Aiming to corner 3% of the passenger vehicle (PV) market in the country, Volkswagen (VW) India expects exports from its plant in Pune to come down by almost half to 30% by 2021 as part of its strategy to focus on demand in the domestic market.
Additionally, VW is also evaluating further rationalisation of spare part costs in India as it looks to shed the image of being a high-maintenance brand, Steffen Knapp, director, VW Passenger Cars India, told The Hindu.
The current capacity of the manufacturing plant is about 1.8 lakh cars annually, of which about 67% is exported to multiple markets such as South Africa and Malaysia. However, the biggest chunk of exports is to Mexico. Mr. Knapp said that while VW will continue to export under the India 2.0 project, however, the focus will be on the domestic market. “I think, in the end, we will go to 70% local, 30% exports by 2021. By then, it will be a complete shift. The focus will be on meeting the domestic demand.”
The VW Group had, in 2018, announced investments of €1 billion in India till 2021 under India 2.0 project, while giving Czech firm Skoda Auto the responsibility to take the lead to achieve a combined target of 5% market share by 2025.
VW earlier this week also announced it will be bringing in four SUVs in India in the next two years, including made-for-India Taigun.
Cutting cost
Mr. Knapp added the company had been historically perceived as a high price- maintenance brand. “But we have done a lot... we have aligned our prices in Q1 2018, by more than 15%. That was a hit to my profit but we had to do that. We also started... four-year warranty and roadside assistance... these actions reduced our total cost of ownership by 30%.” He said VW was discussing undertaking another price cut as far as parts are concerned to come out with “very competitive solutions for customers.”
“We're going now over the next step. In the end of Q2 we want again align our set-up so to come out with really very competitive solution... align means price cut. Earlier because of lesser localisation, parts were imported and there was a mark up because of that.”
