Volkswagen has officially confirmed a compact SUV (under four metres) for India, set for a 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,” said Thomas Schafer, the CEO of Volkswagen Passenger Cars.
- New VW SUV to use the same MQB-A0-IN base as the Kylaq
- 1.0 TSI engine with 6MT and 8AT gearbox choices to be on offer
- A Rs 8 lakh-13 lakh price bracket is expected
While we don’t know what the compact SUV will be named upon launch, in the Brazilian market, Volkswagen already sells the Tera, which is closely related to the Kylaq. Prices can be expected to range from Rs 8 lakh to Rs 13 lakh, ex-showroom. This also paves the way for the brand’s re-entry into India’s high-volume sub-four-metre vehicle market, which it exited following the discontinuation of the Ameo compact sedan and the Polo hatchback.
Which features do you want in Tera?
2027 VW compact SUV details so far
The new Volkswagen car will use the same 1.0-litre TSI petrol engine as the Kylaq, with manual and automatic gearbox options. It will get an 8-speed automatic transmission rather than the 6-speed automatic currently offered on the Kylaq. The Kylaq is likely to receive the 8AT upgrade with its next update.
It will essentially be a badge-engineered version of the Kylaq but will have 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 differ as well, and the GT Line trims with blacked-out exterior parts could be on offer too, our sources indicated earlier.
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 its stance. For context, over 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,” Schafer told Autocar India.
The new compact SUV will give Volkswagen access to one of India’s biggest vehicle segments. Growth in the compact SUV 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 utilisation at Skoda Auto Volkswagen India’s Chakan plant (in Maharashtra) and create economies of scale.
Dipan Sur
Dhruv Dhaka
Viraaj Bhatnagar
