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Volkswagen may produce bigger cars for India

Volkswagen has a change of heart when it comes to its small car plan for India. According to a recent report, sources say that the German automaker is “taking a careful look at the project”, due to a feasibility study that shows “little promise on the cost front.”

It is also said that another reason may have been the frequent changes at the top management level.

“VW’s focus on India could have been impacted, thanks to the recent spate of changes at the top management level. This, in turn, is likely to affect the overall direction of the project to a large extent,” sources told DNA Money.

It was also reported that the Volkswagen board will possibly debate on the matter in January 2008.

“The German automaker announced its intention to launch a derivative of the Polo from a new plant in Chakan, near Pune, in 2009 last year. The initial capacity planned then was a little over 1 lakh vehicles.”

One of the challenges Volkswagen faced then was to benchmark the cost of the Polo with the Suzuki Swift.

It is clear that the issue has not yet been resolved and the board will surely need to decide if it should bring in another model or work harder at costs. A delay will follow if the second option is opted.

The third option will is for Volkswagen to set the price with C-segment offerings.

“Suzuki has been around for over two decades and has been working relentlessly on productivity and costs, while still remaining profitable. It is not going to be easy for a new entrant to use the Swift as the basis for costs,” the report said.

Volkswagen will then have to decide whether it will introduce a bigger car top India or simply improve the Polo and lower its cost.

Source: http://sify.com/finance/equity/fullstory.php?id=14576536

This entry was posted on Tuesday, December 18th, 2007 at 8:12 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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