Volkswagen to invest Rs 1,500 cr in India

German carmaker Volkswagen plans to invest Rs 1,500 crore (Rs 15 billion) in India over the next 6 years on various activities, including local production of engines, as it aims to consolidate position in the country.

The company, which launched an updated version of its premium hatchback Polo priced between Rs 4.99 lakh and Rs 7.37 lakh (ex-showroom Delhi) intends to invest on enhancing localisation as well as development of new products.

"India is a strategic market for us and we are looking at investing here in a systematic manner. Over the period of next 5-6 years we intend to invest Rs 1,500 crore on activities like enhancing localisation and new products," Volkswagen India President & MD Mahesh Kodumudi said.

The company is evaluating making engines in India but hasn't arrived on a decision yet, he said, adding that Maharashtra would be the company's first preference for setting up the engine plant.

Currently, the company imports 100 per cent of the engines used in its cars in India.

"Currently our localisation levels are around 65-70 per cent in value terms and going ahead our objective is to take it to 85-90 per cent. We can achieve it by localising production of engines and gearbox and we are working on it," Kodumudi said.

The company, which has already invested around Rs 4,400 crore (Rs 44 billion) in the Indian market since 2007-2008, is now looking to expand its presence in the market by introducing products in the growing segments.

"In India, compact sports utility vehicle and compact sedan segment is growing and we are looking at it. Also, with the increase in income levels in the country people are also looking at higher segments as well so that's another area of interest for us," Volkswagen Passenger Cars Director Michael Mayer said.

Commenting on the new Polo, Mayer said the launch would help the company strengthen its position in the compact hatchback segment in the country. "If we look at Indian car market, we are not present in segments which are showing growth. New Polo will allow us to increase our market share in the compact hatchback segment," Mayer added.

The updated Polo with the petrol engines is priced between Rs 4.99 lakh and Rs 6.07 lakh, while the diesel variants are priced between Rs 6.27 lakh and Rs 7.37 lakh (ex-showroom Delhi).

Cross Polo would be available at Rs 7.9 lakh while Polo GT TDI and Polo GT TSI, which would be launched at August-end would be priced Rs 7.99 lakh each. When asked about the company's stated aim of achieving around 10 per cent market share in India, Kodumudi said: "You have to face reality of the market. It is not growing as forcasted earlier. We remain committed to the market and will try to increase our presence."

He added that the company is 'not sticking' to any market share target. When asked about enhancing production capacity at its Chakan plant, Kodumudi said the company can take the installed capacity to 2 lakh units from the current 1.30 lakh per annum over the next five years.

"With minor investments we can further scale it up," he added. 

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