November 1, 2011: Christian Klingler, Board Member, Volkswagen Group for Sales and Marketing

Volkswagen has launched the Up in Europe but is it the next big thing for India? Will it be modified for the Indian market, to lower costs?
The Up family is just starting in Europe and you will have seen its siblings from Skoda and Seat as well. We are also working on an Up-based electric car for 2013. The Up is starting in Europe but it will not end in Europe. We look forward to what could happen with the car in South America, India and China. There are different needs for Indians as compared to Europeans and we shall see how it can be made feasible, depending on the production requirements. The small car segment, after all, is the biggest segment in India.

To meet the cost target with the Up in India, will you localise a lot or maybe remove certain European bits and pieces?
Cost is one part, but it’s by far not the only one. It’s a question of the industry strategy and positioning of the car — it won’t be positioned as a Nano-killer or something like that. It’s a very different car — very spacious and roomy, and very nice design-wise. I would say it’s optimum of what you can have for a 3.57-metre car on interior space. There is a quality perception that you get, and if you drive the car, you will see performance as well, so this positioning needs to be defined. There will be a difference to the European cars because the needs are not the same; for instance, a lot of space is required in the boot.

This means it’s going to be different from the European car?
Yes, but only with some small items. We will need to analyse all this in the feasibility study.

As for the Up family, it’s logical that Skoda will get its own version. Would it be safe to assume we might even get a saloon version, perhaps less than four metres?
As I said before, no decision has been taken, but there have been a lot of discussions in this regard and it could be done. We have just shown the car in Europe and the press reaction has been very enthusiastic. Let us first do our homework, and then we will go to the next step.

Seat is the only brand in the VW Group not represented here. Is there any scope for Seat in India?
One must not exclude such kind of opportunities. We are now preparing for Seat’s entry into China.

So after this, you may look at other markets like India for Seat?
Why not?

You have TSI engines and bigger diesels. Can we expect a little more commitment in terms of manufacturing of TSI motors here?
This depends on the strategic positions of the products; you need to have some critical mass and some base for it. Today we have an engine line-up which is very good but we haven’t fully exploited it. Our concern is not commitment to the Indian market but what will happen to the Indian market itself, where does it go to in the next three to five years. There could be more or there could be less development; maybe we can do the small car segment growing up and you have to depend on that.

Are you sensing a market that is not predictable? Is it more volatile?
No, I am not saying it’s volatile. The sense everyone is getting over the past two to three months is that the development of the market is a little bit surprising, you can’t really explain it. It’s all happened very fast, the market has signs of a lack of maturity, so a lot of things can happen. It’s a very fragmented market and I think, at the end of the day, the government should put in place more policies in the car market itself to give manufacturers more stability and benefits.

Volkswagen has quickly become a dominant brand in India. How do the Skoda and Audi brands fit from a Group point of view?
We have to make those brands stronger and stronger. The Q7, for example, is a very good car, a luxury premium car, and in terms of positioning of the brands we are getting more and more that is needed on that. So each of these brands has a task and a sharpening process.

So Skoda will be positioned below Volkswagen which will be more premium?
Yes.

Volkswagen without the Golf is like rice without curry for us. Is it a matter of time before you bring the Golf here?
The hatchback segment in the A0 class is very small. So you and I may love the Golf, but in India the market is not developed yet. We need to see the maturity for such cars in the market first. For example, we launched the Golf VI in China. The market said it wanted a GTI and it had a tremendous segment share, reflective of the maturity of the Chinese people. We sold more than a 100,000 Golfs in China every year.

Volkswagen is a premium brand in India but there’s a perception that it’s high-cost too. Don’t you need to have cost-quality balance more in line with Indian tastes?
The question is always to meet affordability, low running costs and spare parts but sometimes what you need is very low quality, very low equipment, and very low security standards. But this is not the place where we need to be.

Even if Indians want these cars?
Yes. The Maruti Alto is 15 years old but at the end of the day we need modern architecture in a modern car. We look up to the future, we look for a long term future and our products reflect this.

Would you look at another brand which would move away from Volkswagen values but offer what the Indian masses want?
There’s no thinking like that. The quality standards that we have cannot be compromised.

So how do you achieve the costs? Is it with scale or synergies shared with the Group?
Volkswagen is pretty good at controlling the cost, scale is a part of it but not entirely. It’s a careful calculation of costs that are based on the needs of our customers in different regions like China or the US. That’s how it is in India too. We do not believe in low cost and low revenues — that’s not our cup of tea. People love Volkswagen because the quality is great, the design is beautiful, the durability is very good and we hit every nail on the head.