Volkswagen Group scales down its targets in India

World's leading automobile group, Volkswagen, has now scaled down its Indian market share target to 7-8 percent, which was early estimated to be around 20 percent by 2018. The company had a lot of expectations when it entered the market, but somehow due to lukewarm response from the buyers, plus the dominance of the major players like Maruti Suzuki and Hyundai resulted in this decision. Currently, the group is present with its five brands in India- Volkswagen, Skoda and luxury brands such as Audi, Porsche and Lamborghini.

The company said that environment in India is "challenging" and it is a "struggle to find the right product and right cost structures" to make a deep cut. "It is a challenge ... (and) not an easy market," Mahesh Kodumudi, president and managing director of Volkswagen India. Kodumudi said that against the initial expectations, the VW brand failed to get a flying start in India due to heavy competition from cost-effective players like Maruti Suzuki and Hyundai. " Perhaps we made a big splash when we entered and the expectations were that we would come and conquer the market. That has definitely not happened." he added.

Talking about the numbers, the group sold 92,529 units witnessing a fall of 19 percent in 2013. The biggest disappointment came from its brands- Volkswagen and Skoda, which were projected as the volume gainers. According to the reports from SIAM, both the brands are showing a negative graph from past few fiscals.

The report suggests that the group is doing a lot of groundwork to settle down well in the emerging market. The group is now focusing on localizing its products and are geared up with some important launches in the coming months. The group has recently invested INR 15,000 crore for the whole localization plans.

In the coming months, the manufacturer will be bringing a new Polo and Vento in the Indian market. Else, Skoda is set to launch Rapid and Fabia, while the luxury brand Audi will introduce its cheapest offering in the country – Audi A3. With these launches, the group expects to garner good numbers and will also help it to strengthen its position in India.

The poor run, however, has not made the group pessimistic on the Indian market's long-term potential. "India remains a key strategic market for the Volkswagen group," Kodumudi said, adding that it will not shy away from making further investments in new products and capacity expansion.

Read More on : Volkswagen Polo price