Volkswagen India to assemble engines to boost localisation

Written by fe Bureau | Pune | Updated: Aug 20 2014, 06:19am hrs
Volkswagen India will invest Rs 240 crore on setting up a new diesel engine assembly line at the Chakan plant in Pune. The new engine assemble line will manufacture the 1.5-litre TDI diesel engine and engine assembly line will start production by 2014 end. It will also have a full-fledged engine testing facility at its plant. The new line can assemble over 98,000 engines in a three-shift-system at full capacity. The locally assembled engine will be used in the recently launched new Polo and Polo GT TDI.

Mahesh Kodumudi, chief representative, Volkswagen Group India and president and MD of Volkswagen India Private said the current level of locations is 70% in terms of value of the material that goes into the car. On the cost side, we have been working on rationalising the cost and increasing the level of localisation. Not only the breadth or number of parts we are locally producing but also depth of localisation. Our target is to achieve 90%, Kodumudi had told The Financial Express. Now with engines being localized what remains to be done to achieve 90% localisation is the gear box.

The motor to be produced in India will be the new 1.5-litre TDI diesel engine, which was specifically designed and developed for the Indian market and recently unveiled at the launch of the new Volkswagen Polo, the company said. The new engine assembly line will be integrated into the existing structure of the Volkswagen Pune Plant in Chakan. The line will function over a total floor space of 3,450 square metre and create 260 direct jobs apart from the additional jobs created at the Indian suppliers who will be producing and supplying certain parts and components for this engine in India.

Volkswagen India was set up with an initial investment of 580 million euros and an additional investment of 100 million euros and now another 30 million euros will go into the Volkswagen Pune Plant. This represents the single largest investment of a German company in India so far.

Volkswagen is located on 575 acres housing the entire automotive production process from press shop through body shop and paint shop to assembly and now the engine assembly line. The Pune plant also has an in-house R&D facility. The assembly of the new 1.5-litre TDI diesel engine is scheduled to commence at the end of 2014.