Volkswagen group weighs global EVs, local assembly for India market

Automaker evaluates global portfolio as EV penetration is projected to reach 17-18 per cent by 2030

Škoda Auto Volkswagen India is evaluating multiple routes to enter India’s growing electric vehicle (EV) market, including importing global models as fully built units, assembling vehicles locally and developing highly localised products.

 

“We have to identify the right product which we can localise so that it is also in the segment which is relevant for the Indian market,” Piyush Arora, managing director (MD) and chief executive officer (CEO), Škoda Auto Volkswagen India, told Business Standard.

 

Arora said global models could be introduced relatively quickly through the fully built-up (FBU) route, while assembling vehicles locally using imported parts and components offered another option. The company also remains committed to developing a locally produced EV, he added.

 

“We are actively evaluating” the global portfolio for India, Arora said. The company would assess the right product, its localisation potential and the segment in which it could compete.

 

The company has not committed to a timeline for its next EV launch in India. Arora said developing a new vehicle involved a lengthy product cycle, although global models could be brought into the country more quickly if supported by the business case.

 

The company had earlier considered developing an entry-level electric sport utility vehicle (SUV) for India. Arora said in 2024 that the group was assessing which platform could be adapted for a compact electric SUV.

 

Its EV plans come as alternative powertrains account for a growing share of India’s passenger vehicle market. Arora expects EV penetration, which he estimates at 7-8 per cent currently, to reach 17-18 per cent by the end of the decade.

 

This shift is also prompting the company to reassess its addressable market. Arora said its volumes were growing, but market share had been affected. This is because a significant part of the recent growth in India’s passenger vehicle market had come from alternative powertrains, where the company currently has limited participation.

 

Volkswagen Group’s retail sales rose 29.8 per cent year-on-year (Y-o-Y) to 110,000 units in FY26 from 84,810 units in FY25, according to Federation of Automobile Dealers Associations (Fada) data. Its market share increased to 2.34 per cent from 2.04 per cent.

 

Škoda Auto Volkswagen India accounted for the bulk of these sales, with volumes rising to 109,000 units from 84,267 units a year earlier.

 

The group’s momentum, however, moderated in July. Retail sales declined 7.6 per cent to 8,221 units from 8,902 units in the same month of last year. Its monthly market share fell to 1.9 per cent from 2.55 per cent.

 

Arora expects India’s passenger vehicle market to maintain a strong momentum in FY27, with growth likely to be in the high-single digits and potentially reaching double digits. The market could approach 5 million vehicles during the year, he said.

 

However, geopolitical tensions, higher commodity prices and supply-chain disruptions could weigh on demand, particularly if higher input costs are passed on to consumers.

 

India’s growing importance for Volkswagen is also reflected in its manufacturing and export strategy.

 

The company has achieved more than 90 per cent localisation for products developed under its India 2.0 programme. It exports around 30 per cent of its annual production to more than 40 countries.

 

Arora said the company would continue developing products in India for the domestic market while assessing their export potential.

 

Major export markets include Mexico and South Africa, while the company is also evaluating opportunities in West Asia and other regions.

 

The group has combined manufacturing capacity of around 300,000 vehicles across its two Indian locations.

 

Product-driven investments in localisation, suppliers and engineering are being evaluated, Arora said, while capacity expansion would be considered as the portfolio and volumes grow.

 

The company is also evaluating partnerships as part of its broader India strategy.

 

Responding to reports of a possible joint venture, Arora did not confirm any specific partnership. Instead, he said the group would consider all possible opportunities in India.

 

“Partnerships globally in the automotive space are a way to leverage scale, local know-how and create a much wider perspective,” he said.

 

The immediate priority, however, remains expanding product portfolio and participating in faster-growing segments, including electric mobility.

 

REV UP PLAN

 

·  Volkswagen evaluating three EV routes for India: FBU imports, local assembly and localised models

 

·  Global EVs could be introduced faster, while development of an India-specific model would require a longer product cycle

 

·  The company is assessing bringing in its global portfolio but has not finalised a model or a launch timeline

 

·  Limited participation in alternative powertrains has affected the group’s share in India’s expanding passenger vehicle market

 

·  FY26 retail sales rose 29.8 per cent to 110,000 units, lifting market share to 2.34 per cent

 

·  July sales, however, fell 7.6 per cent, while monthly market share declined to 1.9 per cent