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How Volkswagen and Skoda will survive in INDIA?

Updated: May 31, 2021


Volkswagen AG INDIA 2.0 or sarvottam 2.0

The ‘German Automaker’ needs no introduction to mark their presence in the world of Speed, Need, Value, Quality, safety, and what not!


Volkswagen group is one of the oldest, finest, and largest Automakers in the world, which owns many big brand names under the hood. Which is currently having its presence in 153 countries and 662’575 employees worldwide.


Recently VW and Skoda has Introduced their upcoming SUV's in INDIA. Volkswagen Taigun & Skoda Kushaq

Will share all the details of both the vehicle at the end. First, let's begin with the topic.

But!

1) What went wrong with the makers in the Indian market?

2) Why the presence of the brand is still under a niche market tag?

3) Why is the value delivering market concept is not more effective in the Indian auto market?

4) Why the product is still struggling in the number of sales years on year in India?

5) Are they going back just like the other Foreign brand packed up from India?

6) Will VW Taigun and Škoda Kushaq will be a boon for the brand?

7) What are the lined-up products for the Indian market?

Well Well Well!
We are here to bring the correct info about all the above doubts. Lets begin!


We are going to answer all the doubts coming to your mind about Volkswagen's stability in the Indian market and Its new INDIA 2.0 strategy. Stay with us until the end of this blog to know more.

Volkswagen has decided in back 2018 to increase the investment in the Indian market. They plan to more than triple their market share in the Indian automobile industry. With a total investment of Rs 8000Cr in India Volkswagen will boom the industry and will bring more empowerment and employment.

Volkswagen group is always a reputable brand of its product and customer satisfaction part. They are finding their spot in the market very hard from the last 18 years of their journey in India after introducing their brand Škoda in late 2001. After which they have launched Volkswagen and Audi in 2007, followed by Porsche and Lamborghini in 2012.

All the brands are running as independent entities. They are manufacturing half of the product line in Chakan and Aurangabad plant in India.

If we talk about the specialty of brands in comparison to the other automakers, The Group makes up “twelve” brands from seven European countries: Volkswagen, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania, and MAN.

Volkswagen comes up with the bigger picture for the Indian consumers: we are always delighted to welcome the new tech and designs.


As we all know, India is the fastest growing economy and market for all the industries and marketplace to do business: due to the large no of population, and potential buyers. Although, India is becoming the first choice for the production house set up for big multinational brands. Brands like Apple, Xiaomi, Tesla, and many more have already started or are about to start production here.

So coming to the point,

1) What went wrong with the makers in the Indian market?

Volkswagen is a brand that focuses more on safety and quality, followed by the feature and futuristic design with durability.

But in the meantime, Volkswagen didn't provide an affordable price range, changing the trend, and the SUV demand in the market, lack of versatile portfolio and didn't keep the Indian Audience hooked with new offerings along with the updated generation of its vehicles present in the product line.

For Example:- The European market is getting the next-gen polo in 2021 after the 6th gen debuted in 2017. But still, in the Indian market, the 5th gen polo from 2010 is running with the changes in the feature, and slight changes in the headlights only, which is very disappointing for the audience.

When a country is having the world's second-largest population and is aiming towards the biggest economy. Volkswagen didn't understand the demand according to the time and needs.

Whereas brands like Maruti Suzuki holding the market share of 50%, Hyundai holding a market share of 17.4%, Tata growing toward a larger number with 7%, Kia which entered the market in mid-2019 has captured the unexpected market share of 5.8% were followed by the other brands Volkswagen and Škoda combined having a market share of 1.1% only.


The reason for such Niche market is a Higher price, No facelifts from long periods, Less feature, weak sales and marketing, and the major part is Higher service and maintenance cost due to which the Indian consumers prefer to go with the brand like Maruti and Hyundai where availability of parts are at ease and cheaper regarding service too.

They have not increased the numbers of dealers and service centers in India for a long.

Because they are running multiple brands in India and are looking forward to the higher-margin and profits, Volkswagen AG has less focused on Volkswagen and Skoda.


2) Why the presence of the brand is still under a niche market tag?

Here, the brand should focus more on volumes: because the way an automobile is growing and the safety and security of vehicles are increasing day by day, Volkswagen and Skoda are having the potential and capabilities in the vehicle, which can target a fresh audience and car enthusiast. Who is more focused and looking to get a fresh car.

Because of low sales and less profitability, Volkswagen and Skoda are now, targeting the audience of Maruti and Hyundai, they are falling into the niche market. These companies are known as high-maintenance brands. Due to CKD or imported units, these cars are having higher prices, and consumers in India prefer to go with the brand, which is cheaper cost, low maintenance, or high resale value. And just because of Import and CKD, pricing is the major issue because the volume is lesser compared to the competition.

For Example:- T-Roc, Tiguan All space, and Tiguan: are previously called imported units But due to imports, prices are very high. If we compare the segment. The vehicle currently available in the market is at a lower price range, like Harrier, MG, Hector, Safari, Alcazar (Upcoming), Jeep, Compass, and many more. Like the product feature, Engine, size, and Segment, these are having a price starting from a lower variant to higher and offering from 12-lac-to 32-lac.

But the placement of variants and cars by Volkswagen and Skoda are from starting range of 22lac to 36lac.

So Because of a few variants, price tags, and weak marketing and network, they fall under niche market.


3) Why is the value delivering market concept is not more effective in the Indian auto market?

Indians are having a different mindset while purchasing a vehicle or a liability. In terms of cost-effectiveness, they always compare a lot and always go with a high-end feature but low safety measures. Just like Maruti, Which is still only providing the 2 airbags and other mandatory features normed by the govt.

Whereas brands like Mahindra, Tata, Volkswagen, Skoda are providing the segment-best 6, 7, or 9 Airbags. Along with lots of more safety features. So promotion of the brand can be called an issue concerning consumer and customer awareness and push toward the major safety features. We know that in terms of Road accidents no India holds 60th rank. And still, people are not preferring their safety and the safety of the family. Which is a matter of concern.

4) Why the product is still struggling in the number of sales years on year in India?

Numbers are always needed to be delivered whether it is business or jobs. (Jokes apart 😊). The sales figure is the most potential parameter to identify the profit and growth of any company. In the same manner, VW and Skoda are struggling due to no recent gen vehicle launch, Decreasing numbers of Dealers in the country, and higher price range in competition. The heads of the company somehow not interested to run the operation further in India, But they have got some major reforms in the Govt policies and increasing demand for SUVs are the reason due to which brand again decided to move aggressively because they are having a big potential in SUVs segment in the global market. But only moving aggressively will not going to move the numbers. So the brand has decided to bring CKD and complete manufacturing in-country itself. Now with back to back launch schedule both the brands are targeting to acquire at least 5% to 6% market share in the Indian automobile sector. Will discuss further the upcoming SUVs and the Rise of the brands again in the new blog. Lets move further.



5) Are they going back just like the other Foreign brand packed up from India?

As we know Fiat, Chevrolet (General Motors), Harley Davidson, and. UM motorcycle is one of the automobile giants who had left the Indian market recently. And that is because their strategy was not working to convince the audience and consumer to outperform the belief, trust, Product, Price, Promotion, and Process.

Due to which the higher cost of operation becomes a problem for the brands. India market is a very volatile market where understanding the actual Need, Demand, and supply along with the major service facility is tough. I don’t know how many of you are aware of the story of Honda and Suzuki. But let me tell you that in the late Indian automobile industry transformation period Honda and Suzuki tried so hard to convince the Indian consumer and to get into the Indian market without the support of any Indian manufacturer and market leaders. But they “failed” and moved out of the market. And after putting more effort into R&D to understand the Indian market they come with an Indian giant. Honda comes up with a cycle manufacturer Hero And Suzuki with Maruti. So, now these brands are looking forward to achieving the milestone and which can be done by India Sarvottam 2.0. Now Volkswagen and Skoda are not looking to pack their bags at any cost which is a piece of big good news for us because these are strongly built and best in class vehicle manufacturers.

6) Will VW Taigun and Škoda Kushaq will be a boon for the brand?

Ok, Let me ask you this, what do you think?? Update your comments in the comment section and we will bring a brief discussion about the same on this website and our YouTube channel https://www.youtube.com/channel/UCYJXzmGDGae-eNia1MqkqVQ stay tuned.
7) What are the lined-up products for the Indian market?

Volkswagen and Skoda both have lined up many products on the list for 21-22. As below:-


we’re not getting the much-anticipated, or much promoted, Polo gen 5th, but the 6th gen is about to arrive in 22-23. Other than that all-new Taigun midsize SUV and the standard Tiguan facelift, T-ROC, AND THE MOST AWAITED “TAIGUN”. Skoda line up is THE MOST AWAITED ‘’KUSHAQ’’, New Rapid, New Octavia, New superb, and Kodiaq facelift.

Conclusion:- These brands have gone through many ups and downs in the market, But somehow they have impressed potential buyers in terms of Quality assurance and safety. Which currently helping the TATA and Mahindra to follow the footsteps of German engineering. We predict that VW and Skoda both will outperform with their upcoming strategy and with 95% of localization in the manufacturing of Taigun and Kushaq with similar part sharing strategy both will retain their position with a big bounce in terms of customer satisfaction and acquisition. Content Writer:- Abhishek swami.

Stay Tuned for the Remaining Answers…… If you like the blog please share. And subscribe and follow our pages, link given below.

Copy right Reserved! Volkaswagen India:- https://www.volkswagen.co.in/en.html

If you like the blog please share. And subscribe and follow our pages, link given below. So that we can bring the remaining part soon.

Copy right Reserved! Volkswagen India:- https://www.volkswagen.co.in/en.html




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