June 28, 2014: All is not well for Volkswagen. Though they started with a lot of promise with their Polo launch, they could not sustain the momentum with the Polo hatchback and Vento models in the Indian market. The prime reason according to the company is their inability to find the right product and pricing structure for the Indian market. The obvious other reason is the competition they have from established players like Maruti-Suzuki, Hyundai and Honda. Now they seems to be putting efforts in bringing down the cost by bringing in more localization strategies. Some new models like budget friendly hatchback, a entry level sedan and mini SUV are being worked out. These models are being launched with an objective of making further inroads to the Indian market and also to be a part of some of the fastest growing segments.
Though they invested around Rs 4000 crore in their Pune plant, they could not achieve the desire mass volume sales for their Polo hatchback and Vento models forcing them to rethink on their product and pricing strategy. The other factor has been the higher maintenance cost compared to their competitors. They are now targeting some specific segments like Sedans under four meter length to improve their market share. It was one of the best performing segments which was created by Maruti Dzire and then Honda Amaze and Hyundai Xcent also making strong sales last year.
Mini SUV is the other segment which has stuck good gains in the Indian market with Renault Duster and Ford Ecosport models doing really good. This is another key segment of focus for brands like Maruti-Suzuki, GM, Ford, Honda and now Volkswagen also joining the race.
Though it took some time, it seems Volkswagen is slowly beginning to understand the nuances of Indian market and making some positive moves to bring the product pricing structure lower to fit the majority of the market segments in India.
