As a provider of dealer management systems to vehicle dealerships in several emerging markets, we closely follow what is happening in the auto industry in key regions around the world. I thought it might be interesting to share some of that information.
This series briefly discusses the promising future of the automotive industry in India, both as a consumer market and as a manufacturing hub. Part 1 was an overview that talked about the great demand that is expected in India over the next five years, mainly due to the large, growing middle class, and their ultra-low vehicle per capita ratio of 7 per thousand (the US's is 450).
All of the major manufacturers have plans in motion, either through the installation of new plants, or via joint ventures with existing Indian automakers. Parts 2 and on of this series look at what each major automaker is doing in India. We began with GM last post, and today...
Volkswagen in India
Like GM, Volkswagen also has big plans in India, including a new plant and the introduction of a new small model that will compete in the red hot low-cost segment.
Coming off a very good 2006, and with an even more optimistic 2007 and 2008 outlook, VW is set on increasing their presence in high growth emerging markets like India and Russia, according to CEO Martin Winterkorn.
In India, Volkswagen already sells Audis, and assembles some Skoda models (the Octavia, Laura and Superb) at their factory in Maharashtra.
But VW has pledged to become more heavily involved in the growing Indian market with the Volkswagen brand, mainly through locally manufactured vehicles. This is virtually a mandatory strategy due to the high tariffs on imported vehicles in India.
Volkswagen will invest $530 million dollars in a new plant near Pune. The plant will employ 2,500 people and have a capacity of 110,000 units per year. Note that at the same time, VW has been eliminating jobs in Europe, including 20,000 in Germany over the last two years.
At this new manufacturing facility, and starting in 2009, VW will build a compact car specifically tailored for the Indian market.
This new Indian mini-car is expected to be along the lines of the Polo, which has been selling very well in Europe and Latin America for a number of years. It will compete in the premium small car segment with the Maruti Swift, Ford Fusion and Hyundai Getz. VW may also build this car in other emerging markets, such as China, Russia, and Brazil, thus completing the BRIC foursome. Other sources think the new car will smaller, more along the lines of the Renault Logan.
(BRIC is a term created by Goldman Sachs to describe Brazil, Russia, India and China, four economies they think will surpass the G6 in 40 years).
VW wants to source components locally for this new car. It will start off with a localization level of 50%, increasing as production moves ahead, reaching 75% in Year 2.
Volkswagen will also launch the Passat in India this year, and next year the Golf. Both will sell in limited number; VW is looking to use them mainly to create brand awareness in India.
As for the Skoda side of the business, a new model, the Fabia, will be launched this year.
Read more about VW in India at India's Financial Express and at Just Auto.
Posts in this series:
Tags: India, auto industry, automotive industry, Volkswagen, VW, VW Polo, Martin Winterkorn, Skoda, VW in India
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Audi is doing very well in China, having sold over 100,000 units in 2007 (after Germany, China is now Audi's second largest market). Audi's success in China is based on their higher-end cars, most notably the A6.
The top three are on track to become the top sellers for the entire year, all reaching the 400,000 to 500,000 mark.
