VW plots a comeback strategy for India

For a company that is striving to be the world’s largest carmaker by 2018, it is astonishing how Volkswagen has just not got its script right in India.

From Michael Mayer’s point of view, however, the future is more important than worrying about the last few years. The Director, Volkswagen Passenger Cars, has been in India for barely six months but already has a fair idea of the challenges ahead.

“India is versatile and fascinating. In order to be successful, VW as a group needs to understand more and more about this country without losing its own character. It is a key strategic market for us,” Mayer told Auto Focus in a recent interview.

When VW first set up shop here at the Chakan plant near Pune in 2007, things seemed a lot less complicated as sales soared with brands like the Polo and Vento quickly making a mark in this competitive market. Then came the slowdown of 2012 and the dream run was rudely interrupted. “The entire experience, including the slowdown, gave us some time to reframe our strategy and focus on exports which have been reasonably successful,” Mayer says.

The acceptance of made-in-India products in markets like South Africa and Mexico also reminded VW that its India strategy could not be viewed in isolation but had to be part of a larger global plan. “Success is, therefore, not about doing big numbers in India alone but in establishing a footprint worldwide,” he adds.

Product planning, therefore, cannot be done in isolation for India but will have to be a part of the global production network of VW. According to Mayer, a business plan where global models can be used locally is the only way to survive especially when it also helps build up an export business. “We would like to Indianise products to meet local requirements,” he says.

Mayer has worked in countries like China where VW is the market leader with annual sales of over three million units which surpasses India’s overall industry tally of cars and SUVs. Despite this glaring difference, he is convinced that this part of the world still has the potential to offer a similar growth story.

After all, till about two decades ago, parts of China had traffic conditions which were as chaotic as Mumbai but things have changed dramatically since then with tremendous strides made in infrastructure and motorisation. “I see this happening here too, eventually,” an optimistic Mayer says.

In addition, India is a remarkably young market unlike Europe and China who are older, albeit with greater disposable income levels. This youthful base will gravitate towards mobility solutions and here is where VW would like to position itself as the brand of choice.

For the moment, though, Mayer’s top priority is to focus on customer satisfaction and ensure that the VW brand is aspirational enough for people to own and be happy with the experience. He admits that this rebuilding exercise will take time in a country as diverse as India but this will not stop him from helping VW’s dealer partners upgrade their levels of skills and customer satisfaction.

“The goal is to work towards being the best and, as part of this effort, dealers here must be well equipped like their global counterparts to deal with customers. All this will need training and building a lot of competence on the retail side,” Mayer says.

And even while the Indian market may have its own peculiar characteristics, he believes it is important to accept this reality rather than split hairs over it. After all, customer behavioural patterns are not dramatically different elsewhere in the world where everyone eventually seeks a value-for-money product.

“We need to get the basics right, create an inspiring brand and then get the after-sales processes in place so that the good word goes around,” Mayer says. All this will take time which prompted VW’s top management to announce at a recent media interaction that the German automaker would now work towards a 10-year timeframe for India.

“The question is not if but how we are going to grow here. This is what drives us and explains why I am here. Numbers are still small for us but it is important to develop the brand on the lines of what we did in China,” Mayer says.

Yet, even while he gears up for this challenging mandate in the subcontinent, the VW India Director makes it amply clear that there will be no compromise on safety. This becomes particularly relevant in a country which tops the world’s list of road fatalities with nearly 150,000 deaths each year.

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