The German automotive major Volkswagen is upbeat on India as it consolidates its operations while exploring the potential to take up expansion of its manufacturing base.

The automaker, which has invested €1 billion in a greenfield manufacturing unit at Chakan in Maharashtra, is now engaged in discussions on expansion along with its Group company Skoda, as it is likely to get closer to its full capacity of 155,000 units per annum. Last year, the company produced 140,000 units, including for exports.

In a detailed interaction here today, Steffen Knapp, Director, Volkswagen Passenger Cars, said: “As a leading global automotive company, we are not chasing numbers. Our focus is now on consolidating our business over the next five years. As announced, we launched five models in India over the last two years and expect to add six more models over the next four-five years.”

While we do not want to get into specific models, India has become one of the fastest growing markets for Sports Utility Vehicles and we are actively watching this space. The response to the launch of Tiguan SUV has been very encouraging and we are seeking to augment capacity. Likewise, we are looking at the compact SUV segment as well,” he said.

Localisation in focus

Outlining the company plans for India, slated to emerge as one of the top three markets in the world, Knapp said: “We have a localisation level of about 80 per cent. In order to get lot more competitive in the market place, we need to increase this to over 90 per cent. We expect to achive this over the next few years and would then be able to make it lot more attractive for the discerning Indian consumer.”

“As we study the automotive market and emerging trends, we realise the second hand market is yet to evolve. The ownership models will also change just like we have in the Europe and other markets. This will be next major trigger for the growth of the automotive sector and for a company like us,” he said.

The long-term plan is to take the overall sales up from about 47,500 in 2017 in the domestic market to over 130,000 over the next four to five years, effectively more than doubling the numbers.

“That is when we expect to see a share of about 3 per cent in the market which is extremely competitive and diverse to function in.

“While the new Volkswagen Group head had outlined a plan to focus on business region-wise, we expect to do this within India too. It is necessary to do so as we see the market dynamics vary from one region to another,” he explained.

Referring to the launch of Ameo, designed exclusively for the Indian market, he said: “It is popular in tier II and III cities as well where we do not have big presence. Therefore, we are looking at expanding the dealership network from 124 across 80 per cent of the country geography to 200.”

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