also considering plans to develop a car costing less than $4,000 for these markets, according to CEO Rick Wagoner. But with sales of new cars stagnating in Germany, the biggest European car market, carmakers are also hoping to push up sales as a growing number of consumers are refusing to spend more than 10,000 euros on a car. Rising fuel prices, lack of parking and urban congestion make agile microcar with space for four people an attractive proposition for many a motorist in big European or North American cities.

The VW Golf, which was once a cheap car when it was launched as the successor to the VW Beetle in 1974, now sells in Germany at 16,700 euros for the basic two-door version with the Golf Plus 2.0 TDI Sportline priced at just less than 24,000 euros. The current Golf has a length of 4,211 mm compared to 3,432 mm for the 1970s model.

Reacting to criticism that it was no longer a producer of real VW returned to its roots by presenting the VW Up concept vehicle at the Frankfurt show. Like the old Beetle it has a rear engine. With a length of 3.45 metres and a width of 1.63 metres it is in the same small car category as Toyota Aygo, Peugeot 107 and Citroen C1. It is even smaller than current VW Fox and should it ever be produced would sell at about 8,000 euros.