German automaker Volkswagen (or VW) has opened a new 580 million euro production plant in western India. The company aims to expand its share in India's growing car market from 2 percent to as much as 10 percent.
India meets Germany at the new VW factory near Pune, Maharashtra
The new Volkswagen plant is near the city of Pune, which is only a short drive from Mumbai. By the end of 2010 it is expected to employ around 2,500 workers. The factory will have the capacity to manufacture some 110,000 vehicles a year, considerably more than the company's first plant in Aurangabad, which was opened in 2001. Some 25,000 cars are assembled each year in Aurangabad, also located in India’s economic powerhouse, the western state of Maharashtra.
Jörg Müller, head of Volkswagen India, is very optimistic about the market potential in India: "Human beings have a desire for mobility. And we see that in India as well. Right now, we have seven cars per thousand inhabitants in India – in Germany that figure stands at 580 per 1000. That alone shows the huge potential."
Like its rivals, Europe's biggest carmaker has been hit by a sharp downturn in global automobile markets, but company officials say VW has performed better than competitors because of its increasing presence in emerging markets. VW board member Jochem Heizmann stresses the importance of India for the company: "Of course this is a long-term, strategic investment here in India. As we see it today, the Indian market remains one of the fastest developing markets in the world."
Differences between Indian and German versions
Not a single VW brand car will roll off the production lines in Pune to start with. The company is testing the waters with the Skoda Fabia, aimed at the low-budget market, and then plans to add an Indian version of the VW Polo hatchback next year. Heizmann explains the difference to the German version:
"There are differences regarding the ground clearance, for example, due to the road conditions. The chassis, too, will be different because of that. The horn needs to satisfy certain demands in India. And the windscreen wipers must be able to cope with monsoon rains!"
The new plant is the biggest single investment by a German company in India. Volkswagen board member Heizmann is not afraid of competition from India’s Tata Nano, the world’s cheapest car which was launched in Mumbai just a few days ago: "We are not going for that segment at all, given our higher quality and safety standards."
The new Volkswagen plant was ready nine months before schedule; but then, one must say that it comes only after a delay of several years: VW had planned to build a major factory in India much earlier, but its project in Andhra Pradesh state got scrapped after a major corruption scandal.