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Old 1st November 2012, 23:06   #1
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Arrow Volkswagen: India not a priority for new models, investments till 2015

According to VW, India will not be a priority market for introduction of new models, such as small car Up! and major investments till 2015 as the "business case is not positive".

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When asked how long the firm will hold itself from taking any major decision or introducing new models, Volkswagen Group Chief Representative (India) John Chacko said: "Down the line, looking towards 2015, that's the right point of time to make decisions about further."

He said during the interim period, the company will continue to launch more derivatives of models from the existing platforms.

"...we will expand, but (for) new models like Up! or any big investment, those will be decisions that I don't think will be taken between now and 2015," Chacko said.

In January year, VW group had announced plans to invest Rs 2,000 crore for expanding operations in India, only to declare later in May that it had been put on hold as the VAT refund issue with Maharashtra government remained unresolved.
....
Specifically asked about Up! Hackenberg insisted that there was no question of putting investments on hold in India as the group had never finalised a plan for it in the first place.

"We never had any decision to do it. It was in the planning and feasibility phase, and the feasibility phase is not closed. In the feasibility, there are so many parameters to consider for a business case," he added.

When asked about plans to set up an engine assembly plant in India, Hackenberg said it will be necessary to be successful in the future in India.

"It's also a question of when we want to invest money for such a plant...If you want to be successful in India, you need to go for almost 100 per cent localisation that means localize engine, gearbox everything...(but) business case is not positive at the moment," he added.

....
He also said the group, which is present in India through three brands -- Volkswagen, Skoda and Audi, is working on repositioning of the brands.

"It's a question of how different brands are placed against themselves in the market. Skoda has a quite high position. In the group, Skoda is little bit positioned under Volkswagen. So, we are on the way to make a correction," Hackenberg said.
...
Full article: http://economictimes.indiatimes.com/...w/17049814.cms

Related Threads:
1. Polo TSI in India: http://www.team-bhp.com/forum/indian...ml#post2950011

2. VW Up! in India: http://www.team-bhp.com/forum/indian...ed-mumbai.html (SCOOP Pics! Volkswagen UP spotted in Mumbai) and http://www.team-bhp.com/forum/indian...spotted-5.html (VW Up! spotted testing in Pune, totally undisguised, 2 and 4 door versions spotted.)

@Mods: Please merge with an existing thread if required. Thanks.
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Old 2nd November 2012, 10:58   #2
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

India is not priority for New Models?

I dont expect this statement from VW, which is renowned as a very good brand.

India is one of the best market, but one needs to catch the pulse of india. Its pricing with proper service.

It doesnt matter how good a brand goodwill is. They need to provide the basic needs.

Suzuki is not considered as a very good brand outside india, but in india It contributes almost 50% of total market share. Pricing is the key and the Service is your goodwill. Having goood will outside india will not add any value in india.
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Old 2nd November 2012, 11:06   #3
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

they are behaving with the Indian public as our ruling party, summarily hiking fuel/gas prices and asking the people to grin and bear it and generally behaving as if the common man has made some irredeemable mistake. So proportionately Volkswagen glosses over it's own excesses and puts the blame on the state of Indian economy. Same difference.

Corporates reflect political morality.
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Old 2nd November 2012, 11:12   #4
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

Wonder why the "business case is not positive".

They do provide unreliable service, arrogant dealerships, and parts that fail more often than they should.

Maybe Indians need to accept that its a German piece of engineering. Not like the cheap Japaneese that just goes on and on. Now thats boring.

Having to beg the dealer for replacing stuff that is already under warranty, for a service appointment, for a TD, for some proper communication seems to be the USP.

"But you see sir, This is German engineering, and you have to pay a premium for it."
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Old 2nd November 2012, 11:52   #5
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

The bad news: We won't get to see the Up! and its derivatives for the next 3 years. Also no other models such as the Tiguan.

The good news: "more derivatives of models from the existing platforms" gives credence to our discussion on various Polo derivatives coming in 2013 in the Polo TSI thread.
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Old 2nd November 2012, 12:01   #6
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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?

As far as the business conditions why not ask Renault and Mahindra about it. The market is there, its for you to take advantage of it. In the case of the above 2 they have created 4000-5000 nos a month markets.

That is the wet dream of any automaker in any market, and given both Duster and XUV are pricier here than abroad (XUV is pricier in India than most SUVs like RAV4, CRV etc in the US) the illusion of the India market expecting 'cheap stuff' goes for a toss. Like all markets it goes for value.
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Old 2nd November 2012, 12:05   #7
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

I have to admit that these comments from the VW top brass is nothing but a shameful acknowledgement of the fact that they are losing ground. They say that the business case is not "positive" but then the latest Indian Car Sales Figures show that likes of M&M, Maruti, Hyundai & Honda (without a single diesel) are registering a YoY growth - even with a slowing market.

VW needs to clearly re-think about their perception of Indian customers. If they think that they can get away with arrogant (& mostly ignorant dealers), overpriced (& mostly over-hyped products), shoddy service (& wide-spread rip-offs) - they have got it really really wrong. What they are not realizing is that the Indian consumers have a lot more choices than when Skoda came to India. Most of the younger generation Indians know for a fact that VW & Skoda are not really what you call "premium" brands. Given the first hand experience at their Trivandrum Dealers (EVM and Marikar), I for one would not even think about buying a product from VAG family, even though I like Vento/ Rapid and Jetta/ Laura.
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Old 2nd November 2012, 12:15   #8
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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.

Interesting point being admitted that Skoda is positioned quite high in India and they need to make a correction. Does that mean that cars like Laura and Superb will be stripped down and only the VW models will have the high end features?

Right now, both the Laura and Superb are cheaper than the Jetta and Passat plus they pack in a whole lot more features.
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Old 2nd November 2012, 12:15   #9
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

'Business case is not positive' for anyone who do not work to make their money grow. The market will not be profitable for all those who thinks that only making investments will reap huge profits for them. They need to work for it by improving their reach to the end user.

Here you need to remove " I am the King' cap and give it to the customer.

It is not a wise decision to keep India out of the priority line without checking the ground reality behind lesser profits than envisaged.
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Old 2nd November 2012, 12:17   #10
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

Quote:
It's a question of how different brands are placed against themselves in the market. Skoda has a quite high position. In the group, Skoda is little bit positioned under Volkswagen. So, we are on the way to make a correction," Hackenberg said.
I don't get this obsession to make Skoda the cheaper brand, the fact is, in India Skoda is not considered lower than VW by the majority. Some people always go on about how Skoda is considered a joke in the West, it was true 20 years ago, today that is really old hat. VW is hardly a premium brand , the overall awareness is so low that they had to write volkswagen separately so people knew what make the car is.

Skoda in India:
Octavia - huge success, premium car in the segment.
Superb - new version is the car to go for
Laura - a good alternative to the Civic and Corolla
Fabia - ?

VW in India
Jetta and Touareg - unreliable, expensive duds
Passat - First generation here was cramped and expensive, bombed.
Polo and Vento - regular mass market/third world products hyped up to be the end all in their segments, once the initial "awesome-german-engineering" crowd got their cars, the rest simply couldn't find a convincing reason to buy the cars - hence discounts, packages whatever. The service is as bad as some of the other brands that are constantly flamed, the difference is that those cars atleast come with some kit . Lastly, the tagline Das Auto - I had a colleague asking me where the Das Auto dealership was, he is getting a City.
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Old 2nd November 2012, 12:19   #11
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

So the group has no big plans for India, well how would they, the plan they are running at the moment is in a mess so I do hope they resolve issues here first before doing anything else.

Deep down I feel what VW thinks is that they are such a big brand that what ever they do people will still flock to them. They may be taking Skoda's initial success in India as a marker, but back then when Skoda really made it self was a time when really anyone could have come and gained points in India, we were just growing as a auto company and the C and D segments were just being created. Fast forward to now when everyone including their mothers are here and screaming and shouting for our custom a differentiator is required to appeal to the Customer. VW or Skoda sadly does not have this and until they take positive steps in that direction, rehashing and retooling old cars wont really help if anything it will make matters more worse.

Case in point I feel would be Fiat an inspirational brand once now even for free people wont touch it. VW should act and act fast if it wants to get anywhere soon.
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Old 2nd November 2012, 13:00   #12
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

I am not surprised. Being a mass-market brand, they need to show the volume to justify their investments. Currently the German engineering tag alone is not really helping them. In the present scenario, spending more in their traditional markets like Europe, USA and China make more sense for them.

I hope they use this period to stabilize their service infrastructure and look to bring improvement in customer relations.
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Old 2nd November 2012, 13:20   #13
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

VW better put their heads down and find out how to really work out the basics in terms of customer service and satisfaction. They have been singularly pilloried by arrogant dealers and atrocious service experience. So much so that they have captured the new bottom position in the JD Power Customer Satisfaction survey.

Courtesy: Autocar India


Even Fiat without their independent service centers scored higher. VW should do a thorough SWOT analysis now if they are really serious about making a mark in India. Their cars are pretty good, well built and give a pleasurable ownership experience marred only by their customers interface with dealers.

India is a pretty cost sensitive market while German cars owing to their relatively stronger builds (read sheet metal and other parts used) tend to cost higher than the competition. Apart from that they need to intelligently think about how to customize their technology to take advantage of the tax/excise brackets to play the cost advantage game. I refuse to believe that if they made such pathetic products worldwide they could be counted in the top three car makers in the world. Even worldwide their products cost higher than their competition. To be a mass market player in India there is no way but to play the cost game through increased localization, reduction of costs and most importantly making sure their customers have a way better ownership experience.
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Old 2nd November 2012, 13:31   #14
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Smile Re: Volkswagen: India not a priority for new models, investments till 2015

Quote:
Originally Posted by eq24 View Post
Case in point I feel would be Fiat an inspirational brand once now even for free people wont touch it. VW should act and act fast if it wants to get anywhere soon.

yeah right, we just talk about things which we just dont know or havent owned. look at samarjitdhar post, Fiat owners are very happy ones than many brands, could have been even higher with if not ignorant Tata dealers and spares unavailability.
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Old 2nd November 2012, 13:49   #15
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Default Re: Volkswagen: India not a priority for new models, investments till 2015

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Originally Posted by Vid6639 View Post
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.
+1 to this.

I don't find it an issue that VW states that India is not a priority for them even if it is one of the world's largest car manufacturer. I'd rather that they focus on improving the situation with the current setups right from dealer management to customer service.

Infact this is a good thing - already most of the VW dealers don't seem to be able to manage the existing customers. Imagine what will happen if the VW UP or any other budget car is launched - none of the service centers will be able to manage any of the segments!

I guess it's the VW dealers who are going to cry out foul on this matter. But then they have sufficient lot to do, to improve for the existing customers than looking for more revenue via new launches.
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