Volkswagen targeting the compact sedan market of India

Saturday 15 September 2012, 11:05 AM by

Volkswagen Group, the German automotive marque and largest car maker of Europe, is working on a new compact saloon for the Indian car lovers, in order to capitalise on the lower tax slab levied on the sub-4 metre vehicles.

Volkswagen targeting the compact sedan market of India  |
Volkswagen targeting the compact sedan market of India

Industry experts hold the opinion that with the latest development, the German car maker may be following-in the footsteps of the Maruti Suzuki, which has enjoyed immense success with its Swift Dzire.

John Chacko, Chief Representative for India, Volkswagen Group, revealed the idea about the company developing a compact saloon falling in the sub-4 metre length segment. However, Chacko declined to disclose further details about the project.

According to Economic Times, some senior officials of Volkswagen India have divulged detailed information about the compact sedan and the German company seems set to mark its presence in the respective segment and is working profusely towards completion of the project. Reportedly, the in-development phase compact saloon will be built on the 'Up!' platform and will feature a notchback guise. The car is expected to hold a 1.5 litre diesel power-mill under its hood, which has been codenamed as 'EA 189' by the company. The engine is also reported to have been built on the likes of Volkswagen's current 1.6 litre offering in the Indian car market. Sources say that the German firm is looking to avail the lower excise duty of 12 per cent, which is especially meant for the sub-4 metre small cars.

Currently, the 24 per cent excise charges are levied on the those vehicles, which exceed the 4 metre length barrier or feature an engine with displacement more than 1,500 cc. Usually the sedans marketed in the country do not fall in this category but the trim down approach has fared well in the market considering the immensely popular Swift Dzire. Further, other auto makers like Mahindra and Mahindra (M&M) and the Japanese Honda Motors are also enthusiastic about the sub-4 metre vehicle segment. Thus, domestic turf may witness the launches of a compact version of Verito sedan and an elongated Brio saloon, in the near future.

Expressing his views on the company's motives in Indian auto market, John Chacko said, “After being in India for three years, we have to adapt to a certain extent as far as the regulations (read excise duty) are concerned.... Definitely we will have to work on engines, right up to the length of the car.”

Chacko affirmed that the company is currently in the development stage of the 'Up!' platform, while the launch of upcoming compact sedan can take up to three years in the car market of the country. The German auto maker is working on a 1.5 litre diesel engine that will be utilised in the Polo hatch and Vento sedan. Additionally, the engine will also be featured in Skoda models like Fabia hatchback and the new Rapid saloon. Further, the company will phase out the existing 1.6 and 1.2 litre engines, once the development of 1.5 litre diesel engine concludes.

According to Chacko, Volkswagen India may also diversify its product portfolio in the small car, Sports Utility Vehicle (SUV) and Multi Purpose Vehicle (MPV) markets in future. Reportedly, the compact sedan segment in the country recorded a surge of 30 per cent at 88,342 units during the first five months of the current fiscal year. However, the overall Indian passenger car market managed just 7.2 per cent growth.

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