Reasons Behind The Growth Of Volkswagen In India

Posted by Arnavarora
April 12, 2018

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The German Automobile giant has made its mark in the Indian economy and has established a good hold on the Indian automobile market; both in terms of numbers and brand recognition. Speaking of numbers, it has posted six consecutive years of growth production and in 2017, its Pune facility crossed the milestone of 1.5 lakh units, where the production represented a growth of 3.5% over the previous year. Since its establishment, the German automobile giant has cumulatively manufactured 8.7 lakhs units.

However, it’s not only the production figure that has surged the growth. Along with the increase in production, the sales figure to had risen over the years, thanks to an aggressive strategy regarding the Volkswagen Price at Autoportal . The VW team earlier announced a sales figure of 3,715 cars for March 2018 which accounted for a 15% growth in sales over previous year month. Cumulative sales for the first quarter of CY 2018 was recorded at 10,350 units.

Below are few reasons that might provide a clear picture as to why the German Automaker, in spite of its shaky start went on to be the automobile giant that it is right now.

A mix of domestic demand and exports of Make in India cars

One of the main reason behind the huge production that has been laid out in recent years would be the increase in domestic demand. As the VW models became more affordable, the likeability of its varied models among the general Indian masses who wanted to own a car increased, which turned their choices to newer models of Volkswagen. Another important aspect of VW models being produced in such huge numbers would be attributed to the demand for Make in India cars, which were exported to the neighbouring countries.

Shift to use of locally made parts produced in India

During the initial stages of the German automobile company in India, it did not have the luxury to use home-based parts in their production process. But a few years later in July 2014, the German automobile company shifted to using the locally made parts which invariably had a positive impact in lowering the Volkswagen price in India. The locally made parts provided an efficient way of cutting down the cost which had a long-term impact on sales. As during the early five years, since it entered India, it could get a hold on just 2.1 percent of the total market share owing to expensive price.

Huge investments in Indian automobile industry

During the later stages of 2017, the German automobile company made an announcement to invest 7,600 crores to introduce a pool of new models and improving the under performing models of the company. The group decided to set up a new manufacturing plant in Pune at the Chakan facility to expand its production numbers and results can be easily observed with the production figures at the early stages of 2018.

A stable central government and customer sentiment

For growth of any automobile company or for that case any company with foreign roots, compliance of government of policy becomes imperative. In the interim budget of 2014-2015, the government reduced the excise duty on small cars to 8% from 12% along with the incentivising the whole purchasing process. On the other hand excise duties on large cars were reduced to 24% from 27%.

Also, with the Indian economy progressing, the disposable income with the citizens  of India is also increasing and hence, vehicle’s demand continue to rise.

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