Volk­swa­gen Goes for Ma­jor Over­haul

Pushed to be­ing fringe play­ers in In­dia, Skoda is repo­si­tion­ing it­self as a pre­mium brand while its par­ent Volk­swa­gen is re­align­ing pro­duc­tion with fo­cus on ex­ports

The Economic Times - - Business Of Brands - KE­TAN THAKKAR

Europe’s leading car­maker Volk­swa­gen (VW) is re­vamp­ing its In­dia strat­egy five years af­ter it en­tered the mar­ket, where it got pushed to the fringes due to its in­abil­ity to price prod­ucts com­pet­i­tively and come up with enough fresh of­fer­ings. VW is re­work­ing its pro­duc­tion plan, with al­most ev­ery sec­ond unit pro­duced be­ing ear­marked for ex­ports, to in­crease lo­cal­i­sa­tion, con­cen­trate on build­ing brand, im­prove sales and ser­vice, be­sides plan­ning a new prod­uct port­fo­lio.

It plans to in­vest .` 900 crore this year which will go to­wards a new en­gine as­sem­bly plant and a pos­si­ble gear­box fac­tory later, to move to­wards 90% lo­cal­i­sa­tion and over­come the hand­i­cap of low­er­ing costs to com­pete with lo­cal ri­vals. In or­der to ad­dress the other key chal­lenge of keep­ing pace with its ri­vals in terms of of­fer­ing new prod­ucts, VW has lined up about six new launches over the next three-four years, in­clud­ing a sub-4m sedan and an SUV. More­over, the group will seek to en­sure that its brands Volk­swa­gen and Skoda no longer can­ni­balise each other in In­dia. Ma­hesh Ko­du­mudi, MD of Volk­swa­gen In­dia, told ET that In­dia is one of the most dis­cussed coun­tries at the head­quar­ters, but be­ing part of a be­he­moth it takes a lit­tle longer to de­cide on strat­egy. “In­dia is a very dif­fi­cult mar­ket; it takes some soak­ing pe­riod. The com­pany has learnt a lot in the past few years. In­dia will be one of the strate­gic mar­kets for us to sup­port our global am­bi­tions,” he said. In­dia is on course to be- come the third-largest mar­ket for pas­sen­ger cars and util­ity ve­hi­cles by 2020, he added. The Ger­man car­maker plans to roll out 200,000 units from its Chakan plant by 2017-18, up 100% from now. Ac­cord­ing to Ko­du­mudi, VW’s fo­cus has shifted from vol­umes and mar­ket share in 2011-12 to get­ting fun­da­men­tals right. VW has al­ready started work­ing on cor­rect­ing the cost struc­ture, im­prov­ing cus­tomer in­ter­face. “We want to nur­ture and build the VW brand, rather than blindly go af­ter vol­umes,” Ko­du­mudi said, ad­mit­ting that the prod­uct port­fo­lio in In­dia is age­ing and they need to bring new prod­ucts.

It plans to launch a re­vamped Polo in July. This will be fol­lowed by a mi­nor facelift of the Vento sedan ahead of the fes­tive sea­son. A ma­jor Vento facelift is planned for 2015 with dif­fer­en­ti­ated fa­cia from the new Polo. VW also plans to re-in­tro­duce the Bee­tle and pre­mium SUV Tiguan is also be­ing con­sid­ered for next year. “What­ever model I de­cide to do in the fu­ture, the sub-4 me­tre sedan or SUV, it will have in­te­grated ex­port strat­egy. I can­not look at In­dia in isolation any­more,” Ko­du­mudi said.

A re­vamped Polo is likely to hit the road in July

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