VW group targets ASEAN as part of India 2.0 drive

The Volkswagen group is betting big on its India 2.0 initiative to service the ASEAN region as part of its global footprint.

“We need to grow our export operations also, not only to Mexico (more than half the volumes go there) but also to ASEAN. That is the next big step for us,” Juergen Stackmann, Member of the Board of Management of the Volkswagen Passenger Cars brand, told BusinessLine in an interview here on Monday.

India 2.0 is a joint initiative between Skoda and VW, under which a new entity, Skoda Auto Volkswagen India, has been formed to take the story to the next level. It will see competitively priced products roll out of a new platform as part of the effort to reboot its presence here.

Right size and cost base

“I think India 2.0 is the only possible source and there is no other (source) globally that could bring cars with the right size and cost base to the ASEAN markets,” said Stackmann.

VW has a “strong operation” in Malaysia but has not been too successful in “exploiting other opportunities” in the ASEAN belt. “I think India 2.0 clearly provides big opportunities for us here,” he added.

The group has pretty small operations right now in Indonesia, where the cars are sourced from its China arm but clearly “there is so much more to do”. Yet, Stackmann reiterated that while ASEAN would be a vital component of the India 2.0 programme, the first focus of the team here would be “to fix India first”.

Focus on India

This would mean growing the combined VW, Skoda market share beyond the present level of 2 per cent. “We should not lose focus of India as this is the primary market for us,” he said. After all, it is the world’s fourth-largest car-producing region which is tipped to grow in the coming years and emerge the most strategic after China and the US.

As for the Skoda-VW alliance, Stackmann said he was confident that it would work to the objective outlined by the group. “I would say it is like coming out of years of preparation….and we are very happy now to show a strong and powerful glimpse into the near future of India 2.0,” he said.

According to him, India has always been very special to the VW group even while it has had to struggle in a fiercely competitive market over the last decade. “We have come a long way and established ourselves as a brand. The time has now come to grow our business to 5 per cent combined share with Skoda by 2025,” said Stackmann.

He reiterated that the new partnership reflected a renewed vigour in moving forward with big investments. “We are here for good and that is the real message,” he added, while acknowledging that the first 15 years were not “always easy for us” with strong competition coming in from Maruti Suzuki and Hyundai.

“We are, however, here to stay, grow and be a fierce competitor in the coming years. The products for Skoda and VW are clearly a sign of the group’s confidence in India,” said Stackmann.

From his point of view, the time has now passed for all brands within the VW umbrella to be only competing with each other. “We had a time when all brands had little to do with each other other than using the same platform,” he said.

Today, the group has split its world into "competence fields", and Stackmann maintained that it was absolutely the right decision years ago to hand India’s “in-depth development” into Skoda’s hands.

“I think they are doing extremely well and you can see how engaged they are. Skoda has excellent and smart engineering while getting good solutions for customers in a tough environment,” said Stackmann.

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