German carmaker Volkswagen is set to foray into the sub-4-metre compact SUV space with a launch lined up for next year. The new model, which will be based on the highly localised MQB-A0-IN platform, is expected to help Volkswagen enter one of India’s fastest growing passenger vehicle segments.
“We have aspirations to grow significantly in India, not incrementally,” Thomas Schäfer, CEO, Volkswagen passenger cars, said. “Our growth was limited because we only play in very limited segments. Now we need to open up into other segments to really grow.”
The India push comes as Volkswagen restructures its global operations around regional markets amid geopolitical changes and a shift towards a “local for local” approach. Schäfer said India would be an important beneficiary of the realignment, with the group planning to build greater capacity in the country.
“We will build up capacity in India because it is not only cost-efficient, it’s also from the skills and availability of focused tech, it is really good in India,” he said.
Schäfer said Volkswagen had historically been over-reliant on its European, particularly German, engineering set-up, but was now looking to distribute capabilities across regions.
“So a lot more focus on India for two reasons. A, because we need to right-size Europe, but at the same time, we need to build this up because there’s also local opportunity that can be used for local markets plus exports and upcoming FTA,” he said.
India already has a growing engineering footprint within the group, including its Technology Centre in Pune. The country has also emerged as an export base, with more than 700,000 vehicles shipped to over 40 countries.
Volkswagen is also evaluating a local partnership as it reassesses its India strategy, with Schäfer confirming that discussions have been held with several potential partners, although no decision has been announced. “We have also been talking to local partners, talking to a few, and we believe that’s a good way forward, but it’s too early to announce anything,” he said. “It’s not there yet. It’s not years away.”
Schäfer said India’s cost-efficient manufacturing and development base could gain further importance as free trade agreements open opportunities for exports, while also allowing Volkswagen to potentially bring niche models from Europe to India at more competitive costs. “India, for us, has been an export country. It has exported to more than 40 countries over the past years,” Schäfer said.
