'Mid-size Hatch To Remain Key'

How is Volkswagen coping with a competitive market like India's?
We have successfully localised. We have introduced products that the market has responded well to. Our brand has seen rapid growth and, now, we are in a very good position. It is not very easy when you are young in the market. A good dealer network is very important in our business. Volkswagen has very quickly built a dealer network of 125 points of sale in India. Every year we need a product event for brand recognition. Also, the dealer network needs to be maintained to sustain communication with customers. Thirdly, we have to build a sales team that is the best in the automotive industry.

Has Volkswagen identified the segments it needs to focus on?
The mid-size hatchback will remain a key segment for Indian consumers. So, we are definitely looking at how we are positioned there and what the future of the Polo will be. We think this is going to be the volume segment. Polo is in a key segment ¡X one people will move to before moving on to a sedan. As for the Vento, we have seen stagnation in that segment in the past. But I think it will remain relevant as we recently saw a competitor successfully launch a new car that is now dominating the segment. We think there are enough Indian customers who are looking at this segment. The question is whether more Indian customers will buy bigger cars at some point.

Does Volkswagen still have plans to launch a car smaller than the Polo?
Around 50 per cent of the Indian market is dominated by small hatchbacks. We have a product in this segment in Europe called the Up. This segment is, however, dominated by inexpensive cars that mostly use old technology. We do not want to bring a two- or three-generation-old car to India.

What are your plans vis-a-vis compact SUVs?
The only fundamental SUV segment is the compact SUV segment where players like Ford EcoSport and Renault Duster are present. This is a growing segment with increasing demand from customers who want to express themselves with a new body style. Customers are not bothered about the off-road capabilities of these cars. This is a growing segment, and we are looking at this category. Globally, too, this segment is growing. All the available products are first-time offerings. There are no compact SUVs that are 10 years old. We are now looking at having a product proposition in this segment for various regions. For us as manufacturers, we want to develop a product portfolio for India that also suits the demands of our export markets.

(This story was published in BW | Businessworld Issue Dated 22-09-2014)