The Hindu Business Line : Volkswagen to launch small car

NEW DRIVE: Mr Detlef Wittig (left), Chairman of the board of management of Skoda Auto, and Mr Hans Dieter Potsch, member of the board of management of Volkswagen AG (Finance), unveiling Volkswagen `Passat' in the Capital on Wednesday. - Kamal Narang

New Delhi , Nov. 29

German automobile giant Volkswagen AG, which recently announced that it would invest around € 410 million (Rs 2,400 crore) to build a car manufacturing plant near Pune, plans to join the growing list of foreign automakers looking to garner a chunk of the high-volume domestic small car segment.

Compact Car

Addressing a news conference, Volkswagen's Chief Financial Officer, Mr Hans Dieter Potsch, said that the company would develop a compact car "specifically tailored to the needs of the Indian market."

"The car will be on the lines of the Polo, which we sell in Europe. We will be targeting the volume segment and the car will compete with the likes of the Maruti Swift and the Hyundai Getz. It will be customised for Indian needs but we will have similar versions of the car selling in China and Russia," he added.

The localisation content in the cars built at the Pune plant will be about 70-80 per cent. The company's upcoming Pune facility will have a capacity to produce up to 1,10,000 vehicles a year when it starts production in 2009. On Wednesday, the German carmaker signed an agreement with the Maharashtra Government for the new factory. The new plant near Pune will create 2,500 jobs, Mr Potsch said.

Indian Subsidiary

Meanwhile, Volkswagen's first model rollout in India will be as early as 2007. Volkswagen plans to first start making cars at Skoda Auto's Aurangabad facility from mid-2007. "This is how we can bring locally produced vehicles promptly to the Indian market. We will start by producing models such as the Passat," Mr Potsch said. He added that Volkswagen will also sell its Touareg and Phaeton models in India after importing them as completely built units.

Volkswagen is also setting up a new marketing and sales subsidiary in India, which will commence operations in January 2007. The new company will handle sales for the Group brands — Volkswagen, Skoda and Audi. Mr Potsch added that the company may look at setting up an assembly unit for Audi as well in India.

Right Location

Meanwhile, in an effort to put to rest the controversy around its decision not to set up a unit in Andhra Pradesh, Volkswagen said it chose Maharashtra due to competitive advantages. "It was a competitive process and in the end, only one could win," a senior company official said. The company said it had scouted for the right location in as many as six States where it surveyed 17 sites.

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