Volkswagen plans increased sourcing from India

The German car manufacturer Volkswagen AG has high plans in store for India. The group hopes to increase the supply of components from India to carry out its operations globally. The group is betting to source the components worth Rs 2,074 crores from the country to the other parts of the world. The component exports are expected to go up by three times in the coming three to five years with increased localisation plans.  This also means that the component suppliers for Volkswagen Group from India will double to 200 in number.   

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The components like the transmission, engines, plastic and engine parts are the ones which are exported from Volkswagen’s vendors in India. Presently, around 50 million euros or Rs 434 crore worth components are exported per annum. This will basically need an investment of 250 million from the group to carry out the plans successfully. Going forward, this measure will help the group during the launch of its small car Volkswagen UP! as well. The timelines will also fit in perfectly as the small car is expected to launch between two to three years from now. The increased localisation to 90% will help the auto major place the Volkswagen UP! price competitively.

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Volkswagen Group has the cars offered from three of its subsidiaries in India, Skoda, Volkswagen and the luxury car manufacturer Audi in India. Moreover, Volkswagen has two manufacturing plants in Aurangabad and Pune to develop Volkswagen cars in India. On the other hand, the group is likely to introduce the luxury cars from its other subsidiary Porsche in India from 2012. Porsche cars sales haven't been particularly well selling under the Precision car brand. Therefore, Volkswagen Group is mulling to introduce the Porsche cars under its own name from mid-2012.

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