Volkswagen is planning to roll out a variant of its popular car, Polo, in by 2009. The car will be pitted against Maruti's Swift, Hyundai's Getz and Tata Motor's Indica.
This new product will be designed and developed by Volkswagen internally for the Indian market and will have a sizeable local content to maintain cost competitiveness.
Detlef Wittig, member of the Volkswagen management board, after signing off an agreement with the Maharastra government for producing Volkswagen cars from Pune, said: "We are looking at a low-cost product for the India market.
"We are targeting the B segment of the passenger car market, which also is the largest in the country and is expected to grow further."
The company will be acquiring 230 hectare site in Chakan at Pune in Maharashtra and will have a initial capacity of 110,000 units by the year 2009. The investment of Rs 2450 crore (Rs 24.5 billion) will go for a full production plant, with a press shop, body shop, paint shop and assembly line.
Volkswagen will roll out its Passat model as completely knocked down units with a price band of Rs 30 lakh (Rs 3 million) from its subsidiary, Skoda Auto's manufacturing facility at Aurangabad in mid-2007.
The company will be synergising the Skoda facility for other brands also and is planning to assemble different Audi brand by next year.
Detlef Wittig, who is also chairman of the Skoda Board said: "We will be doubling our production at Aurangabad facility from 12,000 units to 25,000 by next fiscal. We will be rolling out some Volkswagen cars and look for few models from the Audi stable such as the A4 and A6 and Q7 which are currently being marketed in Indian."
The company will be rolling out a new independent dealership format and will launch a new company for that. Volkswagen Sales India will be marketing all the new models in India.
The new facility at Pune will create 2,500 direct employment opportunities in production and similar numbers with its ancillary, marketing and sales business.