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Old 24th July 2008, 08:04   #1
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Default VW to enter pre-owned business

Article in today's ET:

Volkswagen plans pre-owned car business in India
24 Jul, 2008, 0600 hrs IST,Pankaj Doval, TNN

NEW DELHI: Volkswagen, Europe’s biggest carmaker, will be making a big push into the Indian market ahead of launching its compact cars and has decided to enter the pre-owned car business to poach customers from current market-leading brands like Maruti and Hyundai.

Mindful of its late entry into India, the company has lined up aggressive plans to make big inroads into India that also includes having dedicated ‘brand stores’.

Volkswagen, that currently sells some of its premium cars in India, is investing around Rs 2400 crore for a greenfield factory at Chakan in Maharashtra that would be the main facility for its upcoming volume cars. "India is an important market for VW, though the late entry does not put us into a disadvantage as we get to learn from the mistakes that other companies made,” Makham Dhalivaal, newly-appointed MD of VW Passenger Cars, told TOI in an interview.

The India-born Dhalivaal, who has more than 25 years of experience in the automotive industry though mostly in Europe, said the company wanted to create a brand equity for VW in India before going in for mass volume segment. "We would be adopting a top-down strategy here, which means launching the premium cars first and then getting into the volume segment with our small cars,” he said. Getting into the used-car market would be an important strategy for the company, he said, pointing out that it was an easy way to poach people from other brands.

"Pre-owned cars would be a key part of our business and would also open up fresh revenue streams for our dealers,” he said. The used car business would enable people driving different brands to trade their old cars for VW cars.

"It is a good business opportunity and an excellent way to get people into your brand portfolio,” Dhalivaal, who has a previous experience in pre-owned business, said. The used-car and exchange market—once dominated by unorganised players—has witnessed action over the last few years, especially after market leader Maruti Suzuki stepped into the business around 2001.

Other players who are in the business include Hyundai which has it under the brand name ‘Advantage’, Ford with ‘Assured’ and Honda with ‘Auto Terrace’. Maruti sells around 12% of its new cars through ‘True Value’.
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Old 24th July 2008, 15:07   #2
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I think VW is biting off more than they can chew. They took all of a decade to get their new cars on showroom floors, and now there's "aggressive" plans of getting into the used car business. Where is the focus? They are barely selling in two digit numbers per month and have just launced the Passat. Plus, they ought to be worried about the reputation that their subsidiary Skoda is making for itself.

The used car business is entirely different from selling luxury (relatively) cars like the Jetta & Passat. The best deal counts, and buyers shop around a lot on price. Plus, Maruti's True Value, Fords Assured and Hondas Auto Terrace primarily sell the parent brands cars. How many VWs are around the used car block anyways?
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Old 24th July 2008, 15:19   #3
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Would be nice if they dealt in pre owned VWs from europe.
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Old 24th July 2008, 15:43   #4
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Quote:
Originally Posted by rangaraj View Post
Article in today's ET:

Volkswagen plans pre-owned car business in India
24 Jul, 2008, 0600 hrs IST,Pankaj Doval, TNN


"India is an important market for VW, though the late entry does not put us into a disadvantage as we get to learn from the mistakes that other companies made,” Makham Dhalivaal, newly-appointed MD of VW Passenger Cars, told TOI in an interview.
I dont think any other company has made THIS mistake of going in the used car business in the early days plus when there are hardly any VW's on road. The next extrant will get to learn this .

Would be interesting to see from where would they get the cars to sell? Not sure how will they get the numbers for the used cars unless they force the current owners to sell .
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Old 24th July 2008, 16:15   #5
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Originally Posted by vinit.merchant View Post
Would be interesting to see from where would they get the cars to sell? Not sure how will they get the numbers for the used cars unless they force the current owners to sell .
This is a great way to ensure that your customers constantly have the ability to upgrade to new models.. Packaging of finance/leasing with a guaranteed buy back/attractive offers for trade ins are are standard. This could be across the whole VW family - Audi, skoda, VW. This is one way of providing a migration path for skoda owners to the VW and then onto Audi.. One happy family!
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