Volkswagen speeding 2 new launches in sedan, SUV space to revive flagging sales

Written by Anil Sasi | New Delhi | Updated: Oct 19 2014, 13:11pm hrs
VolkswagenVolkswagen is pinning its hopes on two new offerings to reinvigorate its flagging fortunes in India.
Volkswagen AG, Europes biggest carmaker, is fastracking work on two key launches for India a sub four-meter sedan and a compact sports utility vehicle.

The German car major is pinning its hopes on both these offerings to reinvigorate its flagging fortunes in India, a market where the carmaker has struggled to replicate its success in neighbouring China, where VW is the market leader.

The company is learnt to be pruning lead times to get both cars to showrooms over the next 12-24 months in a bid to cash in on buoyant consumer demand in two of the fastest growing product segments in the country.

A Volkswagen spokesperson confirmed that the design of the sub four-metre sedan is close to being frozen, with engineers at the company headquarters in Wolfsburg having worked over the past months on the styling and dimensions of the car within the broader limitation of the four-metre length spec.

Maruti Suzuki, Tata Motors, Hyundai Motor, Honda Cars and Mahindra and Mahindra already have a presence in the sub four-metre sedan category.

Because of the length limitation, VWs compact sedan is expected to come with the Polos 2,456 mm wheelbase instead of the Vento sedan, which is 96 mm longer. Indications are that VW would go in for a premium positioning for the new compact sedan and the company is expected to price it above Maruti Suzukis Dzire and the Honda Amaze. VWs sedan is expected to hit the market by the end of 2015.

In case of the proposed compact SUV offering, unlike the sub-four metre Taigun concept showcased at the Auto Expo 2014, the car to be brought in for India may tip the four-metre mark to be positioned in the same product bracket as the Renault Duster and Nissan Terrano.

While the Taigun concept did come under the four-metre mark, which entitles the manufacturer to claim excise benefits under the tax rules for cars in India, VW is learnt to be debating whether to build the the vehicle on the existing Polo or Up! platform or on its latest, but more expensive, modular Golf platform that it calls the MQB platform.

Despite its success in China, five years after entering India, VW has managed to corner just 2.1 per cent of the market as its cars are seen as more expensive and the company seen to have a modest product range to take on market leaders Maruti Suzuki and Hyundai Motor Co.

As part of its extended India strategy, VW has now planned an increase in the indigenisation of its cars here in a bid to cut costs, especially the engines and gearboxes, with the objective of progressively ramping up the local content level in its cars to 90 per cent from about 65 per cent currently.

VW plans to invest $250 million in India over the next five to six years to set up a diesel engine facility and increase local content sourcing and manufacturing and introduce new models.

Sales of VWs passenger cars in India fell 24 per cent to 52,525 vehicles during FY14, ranking it sixth among 14 carmakers in the country by market share, according to SIAM data.

VWs Czech subsidiary, Skoda, too has failed to capitalise on the good start that it got through the Octavia premium sedan launched over a decade ago. Its premium brand Audi is the only exception that is doing comparatively well, having successfully taken on more established luxury car brands such as Mercedes Benz and BMW despite a late start.