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German carmaker <keyword id="6361865" type="CITY" weightage="100" keywordseo="Volkswagen">Volkswagen</keyword> plans to invest Rs 1,500 crore in India over the next six years as it looks to consolidate its position in the country by developing new products. 
 "India is a strategic market for us and we are looking at investing here in a systematic manner. Over the period of next five to six years we intend to invest Rs 1,500 crore on activities like enhancing localisation and new products," Volkswagen India President &amp; MD <keyword id="1932964" type="UNKNOWN" weightage="100" keywordseo="Mahesh-Kodumudi">Mahesh Kodumudi</keyword> said. 
 
The company is also mulling making engines in India but it hasn't arrived on a decision yet, he said. He added that Maharashtra would be the company's first choice for setting up the engine plant. At present, the company imports the engines used in its cars in India. 
 
"Currently our localisation levels here are around 65-70% in value terms and going ahead our objective is to take it to 85-90%. We can achieve it by localising production of engines and gearbox and we are working on it," said Kodumudi. 
 "In India, compact sports utility vehicle and compact sedan segment is growing and we are looking at it. Also, with the increase in income levels in the country people are also looking at higher segments as well so that's another area of interest for us," Volkswagen passenger cars director <keyword id="1330635" type="PERSON" weightage="100" keywordseo="Michael-Mayer">Michael Mayer</keyword> said. 
 
"If we look at Indian car market, we are not present in segments which are showing growth. New Polo will allow us to increase our market share in the compact hatchback segment," Mayer added.

Volkswagen To Invest Rs 1,500 Crore In India

<keyword id="18174" type="COUNTRY" weightage="80" keywordseo="german">German</keyword> automobile manufacturer <keyword id="6361865" type="CITY" weightage="80" keywordseo="Volkswagen">Volkswagen</keyword> is finding the possibilities of introducing a budget brand for the <keyword id="47445" type="UNKNOWN" weightage="40" keywordseo="Indian-market">Indian market</keyword>, a move its Chinese subsidiary is very close to finalising. 

	Volkswagen caters only to 50-60% (Rs 5 lakh and above) of the 2.5 million Indian passenger vehicle market.
 Known for its build quality and premium feel, Volkswagen has positioned itself in the higher end of the existing premium hatchbacks and <keyword id="46360" type="PERSON" weightage="80" keywordseo="Sedan">sedan</keyword> segments. But if the latest plan comes through, it will open up the company's play in the sub Rs 5-lakh bracket as well. 

	The largest car-maker in Europe is known to build tough and premium quality vehicles. In India, Volkswagen has placed its vehicles in the premium hatchback and sedan segment. However, they plan to introduce a more affordable brand which will open up the company's play in the sub Rs 5-lakh bracket as well.
 

	The decision is likely to be taken in the next one year, and if the plan works, the brand will take at least 3-4 years to hit the market, said a report. By then, the company would have localised its products in India, with the local engine and gear box plant in place, which will be the key to producing value for money vehicles for India, it added.
 <keyword id="1932964" type="UNKNOWN" weightage="80" keywordseo="Mahesh-Kodumudi">Mahesh Kodumudi</keyword>, MD and Chief Representative of <keyword id="159682" type="COMPANY" weightage="100" keywordseo="Volkswagen-India">Volkswagen India</keyword>, said, "We are seriously considering a budget brand for India. We have looked at all the ideas which VW (HQ) had looked up for China. My teams here have been working very closely with the Chinese and German counterparts.” "India is one of the most brutal lowest retail markets in the world. What might be a low-cost model in China, may still not be low-cost in India," Kodumudi said. Abdul Majeed, partner and auto expert at <keyword id="127794" type="COMPANY" weightage="80" keywordseo="Pricewaterhouse">Pricewaterhouse</keyword>, feels 2018 may be a little too late, but if VW has plans of getting into higher volumes segment in India, an entry into smaller cars will be the key and sub-brand could be the right approach. 

	Majeed believes the compact small cars will continue to be a large chunk of the Indian market by the end of this decade with the per capita income not likely to exceed $3000-4000. The middle class population will only explode further and they will invariably choose a small car.
 

	The company is putting all the things in place for a better run in the next three-four years, with the company aiming for a market share of 7-9% for the entire group by the end of 2018-2020.
 The German manufacturer plans to launch six to seven vehicles over a period of two years. They will launch a facelift of the Polo, Vento and compact <keyword id="45454" type="COMPANY" weightage="80" keywordseo="SUV">SUV</keyword>. VW will also launch premium vehicles like the <keyword id="119207" type="COMPANY" weightage="80" keywordseo="Jetta">Jetta</keyword>, <keyword id="134042" type="PERSON" weightage="80" keywordseo="Passat">Passat</keyword> and a new compact sedan.

VW To Introduce Budget Brand In India

<keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword>’s ‘Make in India’ has had a far reaching effect. His thundering voice resonating till <keyword id="87" type="COUNTRY" weightage="20" keywordseo="Germany">Germany</keyword> is something wonderful! As per a news report by The Economic Times, German auto major Volkswagen is planning to make India a low-cost manufacturing hub, catering to both the emerging as well as developed markets. 
 As part of Prime Minister Narendra Modi's 'Make in India' initiative, the company will be investing Rs 1,500 crore for localisation and produce cost effective products, <keyword id="159682" type="COMPANY" weightage="20" keywordseo="Volkswagen-India">Volkswagen India</keyword> chief representative Mahesh Kodumudi told on the sidelines of the Hannover Fair. 
"We are looking at making India a low-cost manufacturing hub catering to emerging and developed export markets. In 2014, we exported 65,000 cars which is 60 per cent of our production from the Chakan plant," Kodumudi told the ET. 
 
"We are looking to export 70,000 cars this year," he said. 
 
The company will also increase production capacity at the Chakan and Aurangabad units in the next two years. 
 Volkswagen AG chief executive <keyword id="192806" type="PERSON" weightage="20" keywordseo="Martin-Winterkorn">Martin Winterkorn</keyword> has said to the ET, "India is and will remain an important strategic growth market for the <keyword id="166267" type="CITY" weightage="20" keywordseo="Volkswagen-Group">Volkswagen Group</keyword>. We are convinced that VW will take on a key role in the Indian automobile market in the long-term. We are driving localisation forward with our new engine assembly plant in Pune." 
 
VW plans to increase production to 200,000 units by 2018 and add more new models from the 130,000 units Chakan plant. 
Kodumudi said the company is looking at getting into top down segment and focus will be on building the brand. The company is planning to reintroduce the Passat sedan and a new model of the iconic Beetle this year. 
 
India has good potential to grow. Last year the country produced 2.4 million units and this year the target is 2.5 million, which will grow to 4-4.5 million by 2020, he said. 
 
Kodumudi, however, pointed out that the frequent policy change and large currency fluctuations have hampered growth of the industry in last two years. 
 
"Now we need the government to create stable policy framework and labour reforms, which need to be simplified. This will help gain confidence of foreign investors. We also need to talk about FTA with the EU to help the growth of the industry," he said. 
The company is also talking to the government over the cut in export incentives from 4 to 2 per cent in the recent new Foreign Trade Policy. "This move will hit the company's export plans. We are hopeful of the government restoring export incentives," he added. 
 
 
 (Image: reuters)

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