New Delhi: Europe’s biggest car maker Volkswagen AG wa-sn’t exactly part of the first great rush of automobile companies that entered India in the 1990s.
It moved in at the start of this decade and critics say it has come too late, done too little, and that while it may be the largest car maker in Europe, gaining that status in India will be almost impossible. Joerg Mueller, president, Volkswagen Group (India), took some time out during the Auto Exposition at New Delhi to explain the company’s strategy for India. Edited excerpts:
What is the rationale behind your India strategy of coming in with expensive models first? Where is the company headed here?
We have a top-down strategy, which means that we start with selling high-end cars and then come down the pyramid at lower levels to (eventually) cover all the segments. Hence, we started with the Passat launched last September.
Our next model is the Jetta to be (positioned) below the Passat. And we are preparing our plant for the next generation Polo, to be made at Chakan (near Pune in Maharashtra) by 2010.
We just don’t want to sell cars here, but also make them here and be part of the industry and society in India. This means we will invest, and we are making investments for the small car, which is a big segment in India.
Is your top-down approach a global strategy you have used elsewhere? Where else have you gone in with such a strategy?
It could be a global strategy, depending on brand awareness and standing of Volkswagen in a particular market.
In India, it is very important because people (have been) associated with the brand since the time of the Beetle. Then we were not in the market for many years, and now we are here again.
Driving together: Volkswagen Group (India) president Joerg Mueller says the firm not just wants to sell cars here, but also make them and be part of the industry and society. It is also investing in the small car segment. (Ramesh Pathania/ Mint)
It means that people in India and potential customers don’t know exactly what Volkswagen stands for.
Therefore, it is important now to build up the brand, to make it famous again and to show what Volkswagen stands for in terms of our values. And then come step by step into the market. China is an example where we began with the Santana and then moved down with the Passat.
One criticism against Volkswagen is that it has come very late to the India party.
We are not late because Skoda (part of Volkswagen) has been here since 2001.
So as a group, we are not newcomers here. Volkswagen came in September (with the launch of the Passat), and we are of the opinion that we are right on time.
The Polo is only being launched in 2010, by which time the small car market is going to be very crowded. Do you think Volkswagen will be competitive then?
What is important for us is that we want to bring a new car to India.
Therefore, we are taking our time and preparing our entry into the market carefully. This means creating brand awareness is important and we are taking time for this.
In the meantime, we are developing our car.
As volumes increase here, how are you strengthening your dealer network?
We currently have three dealers in Delhi, Mumbai and Bangalore. We will add another 10 dealers by this year’s end. We want to have more dealers especially in Delhi, but also want to go to Punjab, Pune, Hyderabad and Chennai.
We want to first target the big metros. We want to expand carefully because providing quality service is also very important to us.
Will there be dealers who will sell all three brands (Skoda, Audi and Volkswagen, all part of the group) in the same showroom?
Our strategy for each brand is that it must have its own face to the customer. If, for example, an Audi dealer says he also wants to sell Volkswagen cars, that is possible. But he won’t sell (the two brands) from the same showroom.
Both Jetta and the Skoda Fabia are being made at Skoda Auto India Ltd’s plant in Aurangabad. As you look ahead, do you think all of Skoda’s production will move to your new plant in Chakan? Doesn’t it make sense for the production of Audi cars, which will sell lower volumes, to remain in Aurangabad? What will be the production strategy for the Volkswagen Group?
The group’s production strategy is based on synergies. This is very important. And this is a big chance we have, and we are using this chance, to utilize the plant as a group plant.
Our decision will depend on the volumes, and the volumes will decide our (future) investment.
It means that high volume cars will be made at Chakan, which will be a full scale operation from the paint shop to the assembly, while lower volume models will be assembled at Aurangabad.