Volkswagen India: The Way Forward

[wilful]

Originally Posted by GTO

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.

By the same token, I guess the Indians have also given a subtle thumbs down on VW for the reasons stated, going by the not so hot sales - i.e. poor service reliability, dealers, lack of new models etc. Haven't they got some kind of feedback on the negative perceptions from the market??

But I wonder why they appear bearish on the Indian market. Or perhaps they feel the market is not mature or affluent enough to expand their range?

[manjubp]

Is there is a way to inform VW about this thread. Without VW reading these thread, all of feedback goes to /dev/null.

[Rajeevraj]

I think its not just about dealerships and product line etc..I have rarely had a good experience while visiting Honda dealerships. Multiple times I have heard the line 'Sir, it is a Honda' as answer to some of my questions.

So IMHO there are 2 key things to crack the Indian Market

• The connect with the Indian Consumer: The customer should blindly believe in you.A company like Maruti are the best examples of this, they have achieved this through the factors of reliability, maintainability, network and a few products which deliver what the consumer wants. On the other end of the spectrum, a company like Honda has primarily got this connect by creating an aspirational value in a brand like the City. People would aspire to own a City. That is the reason why in-spite of being priced higher than competition and having less 'comfort' features, the City still had 66% of the C Segment Petrol Market.
  
• An Aha moment: By this I mean that one product that captures the imagination of the majority of the car buying population. Maruti and Hyundai have had several of these. . Renault did it with the Duster, Ford with the Ecosport. The key is to recognize it and then take steps to maintain and build on the Aha moment. I don't think Renault have been able to do that. Seeing the mess with the wait times and deliveries of the Ecosport, looks like Ford may also lose out when more competition starts coming out.On the other hand For Honda I believe the Aha car was the Amaze which nicely supplemented the aspirational City. They have realized it, bumped up production and ensured wait periods are controlled. Plus they have their line up for India planned out

I do not see VW anywhere close to achieving both of the above. Maybe a compact Vento with a manual 1.2 TSI can help?

[ambivalent_98]

My 2 cents as a VW Vento owner.
1) Product build quality topnotch. Feels like built to last and made for India.
2) After sales Service not at par with other car companies.
3) Kudos to giving Honda jitters in 2010-11 time frame and pushing Honda City out of the slot of Number 1 in class.
4) Fizzled out product line up along the way. Skoda brand coming out with cars which are killing the VW business as the Indian market is very price sensitive.
This is surprising because Skoda is VW group company and VW has shown some smart tactics earlier.
5) Need to get their act together and re-think their India strategy. I think most co-VW owners would agree that the company has a great durable product. THeir strategy to sell and maintain it would have to be re-done. They probably need a Carlos Ghosn / Marc Llistosella type of task master to get it together.

[MaxTorque]

Many of our team mates have already given valuable suggestions here. Like others said, Volkswagen products are designed, engineered and made to last products but they need to be launched in India to match our local needs. As the customer base is increasing, VW India should ensure that sales, service and customer care are of truly international standard. Another suggestion, like Honda they should start aggressive localization drives to cut down the costs. Even Honda was unable to localize their products, but slowly they are making good progress and we all have seen the out come. They should seriously consider a made for India VW UP!.

[aniketi]

There is no way forward for VW in India if they don't improve their service & cost of the ownership. As simple as that

Now due to peoples awareness, internet & social media, people now knows that VW cars are very expensive to own and more than that there service is very poor along with their attitude towards the customer. My cousin was very eager to buy Polo when it was launched. His logic was its awesome that one can buy European car like VW Polo at such a low cost. But after hearing lots of horror stories from his own friends & others, he simply don't wanna buy any of the car from them now. He is very happy with his own Hyundai. Here in India, people wants service @ realistic cost. With current approach from VW (& Skoda) people will soon run away from their products. There inventory of 28 K just shows that.

[shobhit.shri]

One more point apart from what has already been said in this thread is the sheer lack of initiative from VAG to scale and indigenize their production. This is hurting them in increased costs and in providing repair parts quickly. Even after being present in India for more than a decade, Skoda/VW still import even the basic parts like air filter and battery connectors from Germany.

I understand that they are not planning to invest more in India but what stops them from using it as their production and export hub just as Ford and Hyundai are doing?

[polopm]

Originally Posted by ambivalent_98

My 2 cents as a VW Vento owner.
1) Product build quality topnotch. Feels like built to last and made for India.
2) After sales Service not at par with other car companies.
3) Kudos to giving Honda jitters in 2010-11 time frame and pushing Honda City out of the slot of Number 1 in class.
4) Fizzled out product line up along the way. Skoda brand coming out with cars which are killing the VW business as the Indian market is very price sensitive.
This is surprising because Skoda is VW group company and VW has shown some smart tactics earlier.
5) Need to get their act together and re-think their India strategy. I think most co-VW owners would agree that the company has a great durable product. THeir strategy to sell and maintain it would have to be re-done. They probably need a Carlos Ghosn / Marc Llistosella type of task master to get it together.

Fully agree, you could see the product was so well engineered and it still gives me smiles when I take the car for a spin.
What irks me is that the attitude of the dealers and probably the company itself - 'This is enough for you' especially on the nice gizmos which most of the cars come now (loaded to the gills) - which VWs' car never had.
It all stems from the fact of not understanding the Indian customer psyche well. India can be terribly snobbish and BBD - Bigger better deal types.

Indians want stylish cars, lots of gizmos, low running costs all at Hero Honda price - anything less you can see what happens. VW will need to spruce up its local R&D and purchase departments for local sourcing - if they have a cost issue importing. All this cannot be done overnight. Will take time and they need to go for discounts, catchy advertising to keep the momentum. Else they will go the Fiat way.

[Kris_risk]

Having taken the bold (outlandish) step of moving away for the first time after having had used Maruti's or Hyundai's for over 2 decades, I must admit that Vento as a product is quite VFM (Vento TDI - HL is what I use) especially build quality and for the engine torque.

I had the opportunity to speak to the Sales Manager at the VW dealership and also a few other too there and strangely felt that they are not able to connect to the general customer. While brands like Fiat are banking on their brand loyalty (not sure if it working though), others like Maruthi are milking their credibility. Even newer entrants like Nissan and Renault are trying to help people associate with their products.

VW, I fear, is not reaching out to their target market well or have they even done a market segmentation yet is a question that I always wonder.

The way forward according to me
* Use the cult following elsewhere that VW has, to drum up some interest;
* Use strategies to break the bad press about high maintenance cost. Say instead of an upfront discount of 15k when buying the car, instead put that money against the first service and advertise that the first paid service will be at the end of 2 years of 30k (now it is 15k or 1 year);
* Stop ineffective marketing strategies like 50% pay and own a VW. It just gives a dubious impression. Instead, focus on advertising that is more oriented towards the customer base they want to reach out;
* Now that they have the VW polo cup, utilize maximum of that to build a brand image, after all the demographics of their customer base should give them an idea who they need to reach out to.
* Customer connect should be improved, after all, word-of-mouth works a lot.
* Genuinely try to improve the service quality, customer service levels and service cost related issues.

The problem is, instead of introspection and worrying about their dwindling sales, they have come out with a 2.5 % increase in their price to mitigate the input costs:

http://economictimes.indiatimes.com/....cms?prtpage=1

PS: After having owned the Vento, the product suffers an identity crisis because she looks so similar to her younger sibling (Polo). In the Indian market that is so driven by image, people who tend to spend in the 10L+ range is looking at some identity/ image differentiation, unfortunately. You always have to wait till the boot to decide if it is a vento or polo .

[ampere]

I hope it does not become a classic case of not solving the problem in hand but introducing another product and passing on the buck to the next one. And that is in case the new product arrives!

[StarScream]

More grist for the mill:

India Proves Hard to Crack for VW as Swift Outshines Polo: Cars

http://www.businessweek.com/news/201...ines-polo-cars

[W.A.G.7]

Most of the reasons for the sales figures we all, already know. The negative publicity floating around Volkswagen and Skoda; has finally started to catch up with them; I feel. They have good cars no doubt, but they should first clean up their attitude (and their dealer's attitudes in dealing with customers) and reputation. I have read/heard more horror stories about Volkswagen group than good ones. Secondly I don't think they will ever try and offer the same level of equipment/engines to India that they offer internationally. For them, India is a cost cutting market only. Net conclusion I feel : The sales figures would be more or less what we are seeing now.

Is anyone at Volkswagen group even reading this thread and pondering over the reason for failure?

[wilful]

Originally Posted by StarScream

More grist for the mill:

India Proves Hard to Crack for VW as Swift Outshines Polo: Cars

http://www.businessweek.com/news/201...ines-polo-cars

That article brings out the VW Indian story and woes pretty well - and runs on the lines of what most of us here have said. I think this paragraph in the article brings out the home truth like nothing else --

Take Volkswagen’s Polo hatchback, which at 510,000 rupees ($8,180) is 11 percent more expensive than market leader Maruti Suzuki India Ltd. (MSIL)’s Swift. Here’s what Indian consumers will get for German engineering: less horsepower, weaker acceleration and, in a country where many car-owners are chauffeured, cramped backseats compared with the Swift.

[Drivethru]

Very nice thread and brings to my mind the mixed experiences I had with 2 brands of VW (skoda's Fabia and vw's jetta) as a customer. I have been tracking some of their corporate developments too. They appointed Arvind saxena from hyundai india's as CEO of vw India. guess VW bosses would have hoped he would recreate some of the magic which helps hyundai deliver great sales volumes with products suitable for india and priced competitively.

VW India plans to launch their low end hatch under the brand-name "Up". I have no clue when they plan to launch it though. Combined marketshare of VW and SKoda in the executive sedan segment (jetta, Laura, superb, passat, Octavia) is strong in my personal
opinion. They will need to reposition their pricing and cost of ownership if VW group (skoda and vw) wants to increase market share to even 5% by 2015.

Other team bhpians have made some extremely valid points on the family look of vento, polo and jetta; poor dealer staffing, cost of spares and service etc.

[prakhar1998]

Volkswagen develops wonderful cars and posses of a large number of brands in it's portfolio. This suggests that they don't have shortage of any sort of money and in a large volume market like India, they shouldn't worry about the results. VAG for god's sake don't cut corners. With poor sales and services, poor customer transparency and unwise decisions, your reputation has taken a hit. Some time back, Vw's sales had rocketed quite high with the Vento and Polo selling well, but then the Rapid came in. Rebadging is the last thing you need to resort to. We saw it in the Micra and Pulse. Next, please train your mechanics well and establish professional protocols for servicing and troubleshooting. Mechanics don't know anything about where the rattles are coming from and when you tell them, they simply avoid it. Next, make your cars more suited to Indian road conditions. Adapt your cars and please provide better drivetrains and definitely better cars. Better demands for the Polo Tsi speak the fact. Next, where is the VW up bound to make its grand entrance into our market? Plus, your so called premium image keeps buyers away because of the premium they have to pay to keep your cars up and running. Why don't you bring the Touran to India and make it battle the Innova, the Innova does sell huge figures. Then, develop some cars for India and maybe Brazil and China (like the EcoSport). I am sure this will help you get to the top of the ladder and beat Toyota.