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East Europe: Volkswagen Relaunches The Beetle

Prague, 15 January 1998 (RFE/RL) -- In the hard-headed world of big industry there is rarely time for looking backward with nostalgia to past times. That's certainly true of the auto industry, where manufacturers strive to outdo one another in offering the customer new thrills, whether in styling, performance, comfort or price. The ruling philosophy is give the buying public what it wants -- as long as its ultra-modern.

But the German car maker Volkswagen, which is as hard-headed as any other successful manufacturer, is laying out hundreds of millions of dollars exactly in the opposite direction. Volkswagen is about to launch a car which appears to have sprung straight out of the 1940s or 1950s -- a model which looks like a racier version of the famous old "Beetle".

The air-cooled Beetle was the original Volkswagen, and was the company's only model for years. It went into civilian production after World War Two and its amusing egg shape was soon to be seen around the world, from the deserts of Australia to the ice of Norway. A brilliant design, it became a cult car, and 30 and 40 year old examples are still eagerly collected by enthusiasts.

Now Volkswagen is about to put the new Beetle into production, and company spokesman Dietmar Fritsche acknowledged to RFE/RL that the basis for the expected big sales of this model is pure emotion.

Fritsche said millions of people started their motoring lives in the old Beetle, and look back with pleasure to the so-called "good old days" of the post-war era. The new model is of course up-to-the-minute in technical terms, being based mechanically on the popular Golf model. It will be built at Volkswagen's Mexico plant, alongside the original Beetle, which is still in production there some 50 years after starting on its long journey.

Fritsche described the new car as a "Leisure Beetle," designed to capture interest among buyers of so-called recreational vehicles, particularly on the huge North American market. On that market, recreational vehicles like sporting four-wheel-drives are capturing an ever-larger segment from the traditional saloons and station wagons.

Fritsche said the new Beetle will be available in Europe later this year, and will be offered to buyers in Central and East Europe if demand exists. He said his company no longer divides the European market into east and west, but instead views it as a whole. This underlines the growing importance of the transition economies to car makers, particularly West European-based manufacturers who regard them as home territory.

A spokesman for the Association of European Automobile Manufacturers in Brussels, Joerg Schroeder, said that the transition lands in Europe are regarded in terms of 165 million potential customers -- a market of a size which cannot be ignored. He noted that there were hundreds of thousands new car registrations in Poland alone last year.

He said the transition economies need to grow further before the full potential of this new market is available, but he said things are moving in the right direction. Schroeder also noted the growing commitment of West European makers to the East in terms of manufacturing plants or contacts with local industry, notably in Poland, the Czech Republic and Hungary, but also in Russia and elsewhere.

Of course not only European-based manufacturers are active, so are the South Koreans -- particularly the Daewoo company, which has several major facilities in East Europe -- and to a lesser extent the Japanese. U.S. auto interests, like Ford and General Motors, are mainly represented through their West European-based subsidiaries. It's not yet clear how the Asian financial crisis, in which South Korea is deeply involved, will affect the Koreans' commitment to developing the Eastern market.

Schroeder said the European manufacturers are now trying to assess what impact the Asian crisis will have on consumer buying power in Europe, both East and West, in the coming year. He said so far analysts cannot agree on the extent of the probable impact.