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Old 1st February 2016, 10:41   #1
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Default VW India to localize production of EA288 2.0L diesel engine

Volkswagen plans to localize the EA288 2.0L diesel engine later this year after ramping up local component sourcing for the 1.5L diesel engine it produces at its facility in Chakan, Pune. The EA288 2.0L diesel engine powers a wide range of cars produced by Volkswagen AG worldwide, including the Skoda Octavia and Audi A3 that are sold in India.

VW India to localize production of EA288 2.0L diesel engine-9.jpg

The EA288 engine family has been developed for VW's MQB platform with displacements ranging from 1.6L to 2.0L. The MQB platform underpins several new VW group models and will underpin many more in the future as well. Volkswagen feels the collective sales volume will be enough to justify the investment required to localize production of the engine.

Upcoming cars such as the new-gen Audi A4 and new Skoda Superb will be among the models offered with this engine. The motor will be compliant with the BS VI emission norms that will be enforced from April 1, 2020. While localized production will help control costs, it will also help in speeding up the supply chain and reduce the time taken for supplying spare parts.

Source: Autocar

*Image for representation only.

Last edited by Tushar : 1st February 2016 at 10:44.
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Old 1st February 2016, 11:12   #2
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Default Re: VW India to localize production of EA288 2.0L diesel engine

Does this mean cheaper Superbs and A3s? Closer to 20 Lakhs possibly?
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Old 1st February 2016, 12:10   #3
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Default Re: VW India to localize production of EA288 2.0L diesel engine

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Does this mean cheaper Superbs and A3s? Closer to 20 Lakhs possibly?
logically to get good volumes and margins - yes
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Old 1st February 2016, 13:34   #4
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Default Re: VW India to localize production of EA288 2.0L diesel engine

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Originally Posted by Jeevith View Post
Does this mean cheaper Superbs and A3s? Closer to 20 Lakhs possibly?
I'd expect a reasonable drop in prices - enough to keep customers happy, but not something monumental like multiple lakhs. The 2.0L engine is meant for premium car segments, which aren't extremely price sensitive. The discount will most likely be a small fraction of what VW's gains in profit margin per car will be.
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Old 1st February 2016, 14:31   #5
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Default Re: VW India to localize production of EA288 2.0L diesel engine

Quote:
Originally Posted by Tushar View Post
The EA288 2.0L diesel engine powers a wide range of cars produced by Volkswagen AG worldwide, including the Skoda Octavia and Audi A3 that are sold in India.
Quote:
Originally Posted by Jeevith View Post
Does this mean cheaper Superbs and A3s? Closer to 20 Lakhs possibly?
Quote:
Originally Posted by ajmat View Post
logically to get good volumes and margins - yes
Quote:
Originally Posted by Tushar View Post
The discount will most likely be a small fraction of what VW's gains in profit margin per car will be.
The difference in taxes and also reduced parts/labour cost should have a substantial impact. Though they would prefer to keep the profits, I agree with Ajmat that in vehicles like the Octavia they would be better served by passing on the benefit entirely to customers. Even the 20L market is quite price-sensitive.
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Old 1st February 2016, 18:28   #6
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Default Re: VW India to localize production of EA288 2.0L diesel engine

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Originally Posted by Tushar View Post
The 2.0L engine is meant for premium car segments, which aren't extremely price sensitive. The discount will most likely be a small fraction of what VW's gains in profit margin per car will be.
The D segment has cars/variants ranging from 16 lakhs to 25 lakhs OTR across India. This is a wide range and I would expect a reasonable fraction of customers buying an Elantra or Altis (which offer cars in the lower 50% price range) switching to a European brand were it to be offered at a lower price. I would even expect a lot of customers in the market to a buy a trend/comfortline upgrade to a HL as in the case of VW (or a comparable switch in Skoda or Audi) for the same price. And someone in the market to buy a Jetta would like to stretch a bit to upgrade to an Audi.

As it stands now, accounting for all discounts, a fully loaded Jetta or Octavia is at least 12-15% more expensive than a 'loaded to the hilt' Elantra/Altis.

I wonder why a HL Auto Jetta cannot be sold at 20-21 lakhs OTR following this move. That is a sweet deal.

Last edited by bhaskaracs : 1st February 2016 at 18:32.
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Old 2nd February 2016, 12:04   #7
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Default Re: VW India to localize production of EA288 2.0L diesel engine

Fat chance that it'll bring prices down. At best, it might help to maintain prices at the same level for a little longer.

Localising requires investment. VW is looking to maximise profits, not cut it by reducing prices. Of course, some manufacturers have used localisation as a false excuse to cut prices (related thread).

Makes sense for them to localise the engine considering how many current / future VAG cars are going to use this motor.
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