Volkswagen India: The Way Forward

[deetjohn]

Good article vb-san. Yes, VW' India story is a very confusing one. They really haven't realized the potential in India we all know that they are capable of.

And its not surprising when we take note of the fact that VW is indeed taking it slow in India for the time being. ACI and Hormazd is particular have stated it many times in the past. Now, this could be due to the small market of ours compared to say Europe or China, or due to the fact that our tax structure makes it very tough for a company like VW to adjust the cost of production.

And one can definitely feel the brakes being on when we take a note of the aggressive push that VW gave the market back in 2009. There was indeed a lot of noise made, literally too. http://www.team-bhp.com/forum/indian...2-pg-26-a.html

But contrary to that, VW followed up with stunning variants for the Polo and Vento in 2013. I think they are great VFM products. And yet, the units that they are shipping or the associated communication (lack of) and support (warranty etc.) from the company is telling. Which again takes us back to the foot off gas comment by Hormazd. I am not talking about the higher segments here because 5 to 15 lakhs is where any manufacturer should take an aim at to make inroads in India.

And looking at the GT twins now, I really cannot wait to taste the products when VW turns it back on in India. And for now, they should use this time to form a solid base. VW really needs to fix sales and support. And that is really a BIG one! And if they can effectively do that, there is no reason why VW cannot get close to 10% market share in India with new products in the coming decade.

[wilful]

I’ve been reading this thread with a lot of interest.
What does an auto giant like VW need to do in a market like India where the Asians dominate?
My thoughts on this the subject (a layman’s view) –
Look at the gaps in this complex market.

Generally Indian preferences veer towards (car enthusiasts are an exception) -

a) Economy – both in terms of fuel as well as spares and service.

b) Reliability – in terms of hassle free ownership – no complex electronics malfunctioning etc.

c) Good service network.

d) Looks – there is definitely a preference for smart looking cars – the Swift being a great example.

e) Space (and fetish for boot) – if an Eon or an Alto could have a boot without much of an additional cost the average buyer would be thrilled. Or if they could be dressed up to look like mini SUVs he would be even more delighted.

f) Resale value.

g) Ground clearance (I had to add this small point thanks to our peculiar road conditions).

Considerations of safety, comfort, technology etc get a higher weightage as one moves up the higher income brackets.
While most buyers may be in awe of superior German engineering and all that, the fact remains that the common perception is that they tend to be much more expensive to run and maintain, with poor resale.
So where are the gaps? The hatch segment is where the volumes come from. A hatch like the UP might work well in our market (one hears about it being launched), if priced well.
The biggest gap I see is the non availability of a diesel automatic below 10/12 lac category. If one goes by the success of a petrol automatic hatch like the i10, a big hit especially with women, a diesel one would kill the market. Of course there would be a price differential but with such a hatch being used only for city runs, it could be stripped off features like airbags, abs, music system etc to tempt buyers. A diesel sedan priced well in the Verna category could also bring in numbers.
A small urban SUV would also brings in the numbers but one doesn’t see it in VW’s portfolio internationally.
Above all the company needs to build a groundswell of goodwill among the car buying public by improving their service/reliability/cost issues and perceptions.

Originally Posted by el lobo 6061

No, Vento can easily sit 5 people of medium built. 3 passengers can easily sit in the backseat. You may be referring to floor hump which may cause inconvenience to one sitting in the middle. But given floor pan of Vento is made such to provide rigidity. Have a go through the below post and you may find your father friend would be having the last laugh at others. Safety is paramount with VAG Group, Ford and Fiat. Other manufacturer like Maruti, Honda, Hyundai use thin sheet metal which is of no use during collision & accidents.

Bricks & bats welcome.

Link:

Originally Posted by joslicx

8. (And probably this should be No. 1 priority) is to get that purported parts hub up and running in India as soon as possible so that customers do not have to wait indefinitely for parts.



you are being a bit naughty there my friend. Many of these Hondas and Hyundais and Marutis are NCAP 5 star certified for safety. Its not just the sheet metal (though thicker sheet metal helps with casual traffic brushes with bikers and autos).

I would tend to agree that you are being a bit naughty there. Many of those cars do have great safety ratings and it's not just the thickness of the sheet metal that matters.

[Tats07]

1. A contributing factor for low GT TSI sales is lack of a manual option. The same holds good for Vento, though VW are yet to figure out where they should actually sell Vento TSI - one can tell from the attitude of dealers. Btw, Vento TSI does have a small limitation on colours. No Red is available.

2. The MPFI engine in Vento was never a match for Honda. It should've been launched with a 1.2 TSI to begin with. The same mistake which Fiat did with the 1.4 FIRE Linea. While Fiat lost out regardless of T-Jet because of multiple factors, Vento 1.2 TSI MT may not have suffered the same fate.

3. Vento TSI should have always been launched with the 1.4 engine option (the same as the current Jetta) and branded as GT. They still can do this, and my view is it will sell well. Unfortunately, it does not seem that they WILL do this.

4. While Vento diesel is a great car, it is becoming a very old product now. The sales are likely to sag. It needs an improvement soon. And I feel it should be in terms of a higher tuned engine option and some form of a facelift. 2014 is the time, not 2015.

5. The problem I feel is lack of engine and transmission options across Polo and Vento, and not absence of compact SUV or a sub 4m sedan. I don't think VW will gain much by launching those in the Indian market, if at all. Yes, they should have another good product in the hatchback segment.

6. The Jetta and Passat segments are getting difficult anyway - people are more likely to move towards the new Octavia (though I have seen only two in Bangalore , both yesterday) or go for premium. I'm not sure what should be a strategy for D segment, it's not the best of segments to play upon right now.

[F150]

Originally Posted by Santoshbhat

They lack SUV's/ MUV's in their portfolio, which seems to be the flavour of the market right now. But first they need to shed their superiority complex, if they want to break into the stronghold that companies like Maruti, Hyundai and Toyota have at the moment.

Exactly my thoughts and that superiority complex seems to have filtered down to the sales staff too.

Genuine buyers would be shooed away with such attitude. They should fix their dealer network and train them to be customer friendly.

They should stop in-house competition with SKODA. Rapid has eaten in the sales of VENTO,

They should reduce the prices of SKODA, rather increase the prices of VW.

[carrerastrax]

The first thing that VW needs to learn is to respect the Indian customer as is. The arrogance and high handedness is just not going to cut it in this country. Myself included, there are a lot of potential customers who've discarded their brilliant products after the first few moments of truth of car buying - test drive and initial interaction. What arrogance and what a dismal way to engage the customer and thus, the resulting experience.

Second, they need to learn some honesty and good trade principles. What's with not offering appropriate warranty and also not honoring your warranty commitments? Why make the customer suffer for what's due from their side? One can blame our poor laws, but we're learning and we'll get there. I hope they're ready to pay then.

Some say that it's their dealers who're playing spoil sport. I'd say, terminate a few erring dealers and the rest will fall in line. Sometimes you have to unload and unlearn. A nice quote I read on FB; people mostly remember the goals a goal keeper missed, and less of how many he saved. This applies to branding as well.

Modular platform engineering is supposed to get them profits alright, but not take the customer for a ride - what's with adding features like ACC, Bluetooth, navigation etc. over time? Imagine this strategy on a segment like the Jetta!! I understand supply and demand and the concepts of market dynamics, but this a perfect recipe for alienating some of the older customers. And I think it's just short term thinking; why price high with minimal features and then start discounts and add features over time? Some sharp suited management thought process. They got it right with the Polo TSI though. Hopefully, sign of better times?

I agree with their product portfolio, but the real credit goes to VW Germany; not VW India. All they had to do was pick the right products and operate in good faith. Some say that they don't have a product for the masses. Depends on how you arrive at your profit (margin per unit x sales). Look at the Verna, Elantra and the king - Fortuner. I'm thinking that the margins on these are much higher. Off late the overall auto sales have come down as compared to yester-years, but they're still selling. I really wouldn't call this bad in absolute terms and we all know it's temporary.

Coming from a Maruti, I bought a Fiat Linea diesel in 2012. While the product is debatable and can end up on a 'like or leave it' note, they've excelled my expectations 8 out of 10 times. That's a lot. And if this goes on, I'll buy another Fiat in the future.

I know there are a lot of customers who're happy owners, and I don't intend to irk you. Thanks for your understanding. I'm just posting my opinion here. My real frustration is this - I don't have the answer why a giant like VW and its sister concerns, with all their resources , can get it so very wrong here. And even worse, why they refuse to learn and grow. Personally, I like VW products. Elsewhere in the world where the consumer laws are strong, my family owns/owned VW products. And I've driven them as well.

Dear Mods and all - I'm quoting Fiat here solely to draw a parallel, but not start a brand war.

[blue_pulsar]

They definitely have the right products in Polo and Vento. They just need to shed the 'German' attitude here. The typical "Are you worth it?" attitude.

Related thread: http://www.team-bhp.com/forum/indian...u-service.html

I'd also like to draw parallels with Bosch washing machine commercial here.

http://www.youtube.com/watch?v=k1qRUsEBLBg

http://www.youtube.com/watch?v=FPaZzlE1FjY

No wonder LG and Samsung have captured the home appliances market.

[kiku007]

What comes to your mind when you think of VW Cars until you enter a VW Dealership? Brilliantly Engineered, simple but elegantly designed, solidly built German Machine.

What comes to your mind when you think of VW Cars after you come out of a VW Dealership? Arrogant Company and even more arrogant Dealer. Pity the car.

I don't understand from where VW-India got the thought that being arrogant = aggressive. They've got it totally wrong.

[sagarpadaki]

Let alone customer complaints, they are not even interested in new customers. I had queried on their website on the day the GT TDI was launched. I got a call from their bombay office telling that they would send a car for TD. weeks passed but no one called me. Couple of weeks back they called again from Bombay and the lady asked me what was my decision on the purchase of GT TDI. I told her how can i decide without a test drive? She again promised to send across a car for TD and till now no Bangalore dealer has called me for a TD. This is pathetic . If they treat prospective customers like this then they are already on a down hill ride. Frankly, i would not buy a VW till they pull their socks up!

[joslicx]

I guess the honest intention of vb-san when he composed this thread was to come out with some strategies/solutions for VW to improve its market in India. Clearly there are lot of issues and we all know about them. So lets not degenerate this thread into a rants thread. I think vb-san might also agree with me.

There are very few carmakers who have found the formula for success in our market. It is a tough market to crack. We generally are opinionated people and breaking perceptions is very difficult (thats what keeps Marutis going on). I think the day VW gets dead serious about India they can (and probably will) launch an onslaught few can match. The Duster, EcoSport, Amaze experiments have shown that it is possible to capture market pretty fast here with right cars. So they can always become a major player here.

One major deterrent could be the constant policy changes at the centre. It must be a nightmare for corporations to really plan any short/long term strategies (especially in a sector like automobiles). Arun Shourie also talks a lot about this aspect in his lectures (very interesting to listen to that man).

[Vid6639]

VW have been adopting a confused strategy from day 1.

Their intent is to be the premium brand vs the sister Skoda brand. The VW cars are priced with the premium tag but the car is in essence a stripped down Skoda. This is the fundamental problem with cars like the Jetta and Laura and now Octavia. The Octavia and Laura are way better equipped than the Jetta. But the price is reverse.

When the Vento came out it was decent but when Skoda launched the Rapid, they undercut the Vento. Initially both cars were equally speced. Over time VW started to distinguish the Vento by adding leatherette, bluetooth, parking sensors and it sort of worked but it still did not justify the 80K premium over the Skoda.

As mentioned by vb-san, the Polo was a disappointment. It had horrible engine choices and only the top spec variant had features with the ones below completely stripped of even basic safety features. Then the rear space was nothing to write home about.

What is the way forward?

1. They need to justify the premium tag. The VW branded car has to be superior to the Skoda one. For example, VW have launched the Vento TSI with 7 speed DSG. This should be VW exclusive. Skoda should either get manual only or continue with the 1.6 old gen engine. Jetta needs to match the Octavia on features.

2. Fix the after sales service reputation. Right now people think that VW is as bad as Skoda. Maybe offer AMC for cars like BMW. Give a premium feeling to a VW customer.

3. Need a practical hatch like the VW UP below the Polo and they need a car to bridge the gap between the Vento and the Jetta. A compact SUV? Tiguan or Taigun.

[vb-san]

Originally Posted by arjab

The main problem with VW is that they simply do not have enough products to cater to the volume/mass segment when compared to the Suzuki's & Hyundai's.
…
…
If these fundamentals are addressed, then there is no reason why VW cannot become a significant mass market player in our market.

We often talk about quantity – that they should cover so and so segments if they want to go mass-market. But as you rightly mentioned, before even thinking about those aspects, they need to address the fundamentals. If they falter on managing the 4-5K sales per month, how they will go on with big volumes? Month-on-month, the Polo averages about 2000 units, and the newly launched GT twins probably will account for 5-10% of that volume. If they cannot manage the timely delivery of those, how they will manage a volume seller in the entry-level hatchback segment? In my opinion, they just need to live up to the billing they’ve created in the market place, and rest of the aspects will fall in place.

Originally Posted by deetjohn

And looking at the GT twins now, I really cannot wait to taste the products when VW turns it back on in India. And for now, they should use this time to form a solid base. VW really needs to fix sales and support. And that is really a BIG one! And if they can effectively do that, there is no reason why VW cannot get close to 10% market share in India with new products in the coming decade.

True, even though they took quite a while to get each of their products right (be it a Polo, Vento or the Jetta), they currently have a formidable range on sale in India. The Polo finally have the engines to justify its premium billing, the Vento have worked its way through via numerous updates, and recently the Jetta also got the much-needed update. Infact if you ask me, these cars probably will be my preferred choice in the respective segments. If a Renault can build a strong base with the Duster, or the Ford with alternate wonders like the Figo or Ecosport, why not VW with so many competent models in their range? A slight tweak in the manufacturer attitude (or the superiority complex), streamlining the delivery aspects, and standardizing the customer care policies can really keep them going.

Originally Posted by joslicx

I guess the honest intention of vb-san when he composed this thread was to come out with some strategies/solutions for VW to improve its market in India. Clearly there are lot of issues and we all know about them. So lets not degenerate this thread into a rants thread. I think vb-san might also agree with me.
…
…
I think the day VW gets dead serious about India they can (and probably will) launch an onslaught few can match. The Duster, EcoSport, Amaze experiments have shown that it is possible to capture market pretty fast here with right cars. So they can always become a major player here.

Completely agree on your point. Normally we get doubts on some manufacturers on reasons like how they will go forward with products not aligned to the market dynamics, or does not have enough presence to sustain, or just because they are not good enough. But in this case it’s just the opposite. Here its more to analyze why VW is not really doing well with the kind of products they have in hand (especially with the launches this year). To draw an analogy, sometimes at work I feel sad to see some folks who are really bright and brilliant, but for some reasons they just don’t step up and deliver. VW’s case is a bit like that.

Originally Posted by Vid6639

1. They need to justify the premium tag. The VW branded car has to be superior to the Skoda one. For example, VW have launched the Vento TSI with 7 speed DSG. This should be VW exclusive. Skoda should either get manual only or continue with the 1.6 old gen engine. Jetta needs to match the Octavia on features.
2. Fix the after sales service reputation. Right now people think that VW is as bad as Skoda. Maybe offer AMC for cars like BMW. Give a premium feeling to a VW customer.
3. Need a practical hatch like the VW UP below the Polo and they need a car to bridge the gap between the Vento and the Jetta. A compact SUV? Tiguan or Taigun.

Infact I will say VW should just forget that they are a superior brand to Skoda, look at their own strengths, and act to what the specific segment calls for. For example, while launching the Jetta they should have just looked at what works the best for the segment and delivered accordingly. For example they have sun-roof, memory seats, ACC, full leather seats etc. as standard in other markets from the launch itself. If the Indian version came with all that, it would’ve been a superior model against the newer Octavia. Infact what came as Highline should've been the Trendline trim.

And regarding AMC, It will be so annoying for their customers (or potential customers who wanted to buy a premium car) to check their website, read through the write-up on the extended warranty, maintenance etc., and then see the footnote *Conditions apply. Currently available on Polo & Vento only.

[ampere]

Nice clear article vb-san. To add all the points,

- They should come up with some thing like Skoda Shield.
- Get post sales part in order
- +1 to Vid. The 12-18L range is a wide gap and they have an amazing set of cars to fill that gap for India,

[Equus]

Lost opportunity. They surely seem to have lost the momentum - they did generate a lot of excitement and caught the minds of the buyers well. Diesel prices going up have played a role in their fortunes and also lack of "newness" is hurting them. They need the UP and sub-4m Vento out real quick to latch on to the growing sectors. Tiguan seems like a right fit but if its going to be above Yeti, then no/less takers.

[selvagp]

I don't think Volkswagen is complaining about its sales or presence in India too much. They have in a way been "simply clever". I say this because I have been following the offers they have been floating month after month be it Audi, VW or Skoda. All of their offers have been finance schemes. Be it Pay 50%, Pay 1 Rupee, 3 years free insurance, 5*5 offer 0% scheme or what not, each of it has been a finance scheme and no prizes for guess the financier. Its all under VW finance. I think they have protected their margins cleverly.

The equivalent cash offers would only have hurt the dealers. Simply clever I think.
They have good products, that everyone seems to agree. They seem to be in no hurry to clear the stocks, may be because they may have met their targets.
PS: I do not have any numbers to support my claim it is just feeling comparing the numerous offers in the market.

[GTO]

End of the day, what they need is a fresh product lineup. The Polo & Vento have been around for over 3 years now. And the Polo hardly competes on value, being further let down by its 3-cylinder engines (TDI & TSI are priced out of the mass market).

Trust me, if Arvind Saxena can't sell cars in India, few people can. This is the man who had a role in making Hyundai what it is today.

VW's reputation on the street is also getting poorer by the day. Rotten dealers & horrible reliability is going to make the crowds flock back to the Japanese & Koreans. A close friends <5,000 kms Polo conked off in Goa. A week up and no one has a clue what's wrong with the car!!!

Considering the state of the market, VW has gone on record to state that it's slowing down investments here (subtle way of saying India isn't on the priority list right now). I don't see matters improving in the short-term at all. No $$$, no fuel for growth.