German automaker Volkswagen has announced the investment of 1 billion euro almost Rs 7900 crore between 2019 and 2021 as part of its latest strategy to enhance presence in India which will be led by group firm Skoda Auto. The Volkswagen group is planning to launch a new SUV based on VW's flexible MQB platform by the second half of 2020 and has set a target of capturing 5 per cent of the Indian passenger vehicles market by 2025.
Commenting on the plan, Bernhard Maier, CEO, Skoda Auto said, “India is a fast-growing PV market and is likely to emerge as the third largest market by 2025. As part of our India 2.0 Project, Skoda, along with Volkswagen, would like to become a significant player by having five per cent of the market. A key focus of our new journey would be to increase our reach and give the best of customer services by keeping the prices competitive,” Maier said. To boost the cost effectiveness of its vehicles, the company aims a localization level of over 90 per cent. At the same time, it wants the premium quotient to remain in its vehicles; the aim is not just to increase sales, but also customer satisfaction.”
Skoda Auto is setting up an engineering design and development centre at Pune besides enhancing capacities at the group's two plants at Aurangabad and Pune as a part of 'India 2.0' project. Creating up to 5,000 direct and indirect jobs through setting up of the engineering centre and creation of additional capacities in the two plants is another part of the plan by the VW group. Currently, the VW group has around 2 per cent market share in passenger vehicle segment in India that stood at over 3.2 million units in 2017-18. The group had earlier explored unsuccessfully a partnership with Tata Motors and now they are looking at launching two models each from Volkswagen and Skoda brands between 2021 and 2025, in order to achieve its targets.
Also sharing his views on the future plans, Gurpratap Boparai, managing director for Skoda in India, said “the expansion of capacity and engineering centre could create additional 4,000-5,000 jobs gradually. The group will also plan to expand its network presence in India with a focus on tier-II and -III cities. The brand network now covers only 17 per cent of the Indian market and it will be doubled as the next step. The group aims to offer ‘world-class products’ at prices that amount to a ‘paradigm shift’ in the automotive industry. The group said it was now creating the ‘right conditions’ for ‘sustainable’ growth.”
Skoda has been selling in India for past 17 years, while Volkswagen began selling in 2007 in the country. The investment of Rs 79 billion will be done in capacity enhancement, R&D, new technologies and products by 2021. Both Volkswagen and Skoda will get two new cars each by 2020, with localization in at least of 90 per cent. The first product for both brands developed on a shared platform will be a mid-size sport utility vehicle. Currently, the automaker manufactures the products in Indian market with maximum 50-60 per cent localization in order to make it less competitive in pricing and ownership.
Stay tuned to V3cars.com for further updates on the future plans of Volkswagen Group in India.