Mumbai: The Volkswagen Group on Wednesday announced its intent to merge its three Indian subsidiaries—Volkswagen India Pvt. Ltd, Volkswagen Group Sales India Pvt. Ltd, and Skoda Auto India Pvt. Ltd. The merger has been approved by respective boards of the three subsidiaries in India and is now subject to regulatory and statutory approvals, the company said.
The restructuring of Volkswagen Group companies in India is seen as an important step towards its India 2.0 project, wherein Skoda India will take the lead in terms of product development and engineering. The sales and marketing operations will remain the same.
The proposed merger of the three group companies will help capitalize on existing synergies and will speed up the decision making process.
Volkswagen Group brands such as Volkswagen, Skoda, Audi, Porsche, and Lamborghini, will maintain their individual identities, dealer networks and customer experience initiatives. The brands, however, have a common growth strategy for the Indian market.
“India is an important and attractive growth market for the Volkswagen Group. With the proposed merger, we intend to combine the technical and managerial expertise of the three companies to unlock the Volkswagen Group’s true potential in India’s competitive automotive market. The integration will lead to coordinated and faster decision making and increased efficiency using existing synergies," said Gurpratap Boparai, managing director, Volkswagen India Pvt. Ltd and Skoda Auto India Pvt. Ltd.
In July 2018, the Volkswagen Group had confirmed investments of ₹8,000 crore in the ‘India 2.0’ project. In January 2019, a VW technology centre was inaugurated in Pune, laying down the foundation for developing new products based on the localized sub-compact MQB-A0-IN platform.
In the second phase of the India 2.0 project, which includes two new cars from the VW and Skoda brands, the VW Group will also evaluate the possibilities of exporting these new vehicles under development, the company said.
“The proposed merger will help the VW Group in terms of improving its response-to-market time, which is very critical in a highly competitive market like India," said Gaurav Vangaal, country lead, LVP Forecasting, IHS Markit. “Different entities have different hierarchies and departments, which in turn act as hurdles in speedy decision-making. Carmakers such as Maruti Suzuki and Mahindra and Mahindra react quickly to the ever-changing market requirements.