Volkswagen has officially confirmed a compact SUV (under four metres) for India, set for launch in 2027. This comes just over a week after we exclusively reported that the carmaker had secured global approval for its version of the Skoda Kylaq. Like the Kylaq, the upcoming SUV will be developed on the MQB-A0-IN platform and will be manufactured locally. "This model is
being developed specifically for India," Thomas Schafer, CEO, Volkswagen passenger cars said.
While we don't know what the compact SUV will be named upon launch, but VW already sells the Tera in the Brazilian market that is closely related to the Kylaq. It remains to be seen what it will be called here. Prices can be expected to range between Rs 8 lakh to Rs 13 lakh, ex-showroom. This also paves the way for VW's re-entry into the high-volume sub-four-metre vehicle market in India, which it had exited following the discontinuation of the Ameo compact sedan and Polo hatchback.
2027 VW compact SUV details so far
As we had reported before, the new Volkswagen car will use the same 1.0-litre TSI petrol engine as the Kylaq, with manual and automatic gearbox options. Upon launch, it will get an 8-speed automatic transmission rather than the 6-speed automatic currently offered on the Kylaq. The Kylaq is likely to make the 8AT upgrade with its next update.
It will essentially be a badge-engineered version of the Kylaq, but will feaure substantial design changes for a distinct Volkswagen identity. The differentiation is expected to extend to the exterior, interior, features and positioning. Its variant distribution is likely to be different as well and GT Line trims with blacked-out exterior parts could be on offer, too, our sources have indicated earlier. Being the newer offering, the Volkswagen model may launch with more features than the Kylaq, but those could later make their way to the Skoda SUV’s facelift.
The case for a compact VW SUV
Volkswagen has so far stayed away from the compact SUV space, but considering the success of the Skoda Kylaq in India, it had to reverse it stance. For instance, more than 45,000 Kylaq units were sold in 2025, making it the biggest contributor to the VW Group's domestic sales. "India will take on a more important role in the company’s global business as Volkswagen adapts to a changing geopolitical and automotive landscape. One very important step is to bring a compact SUV...We'll bring it next year, which is an absolutely right decision to be a significant player in the market," Shafer told us earlier.
The new SUV will give Volkswagen access to one of India's biggest vehicle segments. The wider sub-four-metre SUV market, which includes compact and micro-SUVs, records sales of around 1.1 lakh units every month. It makes up around 30 percent of the country's passenger vehicle sales and more than half of utility vehicle sales. Growth in this segment has been helped by hatchback buyers moving to SUVs, the sharp cut in GST from 28 percent to 18 percent last year for cars that meet the required length and engine-size limits, and the wide choice of powertrains.
Volkswagen currently sells only the Taigun and Virtus as locally produced models, both of which sit above the compact vehicle segment. As a result, a Kylaq-based SUV will lower the entry point to the Volkswagen brand and help it reach many more buyers. Additional volumes from the new SUV may also improve capacity use at Skoda Auto Volkswagen India's Chakan plant (in Maharashtra) and create economies of scale.