Volkswagen; Made in India

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Audi, Seat, Skoda, Bentley,Bugatti, Lamborghini - names that we want to hear more often in India - names that we want to have a tag - made in India. Now that's possible. At least the first step has been taken. 10 odd years of negotiations and countless meetings that stretched from 10 to 4 in the evening, that is what took them to come here, but yes, finally, they are here. Volkswagen, the 'peoples car' company from Germany, is here, and they claim that they are here to stay. They are opening up a factory near Pune, 45th of their manufacturing facilities worldwide. The room at the German Ambassadors residence in Delhi, the venue for the formal agreement signing ceremony, was a bit congested. Or maybe it looked so as it was overflowing with newshounds of various creed and color from various corners of the world. The Volkswagen team looked visibly pleased, and the Chief Minister of Maharastra and his companions each insisted on starting their speeches with a refrain - this is a great win for Maharastra and a great opportunity for India. Vilasrao Deshmukh even went ahead saying - 'Next time you are in India with any other project, you know that there is no need for any other surveys - just come straight to Maharastra.' The room rolled in laughter when Mr. Shankaran, Chief Secretary of Maharastra, mentioned (with a straight face) - 'Maybe its time that we stopped calling Pune the Detroit of India and start calling Detroit the Pune of US.' But he did have a reason - Renault-Mahindra, GM, DaimlerChrysler, Skoda, Bajaj and now the icing in the cake - Volkswagen. Maybe it took them 10 years to convince India (and maybe themselves) to come here, but now that they are here, much more is sure to follow. Both the parties are hailing this as a win-win marketing deal - both the parties are investing time and energy - and both look satisfied, at least for now. They do have sufficient reasons to be pleased with themselves. For Volkswagen, after the recent loss of market share in China, and their dwindling fortunes in Europe, India is, simply speaking, a big opportunity. For the Maharastra government, they feel elated that the optimum location near Pune was selected out of a comprehensive and exhaustive analysis of a total of 17 potential sites. And then, it has the promise of at least 2500 new direct jobs, and many indirect ones on the sidelines. Ashok Chawan, Maharastra Industry Minister, was quite diplomatic - ' It should be a win-win situation for both parties - employment generation should be a priority, especially for the rural population whose land has been acquired.' It's big. Come 2009, and the new plant in the Chakan industrial park near Pune will commence producing up to 110,000 vehicles a year. With investment totaling some 410 million euros, a full production plant with a press shop, body shop, paint shop and assembly lines will come up on the 230 hectare site. Some of the vehicle components will get delivered from other Volkswagen Group plants, but the good news is that a significant share of the material required will also come from local suppliers. And, as the Volkswagen Passenger Cars product offering increases, starting 2007, the Group will set up an independent Indian sales company - initially for the Audi and Volkswagen brands. This company,"Volkswagen Group Sales India Private Limited" registered in Mumbai, will be responsible for the sale of locally produced models and imported vehicles. Audi is already in, so is Skoda, but this would sure help the parent brand to streamline their India operations in a more cohesive manner - no doubt. And yes, they have the Skoda plant in India to extend production support. As early as the middle of next year, synergies with the Skoda plant at nearby Aurangabad will start - Volkswagen brand vehicles are to be produced there, in addition to the Skoda models. Volkswagen brand board member Detlef Wittig, who is also Chairman of the Skoda board of management, is quite confident - "In recent years, we have gained experience of producing in India and of the special demands made by this market," he commented. Volkswagen will start producing vehicles in India with Passat - which they consider to be a strong model at an attractive price. Imported vehicles like the Touareg and Phaeton will complement the range. But is the time right for an entry into the Indian market? The Member of the Board of Management of Volkswagen AG responsible for Finance, Hans Dieter Pötsch, sounded positive - "India is one of the most interesting future markets for the global automotive industry. We are determined to develop the market potential without delay." He further stressed that Volkswagen has very specific India plans to follow this up - and that they would be entering the Indian market with the right products to meet the rapidly-growing demand for mobility here - "Volkswagen will be developing a vehicle in the foreseeable future specifically tailored to the needs of the Indian market. This model will have a very attractive price while offering all the essential features of a genuine Volkswagen with all the benefits of our brand. That is how we will make sure that 'Volkswagen quality built in India' offers a genuine unique selling proposition and a symbol of quality." He didn't clarify, but speculations are rife that this 'India' model will be a Polo derivative - at the price range of 4-5 lakhs, aiming to give Getz, Swift, Aveo U-VA and the likes a run for their money. So far so good. Till this Polo derivative comes out, India will have to make do with an assembled Passat, in the Skoda factory. At the price range of Rs. 30 lakhs, the direct competition is with Merc C Class and Toyota Camry. But the real game begins with the India special. 2009 is the scheduled date for this India special - and suddenly, that doesn't seem so far away. At least not for the competition, who, grapevines say, have started their counter offensives already - the largest car producer from Europe is finally in India.