Michael Mayer is only too aware of the fact that Maruti Suzuki and Hyundai control nearly 70 per cent of the Indian car market. As Director of Volkswagen Passenger Cars, India, he also knows that the scales are not going to tilt in a hurry either.

“For us, it is good to drive the niche,” says Mayer. “Driving volumes immediately is a formula that I do not know how to crack.

It will take time and maybe a decade longer before six strong players emerge in India.” This is the picture in Spain, for instance, where the leader in the car arena has close to 10 per cent market share while the fifth in the pecking order is not too far behind with 8.5 per cent.

“The strong position of Maruti as a market leader in India will not vanish overnight. They cannot do so much wrong to make that happen and will always be a benchmark for the market,” he adds.

From VW’s point of view, the key is to stick out as a brand with relevant products that offer premium features and technology. “It takes people years to appreciate the longevity in a car and this will eventually happen in India too,” says Mayer.

Having been around for a decade here, VW is now more confident of the road ahead. The Ameo compact sedan did the trick in generating volumes last year especially in Tier 2 cities where many first time buyers queued up for the car.

“It is a good stepping stone for us to get into 2017 with an extension of the brands, which will herald affordable premium products,” says Mayer.

“With the Tiguan SUV and Passat coming in through Q2 and Q3, they will mark our inroads into the market stronger.”

Bright future

In his view, the Indian buyer is not just a value and mileage seeker but also has a passion for cars. “They might not buy the GTI but are interested in the car and enjoy seeing it,” he says. And even while SUVs are the current flavor now, VW believes the concept of a three-box sedan is valid for India especially in smaller cities and rural areas.

Ultimately, it will stay alive so long as the sub-four metre clause continues and this is where the Goods and Services Tax could throw up some surprises from the viewpoint of continuing duty concessions.

“If you look at the changes in regulations coming in, which are good from the viewpoint of safety and emissions, they could create some stress on car concepts,” says Mayer, while reiterating that VW is more than ready to meet the challenge head-on.

Petrol engines may just gain traction as Bharat Stage VI norms become a reality in 2020 as they are expected to become more efficient and can cope better in the new emissions regime.

“There will also be costs involved with more technology and you need a good brand to market them at competitive prices,” he says.

Diesel will still stay relevant, though, as “Indian car users drive quite a bit”. As roads get even better in the coming years coupled with the SUV growth story, there will always be a need for good diesel engines that deliver the best in mileage and torque.

This is where VW believes that it is well positioned to deliver what the market wants. While the electric car wave may not happen on a cross-country scale, Mayer says they will make sense in metros.

The young wave

VW’s buyer base is quite young with perhaps the Polo accounting for the more youthful of them. Women also make up a considerable chunk of the brand’s customers and this ‘young wave’ is expected to continue for the Tiguan and Passat too. “Today’s educated workforce also has the idea of smart brand choices. I see a big opportunity for VW in this growing segment,” says Mayer.

There have also been a lot of lessons learnt in this market and the idea is to use these effectively for the next phase of growth. Customers see VW as an affordable premium brand and the key is to build on that advantage in the coming years.

This will keep in line with the growing middle class where rising income levels will spawn a preference for brands like VW. “We cannot cater to all segments but understand the value for money concept,” tells Mayer. “This is an endurance race and we are looking to get things right with the learnings we have accumulated.” Eventually, it will boil down to delivering relevant products while focusing on steady growth.

For a brand that took a huge beating in the 2015 diesel scam, it is remarkable how VW has bounced back quickly. The good part about this setback is that the work culture at headquarters has also changed. Emerging markets will now get a greater push and this is where India could stand to gain.

Going forward, it is likely that the country could become the key lever as a cerebral base to meet the needs of other regions with similar cost pressures in the car space. These will typically include Africa, Asean and Latin America. If things go according to plan, India could just assume a larger global role in the VW roadmap.

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