Volkswagen aims 95% localization of VW, Skoda cars in India

Mumbai: Volkswagen Group in India, which includes the domestic arm of Czech automaker Skoda, will focus on the domestic market in a much larger way than proposed under India 2.0, a turnaround plan with an investment of €1 billion announced in July, said a senior executive on Thursday. The India 2.0 initiative will focus on increasing competitiveness of Volkswagen and Skoda through localization of above 90%, improving customer satisfaction and cost rationalization, besides deciding on the right time to introduce products, the firm had said in July.

“India 2.0 will not be the singular way forward for us here. It shouldn’t be confused with or limited to the first set of products we bring. It’s a concerted strategy as it’s our second coming in the Indian market,” said Gurpratap Boparai, managing director, Volkswagen India Pvt. Ltd, and Skoda Auto India Pvt. Ltd, and head of the VW group in India.

VW group is also increasing its production capacity in India and setting up a new design and development centre in Pune. While six new products have been announced on the Indian version of the MQB-A0 platform (Modular Transverse Matrix platform), Boparai said “the first few products will only chart the path for future products”. The first product, he said, a mid-sized Skoda sport utility vehicle (SUV), will be built and launched on the new platform by 2020. The second will be the Indian version of VW’s T-Cross compact SUV. Two more sedans will follow.

According to Boparai, Volkswagen will invest ₹ 8,000 crore through Skoda Auto India as the two brands seek a combined market share of 5% by 2025. Skoda and VW will, however, maintain different identities in India, he added.

Boparai said the company seeks to achieve close to 95% localization on vehicle parts within six months of launch. Skoda India also aims to double its dealership count from 67 by 2020. Work has also begun on the development of two products for each brand, and 200 engineers have already been hired for the development and design centre in Pune.

On 20 November, Boparai was appointed as the managing director of VW India. He has been tasked with restructuring the group’s management and use existing synergies more efficiently. The group’s structure will be simplified further to establish more agile coordination processes so that decisions can be made more quickly and flexibly, he said.

Sales for both brands have been lagging in India for a while. According to data from industry body Society of Indian Automobile Manufacturers (Siam), Skoda India reported 1.48% decline in sales to 9,919 units between April and October, while VW India sold 21,367 units, witnessing a 24.3% decline, compared to the year-ago period.

Several global automakers, including Nissan Motor Co. and Fiat Chrysler Automobiles NV, have drawn up turnaround plans for India to grab a share of the increasingly high-potential market, owing to rising disposable incomes and low penetration of automobiles.