Not being able to capitalise much on growing Indian car market, the world’s second largest passenger car manufacturer, Volkswagen Group, is looking to expand its product portfolio with entry into high growth compact sedan and compact SUV segments along with more aggression in the premium category. Speaking to Sandeep Singh at Hannover Messe, Mahesh Kodumudi, chief representative of Volkswagen Group in India said that they plan to make India a hub for even high technology cars. Excerpts:
As an investor what do you want from the government?
We want a stable policy as a change in policies reduces the confidence level of foreign partners. We expect rules to be simple and transparent. They should not be open to interpretation and litigation. While these will help building on ease of doing business, we think that ease of doing business has still not happened at the ground level. The government also needs to work on physical infrastructure — roads, railways, ports, power etc.
How do you see the industry growth in India?
The four-wheeler business (cars, MPVs and SUVs) last year was 2.4 million and this year it should be 2.5 million. By the end of this decade, India will reach around 4.5 million may become the 3rd or 4th largest market in terms of sales. India is important not only from growth perspective but also because it holds potential for low cost innovations. We have ambitious plans for the country.
And what do you plan to do?
We intend to make over Rs 1,500 crore over the next 5-7 years both in localisation and new models. We are working on new models and we are not only looking at the high growth compact sedan and compact SUV segment but also focussing on building our brand. Volkswagen being a premium brand, we want to bring in our high-end models and that is under consideration. We hope to make some announcements during the course of this year. If you say you are a premium brand you need to bring in your premium models to develop the brand and we want to revitalise that area.
We also want to use India as an export base not just for low value added manufacturing but also for sophisticated high technology cars.
We want the country to be an important region in the global footprint of the group. India will also teach a lot about low cost production with the same technical specifications.
What is your view on FTA and high import duty?
The FTA should be addressed more vigorously along with the high import duty on higher end cars. If import duties are high, you can’t get enough volumes. Without volumes you can’t invest and thereby can’t bring higher technologies. We also need export incentives because high duty reduces the competitiveness against manufacturing in certain other competing nations.