Mumbai: Germany’s Volkswagen aims to further cut its dependency on Europe and will focus on emerging markets, including India, which it sees driving growth in the future, a senior company official said on 5 September 2007.
“We have consistently been the market leader in Europe for more than two decades. In future, the growth in markets will come from outside of Europe,” Kevin Rose, executive director of Volkswagen’s international sales, told reporters as he launched the company’s Passat sedan in India.
“Around 56% of the sales of Volkswagen brand are already there outside Europe ... This should be over 70% in the next 8 to 10 years.”
Jorg Muller, president, Volkswagen India, poses with the new Passat car during its launch function in Mumbai
Rising incomes and new models are boosting sales of bigger sedans and premium cars in India, and more growth is expected as only 8 in every 1,000 Indians own a car, compared with 300-500 in many Western nations.
Annual passenger vehicle sales in India are forecast to nearly double to 2 million units by 2010. More than two-thirds of the fast-growing market is for small cars.
“Clearly, India is a fast developing, fast changing market with potential to grow, who knows two, three, four times,” Rose said. “We will begin slowly and steadily.”
Sales of vehicles have been hit in recent months after India raised interest rates, making loans for automobiles more costly, while exports have been hit by a strengthening rupee.
Some 80-85% of vehicles sold in India are bought with loans.
Volkswagen also aims to launch a small car by 2009-10 to cater to the Indian market, the head of its India unit said, but did not comment on its pricing.
“We will bring a complete new car. It’s under development,” said Joerg Mueller, president of Volkswagen India Pvt Ltd.
“Let’s wait and see. It has to be competitive,” he said when asked about how much it was likely to cost.
Volkswagen has said it is spending $530 million on a new plant near the western Pune city to make up to 1,10,000 vehicles a year from the second half of 2009.
Tata Motors plans to launch the world’s cheapest car, at just Rs1,00,000 next year, while Japan’s Toyota Motor Corp is looking to launch a small car within two years, and has said the first production facility may be in India.
French car maker Renault, which makes its no-frills Logan sedan in India with Mahindra & Mahindra, is in initial talks with Bajaj Auto Ltd on making “very competitive vehicles” in India.
The Passat, which is being assembled at a Skoda facility in the western city of Aurangabad, will be available in two variants, priced at Rs22-24 lakh, Volkswagen said in a statement.
A Volkswagen official said the company aims to ramp up its dealership network to around 150 in the next three years, from just three at present.
“We will gradually increase it,” said Thomas Kadicheeni, general manager of sales and dealer development.
Volkswagen’s premium unit, Audi, has also set up a marketing and sales office in India and expects to sell around 3,000 cars by 2010.