German carmaker Volkswagen has been in India for the past 17 years, but the company has not made headway in terms of sales in this fast-growing market.
Volkswagen’s market share continues to be a paltry 2% amid its high cost of production, failure to indigenize and problems with its consumer service reputation that has deterred customers in this price sensitive market.
In order to be more agile, the company has now decided to merge its three Indian subsidiaries – Volkswagen India Private Ltd, Volkswagen Group Sales India Private Ltd (which sells all Volkswagen group cars including Audi and Porsche, except Skoda) and Skoda Auto India Private Ltd to bring about synergy in operations, bring down costs and boost sales.
The company has set a target of 5% market share in the Indian passenger car market by 2025 and that would require a steep increase in sales. It has already confirmed investments of 80 billion rupees (US$1.15 billion) for the ‘India 2.0’ project.
The group’s brands such as Volkswagen, Skoda, Audi, Porsche and Lamborghini would maintain their individual identities, dealer network, and customer experience initiatives. But all these brands would work under the leadership of one chief executive with a common strategy for the Indian market.
The current managing director of Volkswagen India Private Ltd and Skoda Auto India Private Ltd, Gurpratap Boparai, will be heading the merged entities.
The company would also emphasize local production, sourcing partnerships and achieving synergy in its manufacturing processes across all units, which will be tailored to the needs of customers on the Indian subcontinent.
Volkswagen group will also explore the possibility of exporting cars made out of its Indian manufacturing plants.