VW wants India-built cars to contain 90% locally sourced parts

Article by Christian A., on July 26, 2014

Volkswagen AG is planning to raise the amount of locally built parts in vehicles being sold in India in order to reduce while costs and increasing slumping sales in the country. While it has been in India for five years, VW has yet to make significant gains, only capturing 2.1 percent of a market dominated by cheap compacts.

Likewise, VW’s models are seen as relatively costly and the brand lacks a diverse mass-market product range. They are outsold and outpaced by compact cars from like Hyundai Motor Co. and Maruti Suzuki Ltd. as well as by mid-market offerings from Toyota Motor Corp.

VW’ slump in India has also been made worse by the country’s worst economic slowdown in the past 25 years, lower sales of passenger cars for the two straight years that ended on March 31.

To reduce costs, widen its appeal and boost its profits, VW is increasing the amount of products sourced locally. Michael Mayer, director, passenger cars at Volkswagen India Pvt Ltd., called the initiative as "Indianisation.”

He remarked that VW needs tailor its cars to the taste of the Indian customers. Mayer remarked that VW may not have had localization on the table it entered India in 2010, the approach has become a vital part of the carmaker’s growth strategy.

Currently, the local content level in cars being sold in India is around 65 percent to 70 percent, and VW plans to hike that to 90 percent building engines and gearboxes locally.

Mahesh Kodumudi, president and managing director of Volkswagen India, remarked that local production of the parts would be needed to have a "sustainable business model". VW posted a 24-percent drop in passenger car sales to 52,525 vehicles in India for the fiscal year ended on March 31, 2014. [source: Reuters]

Topics: vw, production

If you liked the article, share on:

Pin It

Comments

Recommended

South Korean car company SsangYong recently revealed sketches of their upcoming SUV. We’re not always impressed by Korean car designs, but this one looks quite promising. Yup, it is the...
by - March 26, 2017
Twenty-eight years after the company was first launched by Toyota, which was initially targeted to the United States market only, Lexus has already made its way to over 70 countries....
by - March 26, 2017
Last year was probably Porsche’s best year ever in terms of sales. Their factory in Stuttgart delivered 237,778 cars in total, which represents a six percent increase compared to the...
by - March 26, 2017
Lamborghini has disclosed that it is looking into the possibility of releasing electric vehicles. With the Volkswagen Group revealing that it will be releasing electric vehicles within several years, there...
by - March 25, 2017
Daimler AG, through its Smart division, has disclosed that its two electric models, the Smart ForTwo and the Smart ForFour are now open for orders in Germany. Official market launch...
by - March 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries