Despite investing USD 2 billion in the Indian market, Volkswagen has failed to crack the Indian market – They are now looking to sell stake to a local partner
Volkswagen is on the verge of selling its stake in Indian operations, Skoda Auto Volkswagen India PVT LTD (SAVWIPL). The company has been on the lookout for a potential partners as confirmed by Claus Zellmer, CEO of Skoda Auto, which currently overlooks VW’s Indian operations. Here’s a closer look.
Volkswagen to sell stake to a local partner
As per a recent report, Skoda Auto CEO, Claus Zellmer revealed some of the future roadmaps for Skoda Auto Volkswagen India (SAVWIPL), a subsidiary of Volkswagen Group. There used to be rumours and speculations about VW’s dilution in the Indian operations with an active search for a potential partner.
Now, this has been revealed by a company official. Zellmer has cracked the egg and revealed the company is not on a right track, despite being operational here for around two decades and investing USD 2 billion. The company is trying a new track for tricky Indian market and intends to mutually learn and benefit with a new potential partner.
As revealed by Zellmer, VW Group is looking at a true partnership with skin in the game. Like a marriage without a contract, he said. With this potential partnership, SAVWIPL is looking forward to achieve engineering competence, sales competence and procurement competence with its upcoming partner.
He further elaborated that SAVWIPL is not a weak partner who is looking forward to be led in the industry. The company is looking at an eye-level (probably equal stake) partnership and to benefit from each other to be a lot more successful with this partnership than they were in the past. A winning combination, in Zellmer’s words.
Why VW Group failed to crack the Indian market?
With a relatively high price tag, Volkswagen and Skoda cars appeal less to the mass market. India is a price-sensitive market after all. When almost every single rival is priced competitively, VW Group cars in the mainstream market emerge as anomalies and only really appeal to enthusiasts, hence generating less sales.
Zellmer said the company indulged in building vehicles that are over-engineered, meeting expectations of global standards. However, over-engineering comes at a cost and fails to be price-wise competitive, something that rivals are. In this regard, the company aims to learn and find the sweet spot (of cost cutting).
VW Group’s official stand on incentives on Hybrid vehicles continue as it was. Company strongly advocates higher incentives for hybrid vehicles in India as giving options between ICE and EVs is not the right way. Though not confirmed, Mahindra is the most probable partner for VW Group owing to their past dealings. SAVWIPL has refrained from revealing a timeline for closing the talks with their potential partner.
