Volkswagen and Its Top-down Approach in Launching Cars in India

by : Natalie Anderson



Volkswagen, Europe's largest automaker is employing a top-down approach in launching cars in India. And within the span of two years the automaker plans to bring its small car followed by what seems to be a mini car under the Maruti 800 category to India.

After recently announcing that it will start introducing the all new Passat as its entry vehicle in India, Volkswagen plans to launch next what it calls the A-Class, the Golf, and its derivatives. According to Pierre Bruedgam, a member of the board purchasing, Volkswagen India, "We will launch a new car every year. This year, it is the Passat sedan, a B class car, which will be launched in September. And for next year, the A Class, which comprises the Golf and its derivatives are going to be launch. It will then be followed by volume segment small car which will be offered as notchback and hatchback for 2009. In our terminology, the small car is A Zero Class. We are also looking at the A Zero Class, which is the equivalent of the Maruti 800."

Mr. Bruedgam was in Pune for the inauguration of it's off site office and at the same time was looking for some interested local sourcing for the e410 million, 110,000-capacity car plant at Chakan. Volkswagen India is expecting to reach the 110,000 capacity by 2009 as it launched its small car, the Golf and its derivatives.

And since India is considered to be more of a sedan market, Volkswagen India would first try to sell sedans like the Passat and then follow it up with the Golf and its derivatives. For a great part of its proposed lineup the automaker is expected to retain 55:45 ratios between diesel and petrol. Mr. Bruedgam further added, "We will begin our sourcing activities from April, first for the cars to be made here and then for the global market."

Volkswagen officials after visiting India saw that a single purchase office may not be enough and said that they may need to open other offices in the other two auto hubs located in Delhi and Chennai. VW officials have also stated that logistics is an important consideration when sourcing for global operations if the company aims to remain competitive. They also added that Europe's largest automaker may also get some of their metal products from India particularly for its needed volume products. And since a great number of VW cars are expected to be sold in India, the automaker would also make sure that aftersales services such as repairs are made available to the customers that is, aside from the that goes with the vehicles.

Mr. Bruedgam also said that the localization program being employed by Volkswagen expects to obtain 50% local content hopefully at the start of production in 2009. In terms of its volumes car, the automaker is expecting an increase of 75% by the year 2011. Dr. John Chacko, a member of the board technical, VW India, said, "We will source from India for volume models like the Golf and its derivatives, where the same part can be used. VW is expanding its platform theme to a module strategy, which allows us to use the module anywhere in the world." Other VW group companies like Audi and Skoda are also expected to source out from India.