Exports are key part of VW India’s plans to stabilise operations

Exports are an important part of Volkswagen India’s strategy to make its India operations more cost-effective going forward, and the company is keen to use more capacity at its Chakan manufacturing plant. The facility has a  130,000 unit capacity and currently runs two shifts.

Michael Mayer, director, Volkswagen Passenger Cars, made these comments at a round-table meet on the sidelines of the launch of the Vento 1.5 TDI turbo-diesel automatic.

Volkswagen India has been exporting cars – both the Vento and the Polo – from Chakan for the past 18 months. Exports account for half its output, and Mayer added that VW India’s export effort has been helped by a weak rupee.

The Chakan plant hopes to manufacture around 120,000 cars in this year that it can take up to 140,000, in this calendar, top sources told our sister publication, Autocar India.

Poor volumes in local markets have impacted costs but as a result of exports, Volkswagen India has been able to overcome the downturn, its president, Mahesh Kodumudi said in an earlier interview.

Volkswagen India made 52,528 units in the last fiscal, 20 percent lower than in the year-earlier period.

The new Vento 1.5 TDI, which comes with a seven-speed DSG automatic, will have engines sourced from overseas in the launch phase after which engines from its new diesel engine assembly line will be installed in it. The engine plant, slated to start operations at end-2014, has a 98,000 unit capacity. The company has invested Rs 240 crore in the plant. An estimated 75 percent of Vento demand comprise diesels.

The launch of the 1.5 TDI turbo-diesel automatic is part of the company’s plans to woo buyers into showrooms this festive season. At the top end, the automatic diesel costs about Rs 100,000 more than the manual variant.

Among other changes in the Vento are re-designed alloys, dual beam headlamps, a flat-bottomed multi-function steering wheel and new colours including Toffee Brown and Night Blue.

Photograph: Michael Mayer, director, Volkswagen Passenger Cars, at the launch of the new Vento 1.5 TDI with DSG in Mumbai.