VW To Introduce Budget Brand In India

German automobile manufacturer Volkswagen is finding the possibilities of introducing a budget brand for the Indian market, 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 sedan 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.

Mahesh Kodumudi, MD and Chief Representative of Volkswagen India, 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 Pricewaterhouse, 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 SUV. VW will also launch premium vehicles like the Jetta, Passat and a new compact sedan.