German car maker Volkswagen AG and its group companies are stepping on the gas as the car giant readies to grab a chunk of the expanding Indian market, currently the 11th largest passenger car market and expected to reach No. 7, in terms of sales, by 2016.
Over the next two to three months, the VW group’s luxury car manufacturing company, Audi India as well as Skoda Auto India, are scheduled to kick off the next phase of their growth in India with both companies ready to commence production.
While Audi will start assembling its A6 model, the Skoda, which has, till date, been a high-end car, will make its debut in the crowded mid-price segment of the market with a mass-market variant.
Volkswagen itself is deciding what model it will launch here this year.
People familiar with the developments told Mint that Audi has already started work on a new plant at sibling Skoda’s existing campus in Aurangabad. The company plans to commence production of its line up of cars from kits imported from Germany in autumn this year, managing director Rahil Ansari wrote in an email. He declined to provide further details. “We will announce our India specific plans and strategies soon,” he said.
The company has, in the past, said that it would drive its S8 and RS4 into India. The same people said a high-level team from Audi is expected to announce its India road map as early as next month. The company is eager to be a significant player in the luxury car business, which has attracted brands such as BMW, Porsche, Mercedes, Bentley and Rolls Royce.
“They have initially planned to bring in 300 kits but will take a decision on plans for full-fledged production in India by 2008, after watching the market response,” said one person. The company currently imports and sells completely built-up units of the A4, A6 and A8 in India. In 2006, it sold a little over 400 units.
Skoda India, which has been a player in the premium car segment with offerings such as the Octavia, Laura and Superb, is now ready to get into the mass segment, where it has firmed up plans to launch its Fabia model.
A person familiar with the plans said a new assembly line is being readied just now at its Aurangabad facility where it currently has the capacity to manufacture 30,000 units of its existing products.
The Fabia, in petrol and diesel versions, will enter a segment currently dominated by the Maruti Swift by September-October. “Production is scheduled to take off by end June and the initial target is to launch 6,000 units in 2007-08,” this person said. Skoda officials declined to comment.
“We are now in a decision-making process (on) which models will be introduced to the Indian market in 2007 and which car will be produced in our new plant in Pune from 2009 onwards,” said a Volkswagen spokesman.
He said the ground-breaking ceremony for the new plant coming up at Pune is scheduled for this year. People familiar with the company’s plans claim that it has started work on assembling its high-end Passat model in India in the first quarter of 2008 for which a new plant is being readied at Skoda’s campus. “They plan to sell 4,500 units of the car in the first year,” this person said.
The country’s passenger car market, Asia’s fourth largest, has seen a slew of announcements from global car manufacturers wanting to set up shop here or ramp up capacities significantly.
Among those who have announced plans are French car maker Renault and Japanese partner Nissan. They are setting up a joint venture plant in Chennai, along with Indian partner Mahindra & Mahindra, to make 4 lakh cars two years from now.
Other global players have also kick-started their Indian plans, including General Motors Corp., whose CEO Rick Wagoner was in the country this week, reviewing the operations of the Indian subsidiary and to chalk out future strategies for one of its biggest emerging markets. Others such as Toyota, Hyundai and Honda have also announced plans to significantly increase their investments in India with total new investments now hovering around the Rs30,000 crore mark.