Volkswagen Plans its Return with Rs.8,000 Crore Investments

Volkswagen group initiates to pump in fresh investments to the tune of nearly Rs.8,000 crore for a India fight back, and group company Skoda is all set to lead the charge. The company says it would launch four new cars in the market, taking on models from Maruti, Hyundai and Tata Motors.

However, just as it streches in India and gets deeper with localisation, Skoda has also said that the government should allow easier import of parts and do away with special tax benefits that are reserved only for cars under four metres.
Thomas Schaefer, chairman of Skoda’s global board says, “It (tax breaks for small cars) has lived its utility and should be done away with,” ahead of the unveiling of the company’s first mass-localised SUV Kushaq that would take on models such as Hyundai’s Creta and Kia’s Seltos.

Thomas further adds that the Volkswagen group is eyeing a five percent share of the Indian market by 2025, that is mainly led by Skoda and VW brands for volumes while luxury ones such as Audi, Porsche and Lamborghini also chipping in (failed in previous target of 20% by 2018).

He continues, “We compete with brand such as Hyundai at a global level, and it will also be a key competitor in India. We will surely convince people into our cars.”

Just as Skoda develops and sells highly-localised models, Volkswagen would also look at a similar new model blitzkrieg and these would be developed around local pricing and needs.

Schaefer states Skoda is also looking into some of the highly-lucrative segments such as compact SUV. “It’s a tough segment… and you need lots of work to get it right. We are not quite sure whether it will be a hatch, or a crossover or an SUV. We are not quite sure.”

Speaking about the special tax (GST) dispensation those cars under-4-meters get in India, he said that “while we need to live with this regulation for now”, it doesn’t make sense to continue with the incentive. “It might have served its purpose. Maybe it’s better to focus on emissions, and consumption. There are other ways of supporting development. Why 4 meters?”

Furthermore, he said that while localisation is important, the Indian government should also make it easier for companies to import some critical parts from global manufacturing locations.