<div>Volkswagen, Europe’s leading car manufacturer, had recently unveiled the Ameo, the first sub 4-metre sedan by the brand, at the Delhi Motor Show 2016. In a chat wth<em> Deccan Herald’s</em> Benny Antony, Volkswagen Passenger Cars India President Michael Mayer talks about expectations from the car, the preparations for switch to BS VI and more.<br /><br />What have been the investments made in Ameo, and what are the production levels that you are looking at ?<br /><br />We have done two things in 2014 — invested around €175 million and that was going into upgrading localisation and it was the cost for Ameo — which was around €80 million. There are no fixed production targets — the segment of the sub 4 metre sedan is around 3.5-4 million units, and I would be eyeing around 8-10% share there.<br /><br />Are you open to exporting the Ameo? If yes, would it be just to the SAARC region or something beyond that as well?<br /><br />Of course we are. We are currently teasing it out to other global markets where we have a similar demand for entry car sedans. Globally, we have similar markets which offer economy cars and those countries are South Africa or South American countries — Russia not a market for the Ameo as they need bigger cars there.<br /><br />Those markets have a global demand and we are currently changing our approach to these markets by grouping these markets together which we call the economy markets, where India will play a major role in terms of concept and production, and engineering of these cars.<br /><br />Would hybrid cars be a part of your portfolio going forward in India?<br /><br />It will depend largely on two things — Firstly, it is the government policies and secondly, it is the infrastructure development, but globally speaking yes, and that is why we have brought the Passat Plug-n hybrid. We will ride the car in India in a test fleet and see how it works and help this technology to come to birth in India. If it becomes a mass technology, it will depend on several other aspects. <br /><br />Many of the car companies have taken a price hike post Budget. Are you planning something of that sort? How soon can we hear about it from you?<br /><br />We cannot absorb the cess hikes in the Budget with the current prices. So we will pass it on. We need to carefully watch as to how people react on cars becoming more expensive. I would not expect many people to be able to absorb a 1-4% tax hike. I think our price hike is going to happen anytime soon. There is a bit of transition at the moment where people are still looking for cars produced in pre-tax hike phase but we are putting up the new prices soon, including the new infrastructure cess.<br /><br />Would that impact the kind of pricing that you had thought for the Ameo?<br /><br />We can’t say that as we will decide on the pricing right at the time of the launch. We will make the car competitively priced. Of course, its never going to be the cheapest car in the segment, it’s pretty clear that taxes play a minor role in it. It’s going to be a competitive environment that determines the price.<br /><br />What are your views on the government’s announcement of moving to BS VI from BS IV ?<br />It never is easy on both sides — the government as well as auto companies — but I am happy that the government, particularly the transport ministry is taking that leap now. It is very wise and forward looking to get India into an emission standards and technology that is capable to support the environmental needs that the country and the cites have. <br /><br />It requires the availability of fuels in principle and in particular diesel fuel. Low sulphur diesel fuel is the key thing otherwise you can’t clear BS VI. So that’s a challenge, but that needs to be taken up by the government and the oil industry. On our side, it is also not easy but we have just done it on the petrol side where the Beetle that we launched in December is an EU VI capable vehicle. So if we have the fuel there, it will produce EU VI emissions and the GTI that we are going to bring in the second half, is also an EU VI engine. On the diesel side, of course, it needs a little bit more preparation because you need to go into technology to get some catalysts in to make BS/EU VI emission norms. But we have it globally speaking. Its all available and we are set for the timeline currently. Its not an issue for us and we hope that the government is determined on getting it implemented finally.<br /><br />So you have already kind of started preparing for it in India ?<br /><br />Exactly. We are preparing for it and as I said, we can already accommodate it with some of our petrol engines immediately on the lower volume cars and for the rest we are firmly planning.<br /><br />Are you looking at manufacturing some of your global products in India ?<br /><br />This is a clear possibility and it is a reality already. The Vento is manufactured in two sites globally, one is India and the other is Russia. India is the major provider, supplier of Ventos to about 70 or 80 international markets like Mexico. Given the transformation of the Volkswagen brand currently, and its new focus on economy markets, India will play a key role in manufacturing these cars.<br /><br />How has the recent global diesel emission issue impacted your market share and do you see it coming back?<br /><br />When it happened, the confidence of people was shaken and we had to get our position clear in India. That was a shaky period. Since then, we are there on a clean sheet. We see the confidence of people in the brand coming back substantially. January was good for us, February we had some less production and so our wholesales were lower. The first ten days of March have been better compared with the last year, which we see as a strong sign. So from that perspective, I am quite happy that people are seeing the long-term commitment of the brand to India.<br /><br />What is your sales mix between petrol and diesel cars and would you now focus more on petrol cars?<br /><br />Our mix globally over all car lines is around 50:50 at the end. It might be a bit stronger on the diesel than some of the other generalists manufacturers, because we have strong diesel engines and very drivable products there. In smaller cars like the Polo, the mix is lower, the petrol mix is around 65%. Generally, I would always see diesel playing a role in Indian transport and also personal mobility but to the sheer distances and also the element of consumption and Co2 emissions.<br /><br />The small car is a segment which you are not there. Any particular reason why you are not there as it is a huge volume segment in India?<br /><br />Only if we have a competitive product, you should go into that segment and there are various examples where it did not work. If we would like to have a choice on where we would like to go first, then it is the segments that are growing above the entry car. We have not yet found the right formula to bring a cheap, good value product. That is why our topmost priority is developing the mid-size segment, where we are currently and then we will see. India offers good opportunities in suppliers, engineering base. So we certainly have not totally closed the chapter but it’s not on the priority list for the time being. We are not ruling out the entry car segment.<br /><br /></div>
<div>Volkswagen, Europe’s leading car manufacturer, had recently unveiled the Ameo, the first sub 4-metre sedan by the brand, at the Delhi Motor Show 2016. In a chat wth<em> Deccan Herald’s</em> Benny Antony, Volkswagen Passenger Cars India President Michael Mayer talks about expectations from the car, the preparations for switch to BS VI and more.<br /><br />What have been the investments made in Ameo, and what are the production levels that you are looking at ?<br /><br />We have done two things in 2014 — invested around €175 million and that was going into upgrading localisation and it was the cost for Ameo — which was around €80 million. There are no fixed production targets — the segment of the sub 4 metre sedan is around 3.5-4 million units, and I would be eyeing around 8-10% share there.<br /><br />Are you open to exporting the Ameo? If yes, would it be just to the SAARC region or something beyond that as well?<br /><br />Of course we are. We are currently teasing it out to other global markets where we have a similar demand for entry car sedans. Globally, we have similar markets which offer economy cars and those countries are South Africa or South American countries — Russia not a market for the Ameo as they need bigger cars there.<br /><br />Those markets have a global demand and we are currently changing our approach to these markets by grouping these markets together which we call the economy markets, where India will play a major role in terms of concept and production, and engineering of these cars.<br /><br />Would hybrid cars be a part of your portfolio going forward in India?<br /><br />It will depend largely on two things — Firstly, it is the government policies and secondly, it is the infrastructure development, but globally speaking yes, and that is why we have brought the Passat Plug-n hybrid. We will ride the car in India in a test fleet and see how it works and help this technology to come to birth in India. If it becomes a mass technology, it will depend on several other aspects. <br /><br />Many of the car companies have taken a price hike post Budget. Are you planning something of that sort? How soon can we hear about it from you?<br /><br />We cannot absorb the cess hikes in the Budget with the current prices. So we will pass it on. We need to carefully watch as to how people react on cars becoming more expensive. I would not expect many people to be able to absorb a 1-4% tax hike. I think our price hike is going to happen anytime soon. There is a bit of transition at the moment where people are still looking for cars produced in pre-tax hike phase but we are putting up the new prices soon, including the new infrastructure cess.<br /><br />Would that impact the kind of pricing that you had thought for the Ameo?<br /><br />We can’t say that as we will decide on the pricing right at the time of the launch. We will make the car competitively priced. Of course, its never going to be the cheapest car in the segment, it’s pretty clear that taxes play a minor role in it. It’s going to be a competitive environment that determines the price.<br /><br />What are your views on the government’s announcement of moving to BS VI from BS IV ?<br />It never is easy on both sides — the government as well as auto companies — but I am happy that the government, particularly the transport ministry is taking that leap now. It is very wise and forward looking to get India into an emission standards and technology that is capable to support the environmental needs that the country and the cites have. <br /><br />It requires the availability of fuels in principle and in particular diesel fuel. Low sulphur diesel fuel is the key thing otherwise you can’t clear BS VI. So that’s a challenge, but that needs to be taken up by the government and the oil industry. On our side, it is also not easy but we have just done it on the petrol side where the Beetle that we launched in December is an EU VI capable vehicle. So if we have the fuel there, it will produce EU VI emissions and the GTI that we are going to bring in the second half, is also an EU VI engine. On the diesel side, of course, it needs a little bit more preparation because you need to go into technology to get some catalysts in to make BS/EU VI emission norms. But we have it globally speaking. Its all available and we are set for the timeline currently. Its not an issue for us and we hope that the government is determined on getting it implemented finally.<br /><br />So you have already kind of started preparing for it in India ?<br /><br />Exactly. We are preparing for it and as I said, we can already accommodate it with some of our petrol engines immediately on the lower volume cars and for the rest we are firmly planning.<br /><br />Are you looking at manufacturing some of your global products in India ?<br /><br />This is a clear possibility and it is a reality already. The Vento is manufactured in two sites globally, one is India and the other is Russia. India is the major provider, supplier of Ventos to about 70 or 80 international markets like Mexico. Given the transformation of the Volkswagen brand currently, and its new focus on economy markets, India will play a key role in manufacturing these cars.<br /><br />How has the recent global diesel emission issue impacted your market share and do you see it coming back?<br /><br />When it happened, the confidence of people was shaken and we had to get our position clear in India. That was a shaky period. Since then, we are there on a clean sheet. We see the confidence of people in the brand coming back substantially. January was good for us, February we had some less production and so our wholesales were lower. The first ten days of March have been better compared with the last year, which we see as a strong sign. So from that perspective, I am quite happy that people are seeing the long-term commitment of the brand to India.<br /><br />What is your sales mix between petrol and diesel cars and would you now focus more on petrol cars?<br /><br />Our mix globally over all car lines is around 50:50 at the end. It might be a bit stronger on the diesel than some of the other generalists manufacturers, because we have strong diesel engines and very drivable products there. In smaller cars like the Polo, the mix is lower, the petrol mix is around 65%. Generally, I would always see diesel playing a role in Indian transport and also personal mobility but to the sheer distances and also the element of consumption and Co2 emissions.<br /><br />The small car is a segment which you are not there. Any particular reason why you are not there as it is a huge volume segment in India?<br /><br />Only if we have a competitive product, you should go into that segment and there are various examples where it did not work. If we would like to have a choice on where we would like to go first, then it is the segments that are growing above the entry car. We have not yet found the right formula to bring a cheap, good value product. That is why our topmost priority is developing the mid-size segment, where we are currently and then we will see. India offers good opportunities in suppliers, engineering base. So we certainly have not totally closed the chapter but it’s not on the priority list for the time being. We are not ruling out the entry car segment.<br /><br /></div>
