Volkswagen to invest Rs 7,600 crore to launch new models

The Volkswagen Group plans to invest 1billion euros more in India, several people in the know said, as the world’s largest carmaker seeks to launch a flurry of vehicles and expand capacity to shrug off its underperformance in one of the fastest-growing markets.

The group will spend the money to set up a new manufacturing line at its existing facility at Chakan in Pune, build an engineering centre and develop products, these people said, speaking on the condition of anonymity. Developing electric vehicles is also under consideration, they said.

The German auto major is reworking its India plan after an aborted attempt for a partnership with Tata Motors to make products for emerging markets, where the most crucial factor that sells a vehicle is its affordability. Despite the group being present in India for more than a decade and half, it could garner only a less than 2% market share between the Volkswagen and Skoda brands.

Positioning as a premium brand that sits above the likes of market leaders Maruti Suzuki and Hyundai Motor has hurt its performance. The group has now decided to come out with an affordable portfolio on its own for emerging markets, based on the MQB-A0 platform. The new models will be heavily localised to keep the cost low.

Czech unit Skoda Auto is driving this India and emerging market strategy for the group. Skoda chairman Bernhard Maier visited India towards the end of October, followed by a contingent of 40 senior engineers who came to understand the critical issues here before executing the plan. The group has also conducted one-on-one workshops with over a dozen-and-half vendors to put finishing touches to its emerging market strategy, the people said.