For the €20,000 project, VW will rely “on a high degree of localization in Europe,” the company said, adding that the push will require political support and competitive framework conditions.

VW's only model in those segments, the Polo, starts at around $9,100. Maruti Suzuki's entry-level model, and India's biggest-selling car, the Alto, costs half that price, while Hyundai's small-car ...