Volkswagen says more fresh products, localisation top priority in India
Volkswagen is working to establish itself as the most preferred ‘affordable premium brand’ in India
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Mumbai: German auto major Volkswagen is working to bring more feature-packed fresh products every year to India while revving up localisation instead of trying to compete in the highly competitive mass market segment.
Having learnt lessons in the past decade of its presence in the country, the world’s largest automaker has undertaken a course correction and is working to establish itself as the most preferred ‘affordable premium brand’ in India. “We have been here (in India) for ten years now as a brand but we are still in the learning phase. Some of the assumptions that we took in the early days when we came then with Vento and Polo, they have proved to be not 100% right,” Volkswagen Group sales India, director VW Passenger Cars, Michael Mayer told PTI.
He said the company had much higher expectations of growth of the market but that did not happen in 2011-13 and that “fairly dampened” the plans. Giving an idea of the challenges here, Mayer said the tag of the “world’s largest car manufacturer and Europe’s biggest car manufacturer becomes pointless when it comes to understanding and performing as brand and establishing as a brand in the Indian market. It has got structure and characteristics of its own.”
Asked what the company has learnt from the experience, Mayer said: “One of the learnings is that Indian consumers are driven by newness. “If you don’t change your products constantly and provide a reason to buy this year’s version compared to last year’s version, which has to be visible to the customer, you are basically out. So that’s what we have changed.”
Citing the features in the company’s compact sedan Ameo such as the rear view camera, auto dimming mirror and automatic gearbox, he said VW has been able to deliver what Indian customers at that segment aspire for in their cars.
“We are now there with the Indian customers, which was probably not the case in the early years, when we had the understated approach of Volkswagen all through,” Mayer reflected. The second thing is localisation, he said.
“You have to drive localisation in order to be able to compete in the aggressive commercial climate in India. We are doing a lot behind the scenes with our factory and our local engineering. So, that will drive a lot of our future products decisions. We have to be very much Indianised in order to be competitive,” Mayer said.
VW constantly reviews the content of each car and every quarter it is “driving up new localised content with our suppliers and try to get that into other product lines,” he added.
In January 2015, Volkswagen had announced investment of €30 million on Indian specific diesel engine and tooling.
The localisation of 1.5-litre and 2-litre diesel engines is being done in order to be competitive in India, he added.
Spelling out the company’s future strategy, Mayer said: “We see ourselves as the most affordable premium German car brand. This definition limits the circle of size. We are never going to compete with those in top three, four or five (in the overall market).”
Stating that VW is not targeting the entry car market with price range of Rs2-3.5 lakh, he said: “I don’t think we will target that in short-term. “In the long-term you can never exclude that but I think there are many more priority tasks for us to develop cars that fit to the aspirations of the aspiring middle class in India rather than those ones catering to the rock bottom value, conscious first time car buyer, who looks for best value for his Rs3 lakh.”
When asked for the target for 2017, Mayer said: “We are targeting double digit growth. I am sure we can expect that to happen.”
Last year, the company had sold around 47,000 units in India. The company is looking for a bigger play in the SUV segment in India as it gears up to launch the premium model Tiguan.
In its biggest product offensive in five years, VW is also bringing back sedan Passat this year to add to the newly launched performance-oriented hatchback GTI as it bids to position itself as a full range “accessible premium car brand” in India.