VW Group plans merger of business entities this month to unlock 'full potential in India'

by Sumantra B Barooah 08 Sep 2019

In a key organisational restructuring move after the announcement of its India 2.0 strategy last year, the Volkswagen Group in India has proposed the merger of its three business entities in the passenger vehicle industry – Volkswagen India Pvt Ltd, Volkswagen Group India Sales Pvt Ltd and Skoda Auto India Pvt Ltd. The name of the newly formed organisation is Skoda Auto Volkswagen India Pvt Ltd. According to a source, the National Company Law Tribunal has approved the merger, and an approval in writing is expected soon. 

With the planned merger, the Volkswagen Group aims "to combine the technical and managerial expertise of the three companies to unlock the Volkswagen Group's full potential in India". 

Under the 'India 2.0' strategy, the Volkswagen Group had decided to make its Czech Republic-based Skoda business unit to head the fresh attempt to gain a fair share in the highly competitive Indian passenger vehicle market. While Volkswagen cars couldn't find strong favour from Indian customers, the Skoda brand has a good chance as at least some of its models fall in 'sweet spots' of the Indian car market, according to an industry veteran.

Under the Euro 1 billion (approximately Rs 8,000 crore) plan announced on July 2, 2018, the original strategy is to develop eight new offerings – four each for domestic and export markets. The four models include an SUV and a sedan under the Volkswagen brand and the same for Skoda. Sources say that these models will be based on Volkswagen's MQB platform and there will be badge engineering. The company may launch one model every six months. The first of these models could be launched in or around March 2021. Volkswagen's India 2.0 plan also involves tapping the India base as a technical and an export hub. A set of four left-hand-drive models – two each for Skoda and Volkswagen –  may be produced by 2022.

Subject to all requisite approvals, the Volkswagen Group is targeting to complete the merger process of its entities on September 21. 

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