Volkswagen plans to expand its base in the Rs. 3-5 lakh segment with the new SEAT brand which is currently ruled by Maruti Suzuki and Hyundai. This will be the company’s 8th brand to be available in India along with Volkswagen, Skoda, Audi, Bentley and the likes.
Volkswagen India is running feasibility tests to ascertain if the company could introduce its Spanish brand SEAT in the country to rival the likes of Maruti Suzuki and Hyundai in the very popular Rs. 3-5 lakh vehicle space. Operating with seven brands in India which include Volkswagen, Audi, Skoda, Bentley, Lamborghini, Porsche and Bugatti; the German manufacturer’s most affordable product remains to be the Polo, which starts at a price of around Rs. 5 lakhs. However, in order to be a major player in the Indian auto sector, Volkswagen needs to have products in the mass market volumes segment as well.
All set to make its debut in China, Volkswagen has been pushing SEAT towards emerging markets in order to make the brand more profitable, to compensate for the mounting losses in its home market Europe. SEAT’s product range comprises of hatchbacks and sedans including products like the Ibiza, Leon, Mii (VW Up! underneath) and so on that have been developed from existing Volkswagen platforms but get a sporty identity of its own. With a target to enter India in the next 3-4 years, SEAT will be offering highly localised products that could be manufactured at VW’s Chakan facility. Most recently, the company also invested Rs. 240 crores in an engine plant at the facility and will be expanding production capacity to 2 lakh units per year from the current 1.3 lakh units.
The B-segment is one of the more popular and consistent segments in the country, with products like the Maruti Wagon R, Celerio, Hyundai Santro, i10 all selling in significant volumes every year. Even newer entrants like Ford with its Figo managed to achieve an overwhelming sales turnover in the past in the same space. While Skoda is Volkswagen’s budget brand overseas, the Czech manufacturer chose to restrict itself to premium cars after faltering with the Fabia in the hatchback space. Moreover, with a minuscule market share, Volkswagen is in a dire need of a mass market offering.
Another benefit to SEAT lies in the overall market sentiment. The market is improving in terms of sales after sluggish growth in the past year or two and is also open to newer brands and products. SEAT is a budget brand that offers sportiness and decent equipment at competitive prices in Europe. While the brand is less known in India, its products come pinned by Volkswagen platforms and boast of good build quality. However, what needs to be seen is whether Volkswagen will restrict the Spanish brand into bringing only lower end models to avoid cannibalisation or will it also get some of its premium products which includes MPVs and sedans.
Source – Financial Express