June 2, 2014: European brand Volkswagen which has cars in the Rs.5 lakh and above category is looking forward to launch a new budget brand for Indian market. In a report which appeared in Economic Times, it is said that there is indeed such a move and that its Chinese subsidiary will be finalizing it in a short span of time. Volkswagen which has positioned itself as a premium car with its brands Polo, Vento, Jetta and Passat in the premium hatchbacks and sedan segment presently caters only to the 50-60 % of the car market in India.
Even if Volkswagen takes a decision to launch a budget brand, it is learnt that the company would atleast take 3-4 years to launch a product into the market. It is further reported that company would be localizing its products in India and the production would be carried out here. There would be quite a few challenges in launching a budget brand because what might succeed in China need not succeed in India. The other challenges might be:
- Getting the product cost structure right
- Not compromising on the present level of quality and
- Ensuring after sales service and spare parts
Mahesh Kodumudi, MD and Chief Representative of Volkswagen India was quoted as saying to ET, “We are seriously considering a budget brand for India. We have looked at all the ideas which VW (HQ) had looked up for China. My teams here have been working very closely with the Chinese and German counterparts; we have the complete list of all the ideas that they have generated, and we know each and every idea. We are looking at what will be most prudent and suitable for India.”
Experts believe that it 3 years is too long a time to launch a new budget brand and if Volkswagen has plans to do so then it should do it immediately. But Volkswagen it seems is not in a hurry and is looking for an image makeover in next 3 years. It would be doing a face lift for its existing Polo and Vento and would be launching the new sub-4 meter sedan, Polo Stuffe. Volkswagen would also be launching a compact SUV and new Beetle, Passat, Jetta and Tiguan in the coming months.
