Volkswagen bets on budget cars to boost sales in India

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About a week ago, we reported Volkswagen group lowering its estimates of capturing Indian car market share. Company estimated to capture 20 percent of Indian car market share. But after witnessing sluggish sales, company worked out a new target of 7-8 percent by 2018.

But lowering the target does not mean that the company has given up hope. A recent report by ET Auto said that the Volkswagen is considering addition to its vehicle portfolio to make deeper inroads into the market and have a presence in some of the fastest-growing segments.

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Expressing his views on company’s attempt to add new products to the portfolio, group head Mahesh Kodumudi said, “We are working on an entry hatchback, a compact sedan and a compact SUV… You will see us making some announcements towards the latter part of the year. We will go on an expansion phase.”

Volkswagen made heavy investments into its production units in India. However, its products like the Polo and Vento could not achieve sales figures as the company had expected. One of the main reason was stiffer pricing by competitors.

The compact sedan and compact SUV segment in India witnessed good sales. The likes of Honda Amaze and Renault Duster proved to be game changers for their respective companies. Upcoming models coming from manufacturers like Maruti Suzuki, Hyundai, Mahindra & Mahindra, General Motors, Toyota and Honda show how much potential these two segments (compact suv/sedan) have.

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Kodumudi said Volkswagen has been taking steps to boost localization in order to keep its costs under check. “We had a challenge to bring our product cost structure in line with the market.” However, Kodumudi further said that the company will not dilute product features to keep the prices down.

Volkswagen has not been able to achieve the numbers in the Indian car market and looking at the slew of vehicles lined up for launch, the future does not look easy for the company.

What do you think Volkswagen should try and incorporate in their strategy to boost their Indian market share? Express your views through comments below.

Source: ET Auto

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  • Satish says:

    Their products are already high on functionality and hence the quality taking the higher cost. They need to work out (1) Lowering cost without compromising existing driveability (2) Their cars should have lower dash level and more beige on the inside to arm against messy traffic and firing sun. (3) at least minimum level of equipments in respective category. (4) Some variations of engines under lower ‘small car’ indian definition. (5) Lesa important would be to add service network. Rest is fine. Work on it VW. You have potential to steal some market share from MSIL and HMIL. All the best.