German automaker Volkswagen AG has not given up on its plans of manufacturing and offering budget cars to millions of potential consumers in India as this became apparent as the company signaled that it had not completely ruled out a tie-up with the Indian automaker Tata Motors Ltd. This after the German car maker had cancelled a potential partnership with the Indian company.
Bernhard Maier, chief executive officer of Skoda Auto AS, part of the VW group, said that joint working was possible in principle with Tata Motors, the owner of Jaguar Land Rover Plc. Maier further said that VW will decide on the further course of action related to manufacturing affordable models for India, which has bene under consideration of the company for quite some time now, would be taken in the first half of the current year.
“We’ve been analyzing the Indian market in great detail,” he said. “It’s highly, highly competitive. We’re taking a decision on how to enter this market shortly.”
The German auto maker has not been able to make much headway into the Indian market unlike in neighboring in China where it is best selling foreign auto brand, simply because the consumers in India have been keener to purchase compact hatchbacks or sub-compacts manufactured by Suzuki Motor Corp. and Hyundai Motor Co. 1.57 million vehicles in India were sold last year by the subsidiary of the Japanese company in comparison to the sale of 63,732 units by the Volkswagen group.
The aim of the proposed partnership with Tata which was announced last year, was to generate savings in costs of operations and achieving technical synergies. The plan was however scrapped within the next five months. While scrapping the deal, Volkswagen had said that if the conditions were conducive, the cooperation efforts could be revived.
There was growth of almost 9 per cent in the sale of passenger vehicles in India in 2017 with the number touching 3.23 million units and this trend of growth is expected to be continued for this year also according to the Society of Indian Automobile Manufacturers. Maier said that by around 2025, 5 per cent of the Indian car market is being targeted by VW.
The car industry has, in recent years, faced a number of scandals and is under tremendous pressure to reduce costs in the face of rising developmental costs required to meet the environment regulatory requirements of cleaner cars. This has forced forging of partnerships throughout the world between auto makers.
Maier said that a potential entry point for the group into India could around 2021 when the crash and emissions regulations changes becomes effective.
A far stricter emission standard is set to be implemented by the Indian auto makers starting 2020 which would be at par with the emission requirements in the U.S., Japan and European Union. Almost half of the 20 most polluted cities in the world are situated in India.
(Adapted from LiveMint.com)