Volkswagen will give an update on the project "in the foreseeable future," CEO Martin Winterkorn said this week at the Geneva auto show. He announced the initiative three years ago to attract a wider range of customers in China and possibly other emerging markets.

In recent years, the automaker has said that more work was needed to trim costs for the brand's first vehicle. The car would be priced at 6,000 euros ($6,600) to 7,000 euros, Winterkorn said in 2013.

The introduction of such budget models would be a change of direction for VW, whose rising sales and profits have been driven by its premium Audi, Porsche and Bentley brands.

On Friday, VW said that plans to increase earnings this year might be stymied because of economic troubles in Russia and Brazil.

The company is the top foreign automaker in China, where it builds cars for its main VW brand and the Audi and Skoda marques with local partners FAW Car Co. and SAIC Motor Corp. The country is VW's largest sales region, accounting for a third of global deliveries.

In November, VW China chief Jochem Heizman said the company will increase capacity at its Chinese plants beyond VW's previous annual production target of 4 million units by 2018. That compares with VW China's capacity of 3.1 million vehicles in 2013.