A minimum of 2,000 crores investment is planned by the German car maker Volkswagen by 2013 for its Indian operations. In order to launch new models, enhance the production capacity and strengthen research activities, the investment will be made. By the end of 2013 or early 2014, the group is also considering to launch its small car Up in India.
Reinforcing the news, Chief Representative of the group in India and also its President and Managing Director (MD), John Chacko said, “This is a group investment, which will be done in this year.” He further added, “Majority of it will be utilized at expanding our capacity at our plants in Aurangabad and Pune plants, and product planning.”
Having two manufacturing units at Chakan and Aurangabad in Maharashtra, the car maker has an annual capacity of manufacturing 1.6 million cars in the country. According to Chacko, a part of the said investment will be utilised to grow and solidify the company's after sales network and training facilities. However, the group does not have any plans to build another manufacturing facility quite soon.
Besides, the hatchback Polo and Fabia compact, which are sold under the group's brand, Skoda, the car maker wants to launch another small car in India. Volkswagen is already in the process of discussion with its top executives back in Germany. In an interview in March, Chacko stated that something fruitful may happen by the year end.
He said, “I would love to bring Up! here, if it was feasible. Everybody has said make it feasible (for the Indian market). But it is not feasible yet”. Adding further he stated that, “We did change Polo (for India) a bit and nobody notices it. But we have. So why not do it for Up!. We are working to try and make it feasible for India. I would like to have a decision by the end of this year, because it takes time to introduce a product like that.”
An analyst at Fortune Equity Brokers India Limited, Mahantesh Sabard feels that the group's plans are in sync with its motive to stay in the country for a longer duration. He was heard saying, “I don’t think they would be making money in India yet.” Quoting further he said, “This is because their volumes are insufficient to break even.”
Anand Sharma, Trade minister, was recently in Germany to celebrate the 60th anniversary of diplomatic ties between India and Germany. According to him, in India, more than 600 Indo-German partnerships operate. He quoted further that, “FDI (foreign direct investments) inflows from Germany into India are around $4.55 billion and it ranks eighth among investors in India.”
Operating in India since 10 years, Volkswagen has introduced many brands in the country like the Audi, Skoda and Volkswagen. However, it doesn't have any low-cost small cars in its domestic portfolio of India which comprises more than 65 per cent of the automobile market of the country.
Audi has overstepped Mercedes Benz to be the second largest luxury car selling brand in the country. Meanwhile, the flagship Volkswagen doubled its market share to 3 per cent in the country in the Fiscal 2011. On the contrast, Skoda brand has not lived up to the expectations. VW's Polo takes Maruti Suzuki's Swift and Hyundai's i20 heads on in the small cars segment. However, in the sedan segment, company has its own contender, Vento against Hyundai Verna and Honda City.
