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Volkswagen, the German car manufacturer, has found some solace in India despite being entangled in a global emission scandal. It has also become one of the quickest foreign auto makers to mop out its accumulated losses in India in just seven years, earlier than Ford Motor, General Motors and Honda Motors, which are yet to reach that point even after being in India for more than 15 years. 
 
As per experts, it was the German company’s early decision to export vehicles from India, allowing its factory to continue exporting cars despite weak local sales, which helped the company achieve this feat. Volkswagen got into exporting cars from India in 2013, just within three years of starting making cars in India. 
 "Exports are absolutely supporting this, the exchange rate is also in favour of exports," Andreas Lauermann, MD at <keyword id="159682" type="COMPANY" weightage="100" keywordseo="Volkswagen-India">Volkswagen India</keyword>, told <a href="http://economictimes.indiatimes.com/industry/auto/amid-global-woes-india-a-bright-spot-for-automaker-volkswagen/articleshow/52825673.cms">ET</a>. "Otherwise we can be running in losses." 
 
"We have increased our production over the last few years, mainly driven by exports, but now we are expanding the capacity from domestic market perspective," said Lauermann. 
 
India is among the brightest markets for Volkswagen, especially because the company has been marred by a global emission scandal regarding its diesel cars. Around the globe, its seeing a major downsizing, with factories in Argentina, Russia, Mexico and Brazil cutting down on shifts, which has also led to job losses. 
 
<a href="http://www.gannett-cdn.com/-mm-/bc638bcd613d6e892b08f079f85a76359d3bf657/c=0-408-3883-2602&amp;r=x1683&amp;c=3200x1680/local/-/media/2015/09/22/USATODAY/USATODAY/635784997125265923-EPA-FILE-GERMANY-VOLKSWAGEN-EMISSION.jpg">Image source</a>

India becomes profitable for Volkswagen is in the middle of a global emission scandal

As part of cutting costs across the world to clean up the <a href="http://www.businessinsider.in/searchresult.cms?query=emissions+scandal&amp;sortorder=effectivedate">dieselgate</a> mess, German maker <a href="http://www.businessinsider.in/searchresult.cms?query=volkswagen&amp;sortorder=effectivedate">Volkswagen</a> has warned its factory workers in India of potential job losses. 
 "This is the time for survival of the fittest," the management of its Indian subsidiary told employees in a letter earlier this month. "If targets aren't met, the company may have to do away with extra workforce at the Chakan, <keyword id="2094" type="COMPANY" weightage="20" keywordseo="Pune">Pune</keyword>, plant," it said. 
 
This may also affect all its future investments in India. 
 
The letter, that ET has seen,was signed by India Managing Director Andreas Lauermann and Executive Director-HR Patrick Masson. 
 
Responding to ET's queries, Lauermann said the company is affected by the global crisis. "In this light, we have to act efficiently and use every resource wisely," he said in an email. 
 
He, however, downplayed the risk of job cuts, saying the plant recently added a third shift and as an employer it is the organisation's duty to ensure that the jobs are safeguarded, even in difficult times. 
 <keyword id="6361865" type="CITY" weightage="100" keywordseo="Volkswagen">Volkswagen</keyword> has agreed to repurchase or fix about half a million vehicles in the US in an effort to tide over the scandal over using secret software to cheat exhaust emission tests. This cleanup act is estimated by some to cost as much as $10 billion. Cutting cost is one way to raise resources. 
 
The troubles may spill over to India as the management told employees to brace up for the challenge as the Indian plant is "not in a strong position lace, either". The Chakan factory employs more than 4,000 people. 
 
The India unit exports more than 50,000 units a year to Mexico, a market where it recently lost out on 2,900 units to Volkswagen's Kaluga plant in Russia. With local sales remaining weak, the Chakan factory is surviving primarily on exports. Any dent to its numbers in a key export market like Mexico, even from another Volkswagen plant in a different country, will be a huge risk to the India manufacturing operations. 
 
In the letter, the company said if the India unit loses any more production, its financial situation will come under the scanner and the operation may be questioned globally. 
 
"It could eventually force us to come down from three shift operation to two and, in worst case, to a single shift operation. Needless to say, this will directly have an effect on our jobs here at the Pune plant, since a single shift production will require considerably lesser workforce," it said. 
 
"This situation will withhold all our future investments and may also endanger the launch of our new compact sedan that is scheduled in the second half of 2016." Apart from looking at improving efficiency year on year, the company is accelerating localisation. 
 
It has also been sending out a tough message to component suppliers. "If the schedules are not met and if it impacts the production, the vendor will be held accountable with a penalty, which can range in several hundred euros said one of the people in the know. 
 
This was the second round of communication with the employees after a February 2016 staff meet where the management talked about issues of losing production to Russia and emphasised on maintaining quality, high standard of discipline and code of conduct. 
 While the <keyword id="3076065" type="UNKNOWN" weightage="20" keywordseo="dieselgate">dieselgate</keyword> did hurt the brand globally, the <keyword id="143605" type="UNKNOWN" weightage="20" keywordseo="Chakan-plant">Chakan plant</keyword> has been ramping up production thanks to export demand and the upcoming compact sedan, Ameo. Volkswagen added a \third shift to its operation and hired 800 more people. On March 29, the company crossed a critical milestone of 500 <keyword id="20632" type="ORGANIZATION" weightage="20" keywordseo="Cars">cars</keyword> per day at the India factory. 
 
Volkswagen said given the environment, it is extremely critical for each plant to show profitability to sail through this difficult time. 
 
"There is already cut-throat competition in the automotive world and then there is some more across company's different plants within VW world to grab every opportunity and to get more production volumes and utilise the respective production capacity in a better way," the letter said. 
 In India, where the company was eyeing double-digit growth in the fiscal year ended on March 31, 2016, saw sales slide after September as the <keyword id="3067239" type="UNKNOWN" weightage="20" keywordseo="emissions-scandal">emissions scandal</keyword> hit the brand. Local sales fell 9% to 41,096 units last fiscal year. 
 
Exports, however, grew 17% to 75,000 vehicles. VG Ramakrishnan, MD at consultancy firm Avanteum Advisor, said since the domestic plant is making money due to exports, it is highly unlikely that there will be any adverse decision taken on it because of global crises. 
 
"But the domestic operation will continue to struggle due to lack of any new volumes product. I fear that VW India will go the GM way and may become a niche player," he said. 
 
Image credit: Indiatimes

Emissions scandal: Volkswagen may cut jobs in Pune plant

<a href="http://www.businessinsider.in/Volkswagen-is-confronting-a-horrible-reality-at-home/articleshow/51434543.cms">Volkswagen</a> India gears up to increase the output of the Pune plant by 15 per cent this year. It will add a third shift as it readies itself to cater to enhanced demand from export as well as domestic markets.
 

	In preparation for the increased output from the plant, which can roll out maximum of 1.3 lakh cars annually in a two-shift system, the company has hired around 800 new employees.
 "In 2016, we are expecting growth in our domestic as well as export volumes. With the new Ameo, a car that has been specially developed for India, we are expecting a higher demand from the domestic Indian market while we look at supplying more cars to our export markets too," <keyword id="6361865" type="CITY" weightage="100" keywordseo="Volkswagen">Volkswagen</keyword> India President and M Andreas Lauermann said in a statement. 

	In all, the company expects to increase production by around 15 per cent this year as compared to the last one, he added.
 

	Last year <a href="http://www.businessinsider.in/More-trouble-for-Volkswagen/articleshow/51316177.cms">the company </a>produced year 1,23,456 cars from the plant, which started production in March 2009.
 

	Commenting on enhancing manpower, Lauermann said: "We have been hiring workforce across levels with varying skill sets. Our production processes demand skilled workers and we have been carefully appointing the right people for the right jobs."
 At present, Volkswagen India produces models like Polo, Vento and <keyword id="6361542" type="CITY" weightage="100" keywordseo="Skoda">Skoda</keyword> Rapid at the plant in Chakan, Pune. Besides, it also assembles the 1.5-litre TDI engine at this plant. 

	Later this year, the Ameo will be added to the production portfolio on the same line. Volkswagen India has invested around 800 million Euro (around Rs 6,000 crore ) at the plant so far that employees over 4,000 people. MSS RKL ABI

	 
	 
	(Image credits: indiatimes)

Volkswagen gears up to increase its Pune plant output by 15%

<keyword id="2855210" type="UNKNOWN" weightage="100" keywordseo="Auto-Expo-2016">Auto Expo 2016</keyword>, which is going to be world’s biggest show of its kind, would see as many as 80 products being unveiled. This has sent hopes to the hearts of automobile manufacturers, who look forward to the new models spurring growth as the policy road map remains dicey. 
 Even though India's passenger vehicle industry ended on a high note last year, registering a growth of 7.86% to 2.77 million units, and was the best to have happened in four years, the recovery was not spread evenly, as solid performances by market leader <keyword id="44883" type="CITY" weightage="100" keywordseo="Maruti-Suzuki">Maruti Suzuki</keyword> and Korean rival <keyword id="70910" type="CITY" weightage="100" keywordseo="Hyundai-motor">Hyundai Motor</keyword> took most of the part. 
 
Also, with authorities targeting the auto industry for increasing air pollution in cities, manufacturers are not too hopeful about the policies that might sprout up in the near future. 
 "The industry has not made a turnaround. In 2015, the industry grew by 7-odd per cent. If you take out the top two companies, volumes have declined over the previous year," RC Bhargava, chairman of Maruti Suzuki, told ET. "All the product unveilings lined up during the <keyword id="73154" type="PERSON" weightage="100" keywordseo="Auto-Expo">Auto Expo</keyword> show that every company is trying to grow. Hopefully, 2016 should be a little better." 
 Market leaders Maruti Suzuki and Hyundai India sold nearly 1.77 million units between them in 2015, giving the rest of the players just 1.0 million together. Amongst these, <keyword id="72707" type="CITY" weightage="100" keywordseo="Honda-Motor">Honda Motor</keyword> and <keyword id="43777" type="CITY" weightage="100" keywordseo="Renault">Renault</keyword> were among the few that posted growth in numbers in the past year. 
 
"Industry has not turned a corner yet. Volumes have grown but if you look at the dynamics; discount levels too are huge. What the passenger car industry requires is positive consumer sentiment, that is still to happen," Jnaneswar Sen, senior vice president for sales &amp; marketing at Honda Cars India, told ET. 
 
In this case, over pollution has come as a challenge to the industry. The government has mandated that the automobile industry needs to implement BS VI emission rules by 2020. As per industry experts, an estimate investment of Rs 50,000-80,000 crore is needed to update technology for this, leading to a consequent increase in car prices by Rs 50,000-100,000. This in turn would dampen the demand of cars. 
 
"The concern over pollution is quite valid," said Bhargava. "But pollution in India is very different from pollution in Europe and the United States. The IIT-Kanpur study shows that one of the major causes of pollution in India is dust. Cars contribute 2%. The odd-even rule was implemented apparently to curb rising pollution levels, but how does keeping off roads petrol cars, which do not add to pollution levels help." 
Some executives propose that phasing out of old vehicles to boost the industry. 
 
"We need to take a strong decision to unclog roads by phasing out old, ageing cars which are less fuel-efficient polluting and do not meet safety requirements," said Renault India Chief Executive Sumit Sawhney. 
 
"We need a 360-degree approach to address pollution concerns, right now the focus is only on the transport sector." The main challenge faced by the automotive market in India has been instable policies, Andreas Lauermann, managing director of Volkswagen India, told ET. "This has a cascading effect on the entire industry. Once there is a stable framework in the country, the automotive industry might even see stronger growth," he added. 
 
Auto Expo would see several models, including upgrades, debuting, which indicates the importance of India as a growth market for the industry, even amongst all these challenges. 
 
"Global demographics are working against developed markets such as Europe and the United States and to the benefit of India," said VG Ramakrishnan, managing director of consultancy firm Avanteum Advisors. 
 
"Also, given the level of vehicle penetration here (18 per 1,000 people), India has the potential to sustain this growth over the next 20-30 years ... no OEM (original equipment maker) can afford to not be here and we will see that show of strength at the auto show." 
 
It is important for the economy that the automobile industry be revived, as it accounts for 6.5-7% of GDP and 48% of the manufacturing GDP. 
 
<a href="http://file1.hpage.com/000395/70/bilder/maruti-suzuki-sx4-grill-logo.jpg">Image source</a>

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India becomes profitable for Volkswagen is in the middle of a global emission scandal

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Emissions scandal: Volkswagen may cut jobs in Pune plant

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Volkswagen gears up to increase its Pune plant output by 15%

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