Volkswagen’s proverbial second innings could well be on its way with the upcoming launch of its new compact SUV — the Taigun. To be out before the festive festival season this year, this could be the volume model that will help VW inch closer to the three per cent market share target that it has set for itself. The new vehicle represents much of the change in the German brand’s approach to the Indian market. BusinessLine caught up with Gurpratap Boparai, Managing Director, Skoda Auto Volkswagen India, on at the sidelines of the Taigun’s unveil event to get some updates. Excerpts from the conversation:
You are finally entering into the mass SUV segment with the Taigun. How do you see it contributing to your market share expectations?
The Taigun is an extremely important product for us. It will be a significant contributor to our objective of achieving 5 per cent market share for the Volkswagen group as a whole by 2025. And this is a big step in that direction offering one more vehicle in the mass segment. Obviously we have worked very hard to get the product right for the Indian market. Focus also has been on bringing costs down without compromising on the core DNA of VW and that has been the biggest challenge. To make a car that is a VW, but can be priced lower than a VW; that has meant achieving a deep level of localisation. It has also meant working with non-traditional suppliers (for us). It has also meant localising raw materials, and tweaking some of the vehicle’s specs which are not relevant to our operating conditions. All of that has gone into this product and we believe will make it appealing.
How much of the development work has been done locally? And how has your sourcing strategy changed for the Taigun?
The platform part of the development was done at the headquarters. They were already familiar with the original platform and to carry out changes to create the MQB-AO-IN and the expertise lies there frankly. But a lot of the top hat, the interiors etc., was done here locally, including the design, and then the validation was done at HQ.
There are quite a few learnings from the sourcing strategy for this project that will help us in the future. Both in terms of sourcing parts for this car, as well as sourcing of toolings, equipment etc. It is reflected in the significant changes we have managed to effect on the ‘Total Cost of Ownership’ (TCO). For example, a 3-13 per cent reduction in parts prices and a 32 per cent reduction in engine oil prices.
What will be the brand strategy and relationship with sister brand Skoda Auto, which is also preparing to launch the Kushaq, a compact SUV based on the same platform as the Taigun? How do you see the two vehicles being positioned within each brand and between the two?
While on the broader level, Volkswagen has always been positioned higher than Skoda yet we will be addressing different segments and sub-segments with different features. But, there could be price overlaps also. But we appeal to different sets of customers, with the cars looking very different too. There will be a bit of cannibalisation, but we have been conscious of the differentiation to keep overlaps low.
With the complement of four SUVs in our line-up by the end of the year, we believe that all the bases are covered for us as a player in the SUVs market. They will span across the entire price range from the Tiguan AllSpace, Tiguan 5-seater, T-Roc and the new Taigun. But it is a dynamic market and we will keep our eyes and ears open to grab any of the opportunities thrown up by the market.
What’s happening at your dealer network front? Is dealer profitability a big factor post-pandemic? Also, are there dealer monopolies that need to be addressed in some cities?
In bigger cities we will have more than one dealer. As far as monopolies go, I don’t think it is per se a bad thing, as long as the customers are being served. We will work very hard to ensure that. We have been involved in multiple initiatives on supporting our dealers to serve our customers better and have seen some really good customer feedback. The biggest competition is also from competing brands. So we have to ensure that customer retention is done whether it is through one dealer with multiple outlets or through multiple dealers. Where we have had problems with certain dealers, we have either worked with them on changing their operations or have parted ways with them.
Will we never see a diesel engine option in any VW model in the future?
I wouldn’t say that. We will see how the market evolves after Phase-2 norms and then we will take a call. We continue to have strong diesels in our global portfolio, even though, worldwide, the share of diesels has been coming down. We will gauge how the market reacts to the possibility of an even higher price differential between petrol and diesel cars and based on that will take a decision. So, yes, a diesel is definitely not ruled out from our portfolio in the future.