The Road Ahead: Volkswagen Eyes Stake Sale in India Business
German auto giant Volkswagen is exploring the possibility of selling a stake in its India business to a local partner. Despite investing over $2 billion in the country, Volkswagen has struggled to make a significant impact in the Indian market. Now, the company is shifting its strategy by developing new, cost-competitive cars to improve its market share.
Klaus Zellmer, the global CEO of Skoda Auto, which is spearheading Volkswagen’s India investments and strategy, emphasized the need for a change. He pointed out that launching “over-engineered” European vehicles in India has not been successful. Instead, the focus is on creating vehicles tailored to the Indian market’s demands.
Zellmer also advocated for lower tax rates on hybrid vehicles, as the transition to green cars takes time. He believes that providing options for consumers between battery electric vehicles (BEVs) and internal combustion engines (ICE) is essential, as seen in other global markets like China.
Regarding the potential stake sale to a local partner, Zellmer expressed optimism about the benefits of such a collaboration. Finding the right partner could offer valuable insights into sourcing, procurement, and engineering, leading to a more competitive product lineup.
By leveraging the local partner’s expertise and connections, Volkswagen aims to create a winning combination that caters to the specific needs of the Indian market. Zellmer stressed the importance of a true partnership where both parties have a stake in the game, highlighting the mutual benefits that such a collaboration could bring.
As Volkswagen explores new avenues in the Indian market, the focus is on understanding the unique demands of Indian consumers and tailoring its offerings accordingly. By embracing the local expertise and forming strategic partnerships, Volkswagen hopes to overcome past challenges and build a stronger presence in India’s competitive automotive landscape.
[The writer was in Prague at VW group co Skoda Auto’s invite]
