VW to invest €1 B in India by 2021

VW to invest €1 B in India by 2021

The group will launch a new SUV, based on VW's flexible MQB platform by the second half of 2020. Reuters.

German auto major Volkswagen Group on Monday announced an investment of €1 billion (around Rs 7,900 crore) between 2019 and 2021, as part of its latest strategy to enhance presence in India, which will be led by group firm Skoda Auto.

As part of 'India 2.0' project, Skoda Auto is setting up an engineering design and development centre at Pune, besides enhancing capacities at the group's two plants at Aurangabad and Pune.

The group will launch a new SUV, based on VW's flexible MQB platform by the second half of 2020.

The group has set a target of capturing 5% of the Indian passenger vehicles market by 2025.

"We are now investing up to €1 billion by 2020-21. This is the biggest investment which we have done in one single market. This the first and most decisive step," Skoda Auto CEO Bernhard Maier said.

On the R&D centre, he said, "It will be ready by the end of the year. We plan to hire 200-250 engineers to develop cars in India."

The group is looking to create up to 5,000 direct and indirect jobs through setting up of the engineering centre and creation of additional capacities in the two plants.

"We want to exploit the maximum of our current capacities in Pune and Aurangabad," he said, adding that currently, the group is working on finalising the details.

Elaborating on the group's ambition in India, he said: "Our plan is to have a market share of 5% for VW and Skoda brands together in India by 2025."

The group has around 2% market share in the PV segment in India, which stood at over 3.2 million units in 2017-18. In order to achieve its targets, the group, which had earlier explored unsuccessfully a partnership with Tata Motors, is looking at launching two models each from Volkswagen and Skoda brands between 2021 and 2025.

Going forward in India, he said the group's future models will be based on the MQB AO platform, which will be highly localised in order to achieve cost competitiveness.

"We are not looking at cheap cars and not are only driven by volumes, we want to be on a sustainable growth path," Maier said, adding vehicles on the new platform would comply with upcoming emission and safety standards in India post-2020.

Since November 2001, Skoda has sold around 2.5 lakh units in India. It sells four models - sedans Superb, Octavia, and Rapid; and SUV Kodiaq. 

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