Volkswagen, a German auto company, has started sourcing auto component for its European and Russian companies. The company plans to acquire cheaper auto components from India to cater to the needs of its global units. It also plans to acquire 8–10% of the Indian market share in the passenger car segment by 2014. Therefore, Volkswagen plans to launch several of its models in India and also increase the number of dealers in the country.

“Some experts are of the opinion that the Indian and Chinese companies provide cheaper auto components as compared to their counterparts in Europe and the US,” says K Naik, Manager of KP Machine Tools Private Limited, a small-sized tool manufacturing company in Hyderabad. It has been observed that auto components manufactured in India are 10-15% cheaper than other countries, which has attracted leading auto players like Volkswagen to the Indian manufacturing sector.

“Apart from Volkswagen, other renowned companies such as Fiat, Toyota, Renault, General Motors (GM) and Daimler have heightened India’s image as a major auto component manufacturer in the global market,” says D Soni, MD of SN Tools Private Limited, a small-sized tool manufacturing company in Jaipur. It is believed that companies such Fiat and GM are planning to purchase Indian auto components for its units across the world.

Volkswagen’s future plans in India

Presently Volkswagen has managed to sell 1800 units during the January-August period of 2009. The company has already launched 15 different models in India and plans to launch five new models by 2010 from its Pune plant. These models will include the hatchback and sedan versions of Volkswagen Polo, which will fall under the compact car segment specially designed for the Indian market.  

Volkswagen’s investment in its Pune plant is worth €580 million, which is supposedly the highest investment made by a German company in India. The company further plans to employ 2,500 workers in its Pune plant, which will boost Volkswagen’s production capacity, thereby leading to higher profits.

Sabrina Mitchell