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Old 2nd November 2012, 13:51   #16
MCR
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

This is a news item which does not surprise me at all! Why?

1. VW have a monopoly over EU in terms of market share.
2. VW have a very good market share in China (akin to MSIL in India).
3. VW is a very aspirational brand in NA.
4. VW is a big brand in Brazil.
5. VW's market share in Russia is 9%.

So why would one be bothered!

India is considered by most mabnufacturers as a country crazy for cheap cars (and yes, Tata Nano has proved it to the world!). FE is another high factor! Higher the better! So in the current scenario its almost impossible to sell a car which is sturdy, high on features and is more advanced, thus demanding a higher price.

Please go through this report : http://www.economist.com/node/21558269.
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Old 2nd November 2012, 14:03   #17
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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Originally Posted by MCR View Post
This is a news item which does not surprise me at all! Why?

India is considered by most mabnufacturers as a country crazy for cheap cars (and yes, Tata Nano has proved it to the world!). FE is another high factor! Higher the better! So in the current scenario its almost impossible to sell a car which is sturdy, high on features and is more advanced, thus demanding a higher price.
It is their after sales service and customer satisfaction that is pushing the brand down in India and not the demand of cheap cars.

Going by your logic Nano should be outselling Alto.

Why cant they outsell even the European brands in India if they are so good? I dont think the offered products are more advanced than their rivals. Take the Polo's diesel engine for an example.

No offence to you but I think Indians are not fools and they put their money where they get a value for it. Toyota Innova is another good example.
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Old 2nd November 2012, 14:11   #18
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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It is their after sales service and customer satisfaction that is pushing the brand down in India and not the demand of cheap cars.
This is always a problem for new comers! Because most of the buyers are not first timers and the established players would have got all the necessary stuff in place and aligned.

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Originally Posted by sourabhzen View Post
Going by your logic Nano should be outselling Alto.
Would have, had it been trouble free ( = fire incidents).

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Why cant they outsell even the European brands in India if they are so good? I dont think the offered products are more advanced than their rivals. Take the Polo's diesel engine for an example.
They have. Their nearest competitor is Fiat, selling under 1000 cars a month!
They have offered the best engine in their portfolio considering the cost and the operational environment.

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No offence to you but I think Indians are not fools and they put their money where they get a value for it. Toyota Innova is another good example.
I never wrote that Indians are fools. What I have tried to convey is, that currently there is no product in VW which suits us!
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Old 2nd November 2012, 14:22   #19
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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I never wrote that Indians are fools. What I have tried to convey is, that currently there is no product in VW which suits us!
Don't take me wrong please. They have wonderful products but they are spoiling everything by their attitude towards their customers. Look at their position in JD Power's survey in Samarjitdhars post and see how happy are VW owners.

Fiat may have lost due to TATA alliance but look at Figo or 'expenssive' i20's sale figures.

As I mentioned earlier. VW need to take off "i am the king' cap and give it to their customers. If they are the world leaders, they can do it in India too, provided the top guys in India do a self assessment and induce some confidence in their customers as well.
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Old 2nd November 2012, 14:38   #20
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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Originally Posted by sourabhzen View Post
Don't take me wrong please. They have wonderful products but they are spoiling everything by their attitude towards their customers. Look at their position in JD Power's survey in Samarjitdhars post and see how happy are VW owners.

Fiat may have lost due to TATA alliance but look at Figo or 'expensive' i20's sale figures.

As I mentioned earlier. VW need to take off "i am the king' cap and give it to their customers. If they are the world leaders, they can do it in India too, provided the top guys in India do a self assessment and induce some confidence in their customers as well.
No offence taken.

As I wrote earlier, A$$ is always going to be a problem for newcomers.
Please refer to the post by Mr.Behram and you will understand why: http://www.team-bhp.com/forum/indian...ml#post2949325 (VW Downtown Bangalore take 60 days for a 2 day repair job)

It takes a lot of effort from the manufacturers side to achieve the highest levels of service. Till then its going to continue the way its now.

Again, Figo is selling well because of features available at a considerably lower price thus making it a VFM product.
i20 is high on style and also has a feature list equivalent of a vehicle of a class higher. Their A$$ is also quiet good or rather better than VW.

It takes huge effort and money to set up a new plant. Similarly it takes quiet a bit of an effort to introduce new models. So they need to be justified with equivalent sales (read as income). Else, its like lighting a firecracker, just the sound and smoke remain

Last edited by MCR : 2nd November 2012 at 14:40.
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Old 2nd November 2012, 15:30   #21
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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Originally Posted by MCR View Post
India is considered by most mabnufacturers as a country crazy for cheap cars (and yes, Tata Nano has proved it to the world!). FE is another high factor! Higher the better! So in the current scenario its almost impossible to sell a car which is sturdy, high on features and is more advanced, thus demanding a higher price.
Exactly my point which many of us are hesitant to admit. VW simply doesn't have a car which will fit the bill of cheap. They probably incorrectly assumed that the average Indian customer would perhaps spend more for their cars but the state of the economy and turn of world affairs is what they didn't read correctly. VW started out in China 30 years back so it does to take the top spot. They are two big a conglomerate to think in such short terms of 3-5 years.

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Originally Posted by sourabhzen View Post
Going by your logic Nano should be outselling Alto.
Quote:
Originally Posted by MCR View Post
Would have, had it been trouble free ( = fire incidents).
Also customer satisfaction. I don't think Tata is doing swimmingly well in that department as is evident from the same survey. They are about 80 points behind MSIL. That with the higher price of the Alto kind of justifies the Nano monthly numbers.

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They have. Their nearest competitor is Fiat, selling under 1000 cars a month!
They have offered the best engine in their portfolio considering the cost and the operational environment.
I may be wrong and do not want to offend any Fiat owners but I think Fiat owners are those who had fallen in love with Fiat before their proverbial marriage with the car . Hence Fiat scores higher in the customer satisfaction index even though there are no dedicated service centers and owners face considerable difficulty in fast and efficient service at the hands of Tata Motors. VW owners however do not show this kind of behavior and many of them perhaps were willing to try out VW for the first time being German engineering at a less expensive price than Audis/Beemers/Mercs. What let them down grossly is the after sales service.

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Originally Posted by MCR View Post
Again, Figo is selling well because of features available at a considerably lower price thus making it a VFM product.
i20 is high on style and also has a feature list equivalent of a vehicle of a class higher. Their A$$ is also quiet good or rather better than VW.
I do make it a point to check the build quality when I compare these cars. The solidity of the build can give an idea of the cost to build a car even though this aspect could be superfluous in the view of others. I always wondered if MSIL or Hyundai had to provide the same build quality they gave me on my old Zen the price of their cars would have been at par or just below what VW has to offer.

Last edited by samarjitdhar : 2nd November 2012 at 15:34.
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Old 2nd November 2012, 17:39   #22
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

Something of this sort was expected, but not from VW itself. Given the position of Skoda, I expected them to make such a move saying, there will not any new products for next two years and they will be restructuring their existing lineup with better pricing and similar corrective measures in terms of After Sales Services and availability of spares.

But it shows that VW is not comfortable with Skoda enjoying a strong presence over them. Then does it mean Skoda will be moved out of our market and VW will sell the cars under their brand? GM did the same by moving Opel out for bringing in Chevrolet.

I always thought we are doing only screw driver job by assembling CKD’S. So I am putting few questions to senior T-Bhpians about the future of our industry, especially on localizing in India. This may be off topic but thought it would be the right time to ask.

1. Are we going to continue the CKD route for many years to come for cars? (Not asking about Super Luxury or Super Sports cars)
2. Do we lack the engineering prowess that these German brands demand to localize say 80-100% with our OEM’s?
3. Considering that we are capable to design and engineer as demanded by these brands, is it that they will never be willing to share their technology and engineering designs with our OEM’s to allow higher localization.
4. If none of the above is true, then is it the cost of investment with respect to quality as well that’s hampering the development of such products locally.

These are the questions that I wanted ask some industry expert, many of the seniors can be considered as experts in these areas so asking this.

Last edited by GullwingGT : 2nd November 2012 at 17:50.
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Old 2nd November 2012, 19:41   #23
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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VW makes good cars and their investments in India are welcome but this is business, and the kind of statements made in the article is 'not business'. There seems to be some agenda being forwarded here, is VW looking for some sops from the government?
Well the problem is the VAT refund which was promised but now being rejected by Maharashtra Govt.

Major automobile companies set up plants in Maharashtra as they were promised VAT credit.
The 52 (A) amendment to the Maharashtra VAT Act has prevented companies from claiming higher input tax credit (ITC). Earlier, the companies would formally sell their entire production from the manufacturing arm to the marketing and sales arm, to claim VAT set-off for sales within Maharashtra. The marketing arm would then, in effect, bill this to other states across the country. However, under a revised rule, the companies would not be able to claim the VAT set-off on products sold outside the state. Under the new rule VAT credit is only available for vehicles who has end customer in Maharashtra.

VAT is a major cost in Auto sector and this has drastically affected the business case for Autocompanies like Mahindra , VW and others.

This is what they mean by Policy instability.


The related articles are as below :-

M&M may set up plant outside Maharashtra because of Maharashtra Govt Vat policy change
http://www.business-standard.com/ind...ashtra/470413/

http://www.business-standard.com/ind...cision/476453/
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Old 2nd November 2012, 19:42   #24
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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Lets hope they use the 2 years to improve after sales. It's a good decision. Rather than investing in something new, try an fix the after sales and dealer problems. That should make it easier in the future.
Perfect and totally agree. Maybe VW have also recognized the fact that they are simply not able to support existing volumes and hope they are smart enough to realize that poor dealerships and after sales support will surely ensure India will never give priority to VW !!
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