VW wants to crack the Indian car market by launching a well-equipped subcompact sedan there next year that would compete with established models such as the Hyundai Xcent, Maruti Suzuki Dzire and Honda Amaze.
VW only has a 2 percent market share in India and hopes the new sedan will help boost its expansion in the quick-growing emerging market. The new model will be positioned in the small but promising segment for vehicles shorter than 4 meters (157.5 inches). Sub-4 meter cars benefit from a lower excise duty rate of 12 percent, aimed at encouraging ownership of smaller cars. Bigger cars are taxed at up to 30 percent.
To lure Indian customers, VW wants to equip the car with features usually offered on local high-end models, including an automatic transmission and dual airbags. The segment for sub-4 meter sedan models is popular with a growing Indian middle class looking for well-equipped yet affordable vehicles.
“That’s where we see the better future. Developing a car takes some time but in this particular case we took a rapid decision… to make it come to market as fast as possible,” Michael Mayer, VW’s director of passenger cars in India, told Reuters.
VW says the new model will be tailored for Indian customers and built locally, but it will be exported to other emerging markets as well. To keep costs under control, the sedan will be built on the same assembly line as the Polo hatchback and Vento sedan, meaning it will be based on the same platform.
VW is suffering in India because it does not offer compact and competitively priced cars which are very popular there. The German automaker’s sales fell 14 percent to about 45,000 vehicles in India in the fiscal year ended March 31, while the overall passenger car market grew by 5 percent.
Note: India-spec VW Vento pictured
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