VW Chakan plant starts production

The new VW Polo hatch will commence production from December 2009 and from mid-2010, the company also plans to produce the saloon version of the Polo, which is being developed specially for the Indian market. In fact, VW showed the European version of the new Polo hatch at the opening ceremony, just a few weeks after its international debut at the Geneva Motor Show in early March this year.

The Chakan plant is a fully integrated manufacturing facility with its own press shop, body shop, paint shop and assembly lines, as well as a high degree of local supplier support. In fact, VW plans to start with a 50 percent localisation level for the Polo, which would be increased to around 80 percent after two to three years. This would help it price the car very competitively when it is launched in January 2010.

The plant is spread over 2.3 million square metres, and is the single largest investment by any German company in the Indian market to date. As production gets underway in full swing, the facility is expected to employ 2,500 people directly by the end of 2010, with additional employment being generated at suppliers. At that time it would be capable of churning out a massive 500 cars per day. The governor of Maharashtra S C Jamir and Prof Dr Jochem Heizmann, member of the board of management of Volkswagen, Germany, with responsibility for ‘Group Production’, officially opened the new plant at a lavish ceremony that was attended by local and international guests.

According to Heizmann, “With the start of production at our new plant in Maharashtra, the Volkswagen Group has conclusively arrived in India’s emerging market. Thanks to local production of Volkswagen and Skoda models, we will benefit even more from the enormous growth in the Indian automobile market in future.”

At the opening ceremony, Jorg Mueller, president and managing director, Volkswagen Group India, said: “Volkswagen and its cars are already visible testimony to ‘mobility – made in India’. So I am all the more delighted that our new plant near Pune sends a clear signal for the further development of our brands in India and the people in this region.”

The company is confident that despite the impact of the global financial and economic crisis, the desire for individual mobility in India remains high. As a result, it expects Indian car sales to grow from 1.2 million vehicles per annum at present, to over two million vehicles by 2014. Expanding in India also enables VW to meet its internal growth and return targets, making the country a strategic market for the company. Guided by its 'top-down' strategy, VW plans to be present in a range of segments from premium models to high-volume ones like the Polo.

Given its growth plans, "the plant would hit its maximum production capacity of 110,000 units per annum within the next two to three years," according to Heizmann. He emphasised VW's determination to become a significant player in India saying "we will fight hard in this market and are aiming to achieve an eight to 10 percent market share in the long term."

The VW Group currently assembles Skoda, VW and Audi models at its plant in Aurangabad since 2001. In addition to expanding production capacity, the Group is also investing in building up an efficient Indian supplier industry and in expanding its dealer network across the country. At the moment there are 14 VW dealerships in New Delhi, NCR, Mumbai, Bangalore, Hyderabad, Chandigarh, Ludhiana, Jaipur, Kochi, Chennai, Ahmedabad, Lucknow, Goa and Kolkata. The company plans to expand this to 40 dealerships by the end of this year and then to 100 in 2010. Volkswagen also plans to begin selling light commercial vehicles, starting with its T5 model in India. However it has modest volume expectations from this business in the near term.

Production facility

The Chakan plant uses state-of-the-art equipment, for example, the body shop uses the Diode Laser Brazing (DLB) technology, where Roof and Side Framer laser technology is used for welding the roof to the body of the car. The facility is also one of the few environmentally friendly manufacturing plants in the area, with the exhaust from the paint shop being re-burnt and the resulting heat and energy being reused.

The new Polo that will be made at Chakan is a slightly modified version of the European Polo, which will have higher ground clearance, air-conditioning as standard equipment on all versions and more boot space in order to meet the specific needs of Indian market.

Another new model that is expected to be made at Chakan from 2011 is the Up! compact car which Heizmann admits “would fit very well into the Indian market.” VW is working on developing this model for India and is expected to complete the process within the next 24 months. VW also plans to launch the New Beetle by the end of 2009 in India and this niche model will be imported fully-built into the country.