VW Motorsport director Kris Nissen has confirmed the Polo WRC will be running before the end of this season.
The car will compete for the first time in 2013 and Nissen confirmed it will remain in the World Rally Championship until at least the end of 2015.
Nissen also confirmed Rally Dakar winner Carlos Sainz would remain with the team next season.
"We will be able to run with the car by the end of the year," said Nissen. "We will start testing the car. We have an excellent team [in motorsport]. I am very proud of the team. We will run some events with Skoda [Fabia S2000] to train the team on events and to meet the people.
"This is a five-year programme for Volkswagen. The next two years will be to develop the car and the engine, we will then enter the WRC in 2013, 14 and 15."
Nissen added that he was delighted to retain the services of double world champion Sainz, saying: "When Carlos came to us, the team was not on the level we are now - thank you Carlos. But thank you to all the other drivers as well.
"I spent some time convincing Carlos to stay in the team, it was the easiest 10 seconds ever! He [Sainz] will be my right hand and involved in many things. Carlos promised me not for racing, but for sure we need him for some tests."
Volkswagen confirmed it would be contesting the WRC on the same budget as it had for its Dakar programme. After winning Dakar for three years, Volkswagen will not contest the South American event in 2012 officially, but it is likely the Race Touareg 3 will run in private hands.
Nissen added: "I believe those teams can be competitive in 2012, we won't be there as an official team, but we would like to be there with private teams."