Volkswagen, eine Pflanze in Pune einzurichten.-"Das Auto"

One of the things that I am looking forward to in the year '09 (beside the economy to stabilize) is the completion of Volkswagen's manufacturing plant in Chakan, Pune, Maharashtra. Built on a 230 hectare site, this plant will consist of a press shop, body shop, paint shop and assembly lines. Volkswagen plans to produce 110,000 vehicles per year out of this plant by 2011.

Volkswagen, Europe’s biggest vehicle manufacturer and my favourite, had earlier announced that it is going to raise its investment in its Chakan facility (Pune) from 410 million euros (Rs 2,400 crore) to 580 million euros (Rs 3,500 crore) to speed up the completion of the plant and roll out the first 15,000 units of Skoda Fabia one year earlier than originally planned.

Calling this move ‘the biggest investment by a German company’ Jorg Mueller, president and MD, Volkswagen Group Sales India Private Limited said that the company will start production in the first half of 2009.

To ensure quicker delivery of different auto parts to the plant, Volkswagen has decided to invite their auto component manufacturers to set up units in its land around the Chakan facility. This will help the company to save transportation costs and VW will be able to source the same quality of components procured and used in its vehicles sold in overseas markets.

The German car maker has finalized some suppliers like Minda Industries Ltd which has bagged orders worth 50 crore to supply lamps for the small car in India and Russia. Although Mr. Ulriche Proske, Volkswagen India Executive Director Finance, admitted that the company was considering Indian suppliers, he declined to provide any further details regarding the sourcing of parts or the potential markets for its compact car.

Based on the company’s plans revealed during the Auto Expo in January this year, Volkswagen’s India- based small car would be similar to its small car Polo and it is expected to hit the Indian roads by 2009-10.

In his recent visit to the plant, Lower Saxony's prime minister Christian Wulff said “Lower Saxony is proud of Volkswagen and the contribution the company is making all over the world. Our best wishes go to Volkswagen employees and management for swift growth in India, too.”

Volkswagen also plans to increase its Indian market share to 10% from its current less than 1% market share in the next five years.

While the allowance from the government for 100% FDI in automobile makes India a lucrative investment for building production plants but the competition for market share is getting tougher with more and more entrants.