Volkswagen aims to capture 10% of India's car market

The Wolfsburg, Germany-based company will sell cars under three brands, including Skoda AS and Audi AG, to achieve its targets, it said in a statement in Chakan, near Pune, in western India. Production of its Polo compact car began today at the plant, which opened earlier this year. Volkswagen will start selling the cars in March, challenging partner Suzuki Motor Corp., the maker of half of all cars sold in India. “The Pune plant is a key element in Volkswagen's strategy for India,” said Jochem Heizman, a member of the company's management board. India's car market holds “enormous potential” for the German carmaker, he said.

Introducing the Polo is Volkswagen's biggest push to boost sales in India, Asia's fourth-largest automotive market. Already the largest overseas carmaker in China, the company is boosting its presence in India after auto sales in the world's two most populous nations withstood the global recession. Toyota Motor Corp., Ford Motor Co. and Nissan Motor Co. are also planning to sell small cars in the country, where a surge in vehicle demand has bucked a global recession.

'Small-Car Market'

“The Polo is a key model for Volkswagen as they have created a big capacity in India,” said Umesh Karne, a Mumbai-based analyst at BRICS Securities Ltd. “India will be a small-car market for at least the next five years and every company needs a compact car to get market share.” Volkswagen is looking at the potential for jointly building cars with Suzuki Motor Corp. in the South Asian nation, Heizman said. The German company agreed on Dec. 9 to buy a 19.9 percent stake in Suzuki for 222.5 billion yen (US$2.5 billion) and jointly develop vehicles for emerging markets.

VW and Suzuki plan to develop hybrids and electric vehicles under both car brands, according to Suzuki Chief Executive Officer Osamu Suzuki. Suzuki will buy as much as 50 billion yen of ordinary VW shares, while VW will become the top shareholder in Hamamatsu, Japan-based Suzuki.

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