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Business

As India Revvs up its Engines, Volkswagen Takes Notice

Volkswagen is currently a minor player in India's growing automobile market. But with a production facility set to open next year, the company hopes to increase its market share to 10 percent in five years.

Tata Company Chairman Ratan Tata

Small, inexpensive cars, like the Tata Nano, sell well in India

Europe's largest car maker currently has less than 1 percent of the Indian automobile market. But the company plans to change that, said Joerg Mueller, President of VW India.

In the next five years, the company aims to corner 10 percent of the market, according to an interview with the German business daily Handelsblatt.

"We want to move quickly in terms of volume," Mueller said.

Investing in India

Skoda symbol

VW is hoping its Skoda brand can do well

VW's first wholly-owned factory in India will be up and running by the middle of 2009.

The company has reportedly invested 580 million euros ($904 million) in a production facility in Pune, which is not far from Mumbai, the country's financial hub.

The company will increase production of its small passenger car Fabia, built by VW's lower-cost Skoda unit, to 50,000 vehicles per year, according to the Handelsblatt report.

By 2011, VW expects to more than double that figure to produce 110,000 cars each year.

VW also plans to launch a low-cost car called Up! in both India and Russia. The low-cost car, which will share some of the components of VW's compact Polo, is designed to be an affordable car for developing countries.

Small, inexpensive cars such as the Tata Nano have proven extremely popular with Indians. VW's biggest competitors in India are Suzuki and Hyundai, which currently have the biggest chunk of the market.

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