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

Article by Christian Andrei, 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:

Comments

Login or Create new account to add a comment!

Recommended

Hyundai is making the green vehicle race more competitive by offering three powertrain types -- pure electric (EV), hybrid (EV plus combustion engine) and plug-in hybrid (PHEV) – in one...
by - December 9, 2016
Although specs for the new Renault Megane had already surfaced several weeks ago, we didn’t know that the company has cooked up something new. Aside from the 200hp gasoline, Renault‘s...
by - December 9, 2016
For the first time in fifty-eight years, Infiniti registers its first US-Spec Q60 Coupe in Cuba. American products have not been allowed entry into Cuba for six decades. But it...
by - December 9, 2016
Chevrolet has already given out the pricing for some of its 2018 Equinox models. Not only will the new Equinox be available in both the US and Canada, it is...
by - December 9, 2016
Nearly all details have been set with regards to the upcoming market introduction of the new Jaguar I-Pace. Its production version was recently previewed at the 2016 Los Angeles Auto...
by - December 8, 2016
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