Volkswagen to produce smaller engines and compact cars to steer growth

John Chacko, Volkswagen (VW) Group’s chief representative for India, said that the company plans to reduce the 1.6-liter diesel engines used in Polo and Vento, to 1.5 liters. The move is expected to boost sales and at the same time meet the Indian government’s lower excise tax bracket for cars below four meters in length. It will also expand the German brand’s mass car portfolio, and result in lower prices of existing models such as the Polo hatch and Vento entry sedan.
VW’s sales in India reached a high 52% growth in 2011-12, to 78,281 units. But sales plummeted this year between April and August, by19% to 25,306 units. Volkswagen’s strategy mimics those of market leaders Maruti Suzuki and Tata Motors. Maruti’s new Dzire compact sedan and Tata’s Indigo CS both fall below the lower tax bracket. Another carmaker, Mahindra, is also working on a sub-4 meter Verito. Other new compact SUVs being launched, such as the Ford Ecosport and Mahindra Quanto, will also fall under the lower excise bracket. (September 14, 2012)