Every second model produced at the Volkswagen Chakan facility near Pune was exported to Mexico as the company is struggling to find momentum in the domestic market.
It is certainly ironic that one of the world’s largest automobile makers that is competing for world dominance on a global front is struggling to find growth in the Indian auto market. The German auto giant that came in as a highly aspirational mass market brand in 2009 has been struggling to grow in the domestic market with limited success. With mounting losses due to under utilization of the Chakan based facility, the company diverted its attention towards export operations and now exports more than 50 percent of its production overseas.
2014 saw Volkswagen India roll out 1,11,444 vehicles from the Chakan plant, its highest ever production till date of 11.4 percent over the previous year, despite the loss in market share. With the company commencing export operations for the Vento and Polo, over 59.8 percent of the total production or 66,660 units were exported to Mexico last year, while the remainder of 62,363 units constituted of Indian sales. Out of the total production for the year, the plant produced 67,010 Vento sedans, 33,547 Polo hatchbacks and 10,887 Skoda Rapid sedans.
Despite the growth in production, Volkswagen India’s net profits saw a steep decline of 53 percent at Rs. 29.5 crore due to low sales. In order to curb losses the company commenced exports of the Vento to Mexico in 2013, while that of the Polo were started in November last year. Volkswagen has also revised its target to have a market share of 7-8% from the earlier 20% by 2018. Nonetheless, the company is surely being aggressive about its domestic operations as it plans to launch a compact sedan and SUV in the mass market segments to increase sales by next year.