Maruti-VW enter top level talks

The ongoing talks between Maruti India and Volkswagen group are understood to be reached to a new level after top officials of both of the companies met on Friday to look into the possible synergies at the production and designing level. 

In December last year, Volkswagen, Germany based major auto maker, had acquired a 19.6% stake in the Maruti Suzuki Motor Corp (SMC) for about $2.5 billion. Since last few weeks, a number of media reports have been speculating that the Volkswagen Group is looking for possibilities of synergy with India's largest car maker Maruti Suzuki. 

The areas where both of the companies are expected to enter into a synergy may include synergies in manufacturing, product design and product testing. If any of such synergy takes place, Volkswagen will certainly benefited by Maruti's expertise on efficient production of high volumes at a considerably low cost.   

The Volkswagen group can be seen as a new entrant to the Indian market as till last year it only had a few cars in its India portfolio including Volkswagen Passat and Jetta, and in the period of last six month the company has added 3 new vehicles in this portfolio including recently launched Polo, all new Beetle, and its luxury SUV Touareg. The company has started producing cars at its facility at Chakan Pune, where it has invested around Rs 3,500 crore. The plant has a production capacity of 1,10,000 units per annum.  

While on the other hand, Maruti Suzuki is one of the oldest car maker in India with a huge market share of more than 50 percent. Maruti sells some of the most popular cars in India including small cars like Maruti Alto and Wagon R, premium hatchbacks like Maruti Swift and Ritz, and entry level sedans like Maruti Swift Dzire.