New Delhi: Two days after Volkswagen AG announced it was reviewing all planned investments in the wake of a global emissions scandal, the company’s Indian unit said it would continue to invest to develop a new made-in-India compact sedan, an engine, and an engine assembly line.

The company will invest 1,500 crore by 2018-19 of which 240 crore will go into new engine development plans and its first engine manufacturing facility, while the rest will be used to develop the sedan, increase localization, and improving the productivity of its manufacturing plant in Pune, the company said in reply to a detailed questionnaire that sought the firm’s response to its future in the country.

“The Indian automobile market is a key market in the growth strategy of Volkswagen Group and by end of the decade experts see India becoming one of the largest automobile markets worldwide. Volkswagen India is following a long-term investment plan in India and is fully committed to this emerging market," a spokesperson said in an e-mail

“All further aligned investments will happen as planned...."

The company plans to continue with its marketing and advertising activities as well.

Citing Matthias Müller, the new chief executive of Volkswagen AG, The Wall Street Journalon 6 October reported that the German company has put all planned investments under review as it grapples with the fallout from the scandal after it admitted last month to cheating emissions test using clever software.

Müller on Tuesday said that his company would start a global recall of affected vehicles in January and that the process would be completed by 2016-end.

Following India’s decision to get the company’s cars in India evaluated by apex vehicle-testing agency Automotive Research Association of India (Arai) in Pune, Volkswagen has provided a first overview of the details for all the cars sold in India with the controversial EA 189 engines.

“Currently, we are compiling further data and awaiting results from Germany on the evaluations to present the accurate picture to Arai within the next weeks," the spokesperson said.

The company declined to share further details.

Arai is probing if Volkswagen models recalled in the US and Europe are also sold in India. It will also check if Volkswagen used in India the same “defeat device", the software which was used by Volkswagen in the US to fudge emissions data.

The defeat device allowed cars to pass emission control tests by showing much lower levels of pollution than in ordinary use. It hid the fact that the emission of its diesel cars were 40 times higher than that allowed in the US.

According to Abdul Majeed, a partner and auto practice leader at Pricewaterhouse Coopers, the challenge for Volkswagen in India will be to get consumer confidence back.

“They need to go the extra mile," Majeed said. “I am happy with what they have done with the Polo. It’s a very bold step."

Volkswagen India on Wednesday also asked its dealers to stop the sale of some models of its hatchback Polo with immediate effect because of technical issues. It clarified that the episode is not related to the global emission scandal.

“It sends out a right message... It may actually hurt you in the beginning, but it increases customer confidence," Majeed said.

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