Volkswagen is on track to sell 120,000 cars by 2024: Steffen Knapp

The launch of seven-seater SUV Tiguan Allspace, the biggest new car for Volkswagen this year, is part of the German company’s strategy in which SUVs form the core of its product line-up, according to Steffen Knapp, director for Volkswagen Passenger Cars.

Tiguan Allspace was launched in Mumbai on Friday, barely two weeks before the introduction of the company’s second SUV for the year. Five-seater T-Roc will hit the markets on March 18.

Knappe says the coronavirus disruption to economies, which originated in China, won’t upset their middle-term stated goal of crossing 100,000 unit sales in the next four years. There have, however, been minor hiccups for the roll-out of some models.

For example, the BS-VI versions of Polo and Vento TSI (petrol) engines are currently available only in manual transmissions. The automatics are delayed by around two months, Volkswagen officials have said.

Exports have also been under pressure. Mexico, which is a big market for Volkswagen India, is a little shaky because of exchange rates and other economic fluctuations, and is thus showing some slowing, Knappe says.

“The supply chain has been managed well with regards to being impacted by the coronavirus ou break. Clearly, Volkswagen is aiming to capture as much ‘mind-space’ as possible among the Indian customers as it builds up momentum for its Vision 2.0, which will be an all-in aggressive play from the VW Group — in terms of pricing, localisation, depth, and width of products,” says Suraj Ghosh, principal analyst (powertrain forecast) at IHS Markit. “For now, they’re basically showcasing their diverse portfolio, be it at body-type level or technology level.”

Across the car market, sales have been hurting. Market leader Maruti Suzuki reported an almost 4 per cent drop in sales for February, against the same time last year. Mahindra & Mahindra saw sales skid by over 40 per cent for the same time and for Tata Motors, it was a decline of 34 per cent.

So, is the market showing  any silver lining? Knappe says the original assessment was they would see an uptick from sales for the industry, which has been under pressure for over a year now, by July this year.

“The problem now is you can’t read the market with the outbreak of the coronavirus. I have an issue in reading the first quarter. As of now, we are at -5 per cent in sales, which is not what I anticipated,” Knappe says.

Even if that is the case, Knappe says the company is on track to sell 120,000 cars over the next five years as announced last year. “That is the number we are targeting and at which point we will be sustainable in India and all our plans for that are on track.”

The company’s smallest SUV, the VW Taigun, which is to be its volume generator, will be launched next year. It is going to have 95 per cent localisation versus 80 per cent presently and should drive the market forward.”

According to Ghosh of IHS Markit, all carmakers, who have any direct or indirect sourcing from Hubei province, currently face a high risk of production disruption because of extended shutdowns, uncertainty, and high costs around shipping and logistics.