One of Europe's largest car maker Volkswagen is mulling the possibility of introducing a budget brand for the Indian market, a move its Chinese subsidiary is very close to finalising. The company, which is trying to get its basics right in India, caters only to about 50 to 60 per cent (Rs 5 lakh and above) of the 2.5 million Indian passenger vehicle market. To increase its market share in the country, Volkswagen is now eying to play in the sub Rs 5 lakh bracket.
At the moment, the automaker has positioned itself in the higher end of the existing premium hatchbacks and sedan segments, thanks to the reputation of build quality and upmarket feel of its products. But if the said plan comes through, Volkswagen could get a real chance for increasing its foothold in the lucrative entry-level segment.
“We are seriously considering a budget brand for India. We have looked at all the ideas, which Volkswagen had looked up for China. My teams here have been working very closely with the Chinese and German counterparts; we have the complete list of all the ideas that they have generated, and we know each and every idea. We are looking at what will be most prudent and suitable for India.” Mahesh Kodumudi, managing director and chief representative of Volkswagen India said.
But the product meant for India could be different from the one being developed for China. "India is one of the most brutal lowest retail markets in the world. What might be a low-cost model in China, may still not be low-cost in India," Kodumudi added.
He explained that Volkswagen decided to go into a consolidation phase in 2011-12 to establish the ground to unleash the next growth phase. "If you don't get some of the fundamentals right, then there's no point," Kodumudi explained.
This includes getting the product cost structure right without compromising on quality, besides reworking the after sales service and ensuring availability of spares. The company has rationalized prices of over 35 different spares which generally come up for renewal. VW is also working towards improving the buying experience at the dealership and the new branding campaign is also likely to hit the market soon.
Till that time, VW is aiming to bring in 6-7 new product actions, including facelifts of the existing Polo and Vento and the new sub-4 meter sedan (Polo Stuffe), a compact SUV and the new Jetta, Passat, Beetle and Tiguan at the premium end of the market to spruce up its image over the next 2-3 years.