Volkswagen focussing on premium products in India following global strategy

With nearly 45 per cent of passenger vehicles sold in India coming from models priced above Rs 10 lakh so far this year, German carmaker Volkswagen is focussing on premium products in the country following its global strategy, according to a senior company official.

The company, which till about three to four years back was operating in a price bracket of Rs 6.5 lakh to Rs 7 lakh, has now moved up to an average price band of Rs 16 lakh offering feature-loaded products in order to meet the evolving customer demands.

"For the industry, in 2018 around 18 per cent of the cars sold in India were above Rs 10 lakh. Last year it was at around 40 per cent and this year in first quarter it has already moved to about 43 to 45 per cent," Volkswagen Passenger Cars India Brand Director Ashish Gupta said in an interaction.

He further said,"Customers are in a zone of no compromise. There is no compromise on features. There is no compromise on safety and regulation has also moved ahead."

According to Society of Indian Automobile Manufacturers (SIAM) data, domestic passenger wholesales were at 10,18,355 units in January-March 2023 as compared to 9,20,685 units in the same period a year ago.

On Volkswagen's (VW) strategy to meet the evolving customer requirements, Gupta said,"We have very clearly, as a brand, stated that we have moved up on the premiumisation stage. We will not be going back to sub-four metre of the Polo segment as such. We have moved the price points and the brand up."

Three to four years ago, he said,"We were operating in a price bracket of Rs 6.5 lakh to Rs 7 lakh. Now, we operate in a price band of an average Rs 16 lakh. So we have totally transformed."

He further said, "If we look at the brand globally, that's the sweet spot where the brand operates. We define ourselves as top of volume. We play at the top part of the volume segments. That's the positioning of the brand globally and our endeavour over the last three years has been to move to that positioning in India as well."

Last year was the transition phase and out of over 42,000 cars sold by VW brand in India, around 4,000 were Polos and Ventos with the resultant average price point being around Rs 14 lakh to Rs 14.5 lakh, Gupta said adding, the transformation is also based on VW's global strategy.

At present, VW's products are priced at around Rs 11 lakh to over Rs 34 lakh. Gupta said models in the Rs 15-20 lakh price bracket account for about 55 per cent of the company's sales at present.

In March quarter 2023, the company had recorded wholesales of 10,119 units. Apart from adding new features to the cars, Gupta said new regulations such as the BS VI phase II and the upcoming mandatory six airbags have also played a part in the increase in prices.

"So, we have no choice but to move ahead. New technology and the implementation of the new regulations will come with cost and price increase," he added.

When asked if the increase in costs would affect affordability thereby impacting sales at the lower end of the market, he said,"I'm sure there are brands who want to address that part of mobility as well. And, if there is an opportunity in the market, there will be more brands coming. That's how the market dynamics work, it's natural."