There was a recent announcement by Volkswagen regarding the Indian launch of Phaeton, one of its high-end luxury cars. Phaeton is named after the son of Phoebus who is the Greek sun god. The car was first unveiled in 2002 at the Geneva motor show and went on sale in 2003 but the sales were not up to mark. The competition was other high-end brands like BMW, Mercedes, Lexus and sibling Audi but Phaeton did not have the appeal of the rivals thus the sales were disappointing. Volkswagen is very keen on ensuring that the car works in India thus it has been completely re-designed to have features like a new dashboard, 18 way adjustable seats, 18 inch wheel, improved upholstery, daytime LED running lights and a new air conditioning system to work in Indian conditions.
Volkswagen announced earlier this month, the launch of a new sedan, the Vento by autumn. This will roll out of the Volkswagen at Chakan near Pune and has been designed as per the requirements of the Indian customer. Volkswagen is also working one small car for the Indian market. Currently the company sells 6 models in the country: Touareg, Phaeton, Passat, Jetta, Polo and the Beetle. The numbers will go up to 8 models. Volkswagen provides a wide spectrum of models with petrol as well as diesel variants. The Volkswagen Chakan plan that was setup at a budget of 3,200 crores makes 110,000 cars per annum and can double its production.
Volkswagen, Audi and Skoda have a less than 1% share of the 1.3 million units, Indian car market. Volkswagen is aiming to raise the share to 10% in next 5 years. India is an important market for the company in realizing its plan to be the world’s largest car maker by 2018. In 2009 the company held the third spot with a sale of 6.29 million cars; Toyota led with 7.23 million cars followed by GM with 6.50 million. Volkswagen has established itself as the leader in Europe, South America and China. In 2009, 1.4 million cars were sold by Volkswagen in China which is 18% of the Chinese market; this is more than the entire size of the Indian car market. The Indian car market will cross 3 million cars in 5 years and is one of the few markets that will see large sales volume in the coming years.
Experts believe that Volkswagen will use the experience and knowledge from China in the Indian market. This may lead to aggressive pricing and promotions. The Chinese market is different from India as the large cars dominate the
Chinese market where as small cars rule the Indian market. Volkswagen is strong in mass market and rivals admit that it is no more a fringe player in India. Many rivals insist that cornering 10% of the market in 5 years will be tough. They point out that a similar target was set out by GM for the Indian market by end of this year but its looks farfetched now.
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