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Volkswagen upbeat on India

At a time when the global automotive industry is in a state of turmoil and companies are cutting costs and shutting down factories, world’s third largest automaker Volkswagen on Tuesday opened its plant here with an initial capacity of 1,10,000 units per annum, nine months ahead of schedule.

business Updated: Mar 31, 2009 20:33 IST
HT Correspondent

At a time when the global automotive industry is in a state of turmoil and companies are cutting costs and shutting down factories, world’s third largest automaker Volkswagen on Tuesday opened its plant here with an initial capacity of 1,10,000 units per annum, nine months ahead of schedule.

Volkswagen’s maiden small car in India, the Polo, which was showcased here will be rolled out from this plant early next year. This is also the biggest investment by any German company in India so far.

The plant which has been built at an investment of Rs 3,800 crore, will currently roll out Volkswagen Group’s Skoda Fabia from May. Skoda’s own plant at Aurangabad with a capacity of 30,000 units per annum will continue to assemble the high-end cars of the group including the Octavia, Superb, Jetta, Passat, Audi A4 and A6.

“There is an enormous potential in the domestic market here and even though the effects of global economic and financial meltdown have been felt here as well, the story remains intact,” said Jochem Heizmann, member of board responsible for group production, Volkswagen. “It will be a matter of time when the full capacity here would be utilised — say in 2-3 years. Through this plant, we will increase the local contents of our cars which will help us in pricing our products competitively.”

Along with the Polo, the company will also launch a sedan next year —a notchback version of Polo.

VW will also launch its range of light commercial vehicles. But it has not firmed up its plans on whether to go alone or tie up with an Indian company.

In 2008, Wolfsburg based company produced 6.35 million vehicles worldwide, a 2.1 per cent increase over 2007.

The company has already made public its intentions on overtaking Japan’s Toyota Motor Corp and American General Motors to emerge as the largest automaker in the world in nine years. Its India plans are designed to help the company achieve that milestone.

Interestingly, Volkswagen was one of the companies the Indian government was in negotiations with in late 1970s which ultimately culminated in the birth of Maruti Suzuki.