German automaker Volkswagen is looking to shake things up in the Indian market. After over two decades of operation and $2 billion in investment, the company has yet to gain significant traction. In response, VW is in talks to sell a stake in its Indian business to a local partner.
Shifting Gears: From Over-Engineering to Market Relevance
A key reason for the talks is a desire to better understand Indian customer preferences. “We have been in India for over 20 years and have not proven to be on the right track,” admitted Klaus Zellmer, global CEO of Skoda Auto, which leads VW Group’s India strategy. He acknowledged that European-style “over-engineered” vehicles haven’t resonated with Indian buyers.
Finding the Right Partner for Mutual Benefit
Mahindra & Mahindra is reportedly the frontrunner for the partnership. Zellmer emphasized the importance of a “true partnership” where both parties contribute. A local partner could provide valuable insights into Indian customer preferences and supply chain efficiencies. “Combined with our engineering excellence, it can be a winning combination,” Zellmer stated. He envisions a partnership of equals, where both companies benefit and achieve greater success than VW has seen in India so far.
Beyond Electric Vehicles: Advocating for Hybrid Options
The discussions extend beyond just finding a partner. VW also advocates for a more nuanced approach to electric vehicle (EV) adoption in India. While electric vehicles are the future, Zellmer believes the government shouldn’t solely push for battery electric vehicles (BEVs). He points to China’s success with hybrids, suggesting that offering a wider range of options would be more effective in transitioning the Indian market away from internal combustion engines.
Volkswagen’s willingness to adapt its strategy and embrace a local partnership demonstrates a commitment to the Indian market. Finding the right partner could be the key to unlocking VW’s potential in India. By offering more cost-competitive and market-relevant vehicles, VW might finally achieve a foothold in this dynamic automotive landscape.
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