Volkswagen in consolidation mode in India

Volkswagen has been in a bit of a limbo, of late. The carmaker has had no new mass market products for quite some time, and the lack of buzz around the brand is reflected in the sales figures. In 2017-18, VW sold all of 45,329 units in India, down 9.4 percent on its performance the year before. The carmaker also ended the last fiscal with market share dropping to a mere 1.38 percent in the Indian passenger car market. Volkswagen’s arrangement with Skoda that will have the Czech carmaker lead product development for the two brands in India promises much, but is yet to be green-lighted by the VW Group board. And even if the product partnership goes ahead as planned, the first of the new wave of VWs for India is still a few years away.

With little room to manoeuvre at the moment, VW is in consolidation mode in India. On the product front, the carmaker will rely on model updates to keep customer interest alive, but will also tweak its approach to sales. Citing the example of the compact sedan segment, Steffen Knapp, director, VW Passenger Cars, spoke to Autocar India of a more ‘regionalised’ approach. “Private customers in cities like Mumbai, where we have a big presence, are not running for compact sedan models because they perceive these as taxis. We have to realise that the compact sedan category is much more popular in the Tier-2 cities. So, we have just launched a road show where we will go to Tier-2 cities where we will prominently show the Ameo. We will also change the way of advertisement. We are not speaking in English any more. We will speak in the local language, so we are much more regionalised.” 

Knapp underlined that VW will not turn its back on its premium portfolio that comprises the Tiguan and Passat. VW India has been allocated 1,000 Tiguans for the year which should meet demand.

Volkswagen has also chalked out a strategy that will prepare it for the next phase of growth, with focus on non-product aspects of the business. Knapp described brand, business from corporates, digitisation, dealer network, talent development and customer loyalty as ‘cost strategic’ pillars that the carmaker is working towards.