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VW says on track to sell over 100,000 cars By 2024 as it bets big on SUVs

Supply chain sees minor disruptions, launches on track

Pavan Lall 

Tiguan Allspace
Steffen Knapp, Director, Volkswagens Passenger Cars India launch the new Tiguan Allspace in Mumbai | Photo: Kamlesh Pednekar

The Tiguan Allspace, a seven-seater SUV that is the biggest new car in Volkswagen's line up for the present year, was launched Friday. The vehicle is part of the German company’s strategy in which SUVs form the core of the company's product line-up said Steffen Knapp, director for Passenger Cars.

The launch happens barely two weeks before the introduction of the company's second SUV for the year which will be the 5-seater SUV the T-Roc and will hit the markets on the 18th of March.

While Knappe says that the Coronavirus disruption to economies which originated in China won't upset the company's middle-term stated goal of crossing 100,000 unit sales in the next four years, there have been minor hiccups for the roll-out of some models. For example, the BS VI versions of the Polo and Vento TSI (petrol) engines are currently only available in manual transmissions. The automatics are delayed by around two months, VW officials added.

Exports have also been under pressure. Mexico, which is a big market for VW India, is a little shaky because of exchange rates and other economic fluctuations and is thus showing some slowing, Knappe said. "The supply chain has been managed well with regards to being impacted by the Coronavirus epidemic."Clearly, VW 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, localization, 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 a almost 4 per cent drop in sales for the month of February compared to 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 34 per cent.

So, Is the market showing any silver lining? Knappe says that the original assessment was they would see an uptick fro sales for the industry which has been under pressure for over a year, by July this year. "The problem now is you cant read the market because with the outbreak of the Corona Virus. I have an issue in reading the first quarter and as of now we are at -5 per cent in sales which is nt what I anticipated," Knappe said. Even as that is the case, Knappe says that they are on track to sell 120,000 cars over e five year period 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 the company's volume generator will be launched next year is going to have 95 per cent localisation versus 80 per cent presently and should drive the market forward."

Ghosh adds that currently, all carmakers, who have any direct or indirect sourcing from Hubei province, face a high risk of production disruption as shutdowns are getting extended, uncertainty and high costs around shipping and logistics.

First Published: Fri, March 06 2020. 18:05 IST
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