The Indian car market is a difficult one to crack, with frequent policy changes leaving automakers in turmoil. Volkswagen entered India in 2007 and hasn’t got a grip on the Indian market yet. The German automaker has invested heavily in assembly and manufacturing operations but availed little success. The Polo and Vento (Polo sedan) are doing average numbers and are not selling anywhere close to what the company expects. The reason for the poor performance can be attributed to the higher pricing of VW cars.
The Volkswagen Polo largely competes with the Maruti Suzuki Swift and Hyundai i20, both of which cost less and offer much more features than the VW. The Polo is powered by 3-cylinder gasoline and diesel engines, while its competitors offer more refined 4-cylinder units. In order to boost its market share, Volkswagen is now planning to bring in cheaper vehicles in lower segments. Two such products are the Up! and Up! based compact sedan.
In India, all vehicles measuring less than 4-meters in length having an engine capacity less than – 1.5-litre (diesel) or 1.2-litre gasoline, is subjected to 12% excise duty against 27%. This is a huge saving and thus Volkswagen plans to add a boot to the Up! hatchback, resulting in a compact sedan measuring less than 4-meters in length. There are already two compact sedans present in India – Swift DZire and Tata Indigo CS. A sub 4-meter version of the Logan (Mahindra Verito) is set to be launched next year.
Faisal Ali Khan is the owner/operator of MotorBeam.com, a website covering the auto industry of India.