Volkswagen Focussing On Premium Products In India Following Global Strategy

With nearly 45% of passenger vehicles sold in India so far this year coming from models priced above Rs 10 lakh, 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 ago 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 evolving customer demands.

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

"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," Gupta said.

According to Society of Indian Automobile Manufacturers 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.

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

"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 of Rs 16 lakh. So we have totally transformed," he said.

If we look at the brand globally, that's the sweet spot where the brand operates. We define ourselves as top of the 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, Gupta said.

Last year was the transition phase, and out of over 42,000 cars sold by the 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 that the transformation is also based on VW's global strategy.

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

In the March quarter of 2023, the company recorded wholesale sales of 10,119 units. Apart from adding new features to the cars, Gupta said new regulations such as 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 increases," 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."