With an aim to become the number one car maker in the world by 2018, the Indian subsidiary of global auto giant Volkswagen is realigning its India strategy to be reckoned among the top OEMs in the country. Among some of the key steps that Volkswagen India has adopted is to increase local sourcing on its range of products in India to enjoy the cost benefit. According to industry sources privy to the plans, Volkswagen India has started work on developing a small car that would be positioned below the Polo. The car is going to be the company?s cheapest offering in India till date. Apart from that, Volkswagen India has also changed its accounting year to April-March 31 against January-December 31 as followed by the Volkswagen Group globally.
?Volkswagen?s proposed small car would have a higher local sourcing than the Polo,? a source with direct knowledge told FE. He said that the company?s aim is to increase local sourcing up to 75% from the current level of 60-65%. The source said that the proposed small car would make its India debut in 2012 though was not able to give any tentative price point. He, however, added that the small car is likely to be at least R1 lakh below the base price of the Polo which is around R5.3 lakh. ?The company is exploring various options to increase their India presence including bringing more products into India,? he said.
However, interestingly in the recent months, the company has also seen an exodus of at least three of its top India officials. FE has learnt that the company?s president and MD Frank Loeschmann has put in his papers. This comes close on the heels of the resignation of its vice-chairman KK Swamy and Makham Dhalivaal, managing director of Volkswagen’s passenger car division. When contacted, Volkswagen India spokesperson declined to comment on the company?s proposed small car and the resignation of Loeschmann. However, he confirmed that the company has changed its accounting year to March 31. ?To align with the fiscal year in India as per tax, we changed our fiscal year from January till December to April till March.?
Partner (consulting & markets leader) at Mazars India Monish Chatrath said since India had demonstrated to the world of its high quality products, global OEMs like Volkswagen would look eastwards to meet its component supply. ?It is clear that in the coming three years maximum growth is going to be witnessed by small car segment. Hence, OEMs need to have a presence here,? he said. However, Chatrath said that following two different financial years for different geographical territories could be counter-productive for OEMs.