India loud beep on Volkswagen radar

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Mumbai, Sep 9 : After kick-starting its Indian operations by unveiling the luxury sedan, Passat, recently, Europe’s largest car maker Volkswagen is betting big on sourcing cost-effective automotive components from India. A source close to the company said Volkswagen was planning to use local components for its vehicles in India. It might also look at making the country a major sourcing hub for global operations, he said.

An industry source told FE, “The whole project stands on getting local inputs. Before VW came to India , it had a good look at the components supplier infrastructure. It is optimistic that it would be able to forge partnerships, which will not only assist its Indian operations but will help significantly in sourcing for global operations.”

The company is currently setting up a plant in Chakan, near Pune with an investment of Rs 2,450 crore, which will have a capacity of producing 1,10,000 cars. The plant is expected to be started by the end of 2009 and, until then, the company will continue to assemble the Passat and (speculatively) the Jetta at its group company’s plant in Aurangabad .

Kevin Rose, executive director - international sales, passenger cars, Volkswagen AG, said, “The quality of Indian components is very good and almost everything can be used in our cars globally. Currently we have begun local sourcing for our global operations for things such as wire harnesses.” The company will use the next two years to build ties with suppliers and then progressively manufacture models at its Pune plant.