Poor sales force VW group to scale down India market share target [India Business] [Times of India]
(Times of India Via Acquire Media NewsEdge) PUNE: Europe' s top carmaker Volkswagen group has scaled down its India market share target to 7-8% by 2018 against the 20% projected earlier as it struggles to make headway in the highly-competitive market dominated by heavyweights like Maruti Suzuki and Hyundai.
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, told TOI here.
The group operates five car brands in India -- mainline makers VW and Skoda and luxury brands Audi, Porsche and Lamborghini. Out of these, only Audi has been able to have a strong say in its target segment, though the volumes in the luxury market are limited as the overall market size is small.
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."
Interestingly, the VW group is the biggest automaker in China with annual sales of 3.19 million in 2013, which is more than the size of the overall Indian market.
At the time of the India entry of VW brand in 2010, the company had sounded an ambitious note with global CEO Martin Winterkorn announcing a target of 20% share for the group by 2018.
The group's sales fell nearly 19% in 2013 to 92,529 units against 1,14,045 units in 2012. The situation has been grave for VW and Skoda, the brands that were supposed to be the volume drivers. As per fiscal-year numbers reported to industry body Siam, VW's volumes have been on a constant decline since 2011-12. For Skoda, the volumes have been on a downward spiral and the brand finished FY14 with volumes that were lower than numbers achieved in FY11.
Kodumudi said the group has a lot of groundwork to do to find a firm footing in the market.. The group is now working at increasing localization in India, while it also looks at new product launches. It has lined up investments of Rs 1,500 crore for the localization efforts as well as working on variants for existing products.
Vento sedan and Polo hatchback are the main cars for VW, while for Skoda, the crucial cars are Rapid and Superb sedans. Skoda has made an exit from the hatchback segment where it was selling Fabia compact as the model failed to make any notable headway in its category.
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.
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