German car maker Volkswagen has finalized a low cost car brand for the Chinese car market. Production of low cost cars under China will begin from 2017. Here in India, Volkswagen’s Indian subsidiary is considering a similar approach to boost its market share. While the automaker is contemplating a low cost car brand for India too, the brand is likely to be quite different from that of China as the Indian car market is even more cost conscious than the Chinese market.
This means that Volkswagen India will have to take a new approach for the Indian market, cutting costs further. As of now, the plan is still in the concept stages as Volkswagen is yet to figure out a way to build cars at a low cost here. The car maker is presently working on increasing the local content on cars such as the Polo and the Vento, which bring in the lion’s share of sales for Volkswagen in India.
Even if Volkswagen India figures out a way to build low cost cars here, the actual market introduction of these cars is likely to happen only in 2017 or beyond. The automaker, along with Skoda, aims to garner a market share of 7-9 % in India by 2018-20. Currently, Volkswagen holds 1.65 % of the Indian car market while sister brand Skoda holds 0.55 %. Together, the brands command just 2.2 %.
Raising this to 7-9 % by 2017 means that Volkswagen needs big volume products, and this is possible only by the low cost route as the current crop of Volkswagen’s cars are premium priced and are also expensive to maintain. Unless something changes dramatically, Volkswagen achieving market share of 7-9 % in 2018-20 seems unlikely. Future Volkswagen launch plans include a compact sedan based on the PQ25 (Polo/Vento) platform and a sub-4 metercompact SUV. Click here to read more about Volkswagen’s future plans for India.