Volkswagen dares third cheap car startup in India

Cheap car? Manager in the Volkswagen Group do not like to hear this term. This suggests a car of inferior quality and it is said that the car giant does not produce such vehicles. Instead it produces cars for the people for an affordable price. In India however its been a big problem to produce and sell such vehicle. Since 2004, the Wolfsburg work on such a budget car, so a very cheap model for around $ 5,000 new price. The result is, except frustration and disappointment, nothing.

With its car plans for India, Volkswagen has even failed twice. Already in the year 2009 a cooperation with the Japanese terrain and car specialist Suzuki was supposed to bring VW success. But the collaboration ended in a spectacular rose war, followed by unbundling.

In March 2017, the Volkswagen Group allied with the Indian car maker Tata Motors, who trying to be successful with cheap vehicle Tata Nano, but in the end ended up not successful. Due to tightened Indian emission standards, the Tatas platform would have made it too expensive for a real budget car.

A few months ago, the Volkswagen Group management transferred the responsibility for the India mobile to the Czech subsidiary Skoda. In any case, this has the role of the favorable provider in the Group. Skoda boss Bernhard Maier dares now with the approval of the group management the third attempt in India: The VW group wants to invest one billion euro from 2019 to 2021 in India, as Maier in New Delhi announced. This will expand the VW plant in Pune, India. Under Skoda’s leadership, the Volkswagen group builds a technical development department in India, which will develop its own models for the subcontinent.


a-India CEO Gurpratap Boparai avoided precise prices. But already the press release gives clear indications that VW in India is not heading for price breakers. After all, the new models from India are built on the basis of the modular transversal platform – the group-wide platform that Volkswagen introduced a few years ago.

What makes the Indian car market so difficult?

From the billion-dollar investment and the new models, VW hopes to significantly increase market share: In the long term, the brands VW and Skoda together aim in India at a market share of up to five percent. In the past fiscal year VW and Skoda just came to a market share of 1.9 percent.

Experts have been predicting for years that India’s car market still has high growth potential. In the past year, 3.28 million new cars were sold in India, with a slight upward trend. India should shortly overtake Germany in the annual new registrations and then rise to the third largest car market worldwide.

But the market has a major hurdle for classic car companies: in India, large numbers of models come from models that are unimaginable in Europe, ranging from 3,000 to 5,000 euros.

For years, the market leader has been the Indian manufacturer Maruti Suzuki, with the majority owned by the Japanese. Recently, the Indian-Japanese joint venture held 50 percent market share. Their bestseller is currently the small car model Alto at the new price from 257,000 rupees, or around 3200 euros. The Korean Hyundai Group ranks second with a market share of 16 percent – and is also massively reliant on cheap cars in India, starting at around 4,000 euros.

For pioneer Renault a cheap car may not look bad

How to score in India as a Western automaker, has shown in the past two years, the French car maker Renault: The French have boosted their market share to last 3.1 percent, mainly thanks to a specially developed for India vehicle: The Kwid, a neat little SUV for a low price from about 3500 euros.

Just 3.7 meters is the Kwid long, with 54 horse powers for European or American conditions almost ridiculously motorized. But from the inside the Kwid offers for a little extra charge even a touch screen with Bluetooth interface. The car was developed in India by Renault’s low-cost car specialist Gerard Détourbet. The studied mathematician is the head behind the low-cost car Dacia Logan, with which Renault made the low-cost car segment acceptable.

A cheap car should not look poor, said Renaults chief designer Laurens van den Acker, who was a big part of the success. Since the Kwid launched in 2016, Renault has sold more than 200,000 vehicles of the most affordable SUV in India.

From such a market launch, also the Skoda people are dreaming of now. They are probably counting on the Indian market also moving more towards higher-priced cars , which is why they can also set off two or three segments above the Kwid. If this works will not be clear until 2020. After all, Skoda has earned a reputation within the group for incorporating clever practical details into its cars.


Felix Ewers