Volkswagen has decided to sell its stake to a local partner for its Indian market ownership. The brand made multiple statements on this major decision including failing to crack the market despite investing a huge amount of money, calling their cars “over-engineered”, and not being on the right track in the Indian market. Klaus Zellmer, global CEO of Skoda Auto(the Man behind VW’s strategy and investments in India) stated these words.
What is the problem behind VW’s Failure in the Indian Market?
“The company is developing new cost-competitive cars to shore up its low market share against launching “over-engineered” European vehicles that have failed to find success,” said Zellmer. He pointed out the problem being “over-engineered” cars, that usually come with a high price tag. People in India look for vehicles with affordable price tags rather than highly engineered mechanisms.
He also said “On reasons for talks with potential local partners – where Mahindra & Mahindra is understood to be the front runner. We have been in India for over 20 years and have not proven to be on the right track. So, you try a new track.” He meticulously stated that having a partner who understands the dynamics of the Indian market will be beneficial for both ends. Later, Zellmer also points out that Volkswagen is looking for a true partnership, which means getting access to engineering competence, sales competence, and procurement competence.
He emphasized the statement that “European cars are often “over-engineered” which may not be required in India. Often we build cars according to our own expectations. And, over-engineering always comes with a price tag. This price tag is something that weakens our competitive position.”
Would having a partner work for Volkswagen? – Our Take
As Zellmer clearly stated the reason for their failure in India was being unable to track the market and what people desire from a car, having a local partner that understands the market can be beneficial for them. Furthermore, “over-engineered” vehicles with expensive price tags, are one of the major complications VW has faced in India.
According to us, Volkswagen should come up with affordable vehicles, without sacrificing on the performance side. Same as earlier when the brand announced affordable EVs in the European market as their sales went down there. Pricing is a major complication and one of the significant factors in a country like India. Having a local partner can assist VW in that as well.
Let’s see if this strategy would work for VW or not, till then stay tuned for more updates about this topic and other latest news in the automotive sector.
