Thierry Lespiaucq (right), Managing Director, Volkswagen Group Sales India, during the inauguration of Volkswagen dealership in Coimbatore on May 29, 2015. Photo: M. Periasamy
He also felt that the Government should support heavily the export activity and it was an “outstanding opportunity” for India to use the platform provided by its highly skilled manpower to turn the country into a global manufacturing hub.
Speaking to newsmen in Coimbatore on Friday on the sidelines of handing over of the 3,00,000th car made by the company in India to a customer here, he said the biggest step towards ease of doing business in the country would be moving to the Goods and Services Tax (GST) regime, which “from a tax point of view would completely change the life, I hope so”. This would make the job of doing business here “a lot easier” and investment decisions lot more easy to take. He expressed the hope that the opposition would “find a way to support” the GST initiative because it was “for India” and it was what “India needs”.
Explaining that the Indian market was “very important” for Volkswagen, he said the company will bring to India “an all new Passat” in 2016 and also will assemble in India the compact SUV Taigun (pitting it directly against other reigning compact SUVs like Ford EcoSport, Nissan Terrano and Renault Duster. The country’s largest car maker Maruti Suzuki is also reported to be eyeing this segment).
He said the company’s Taigun will be the next generation model but did not want to mention any specific time of its launch. He also expected the much anticipated launch of “Volkswagen Beetle” model to take place in the next year. He also announced the development of a car made for India but this would not be a sub- ₹5 lakh model.
Lespiaucq said out of the Chakan plant near Pune with a capacity of 1.30 lakh units, Volkwagen exported about 65,000 units and its domestic sales was about 45,000 units last year (2014). During this year, he expected the sales to remain “almost stable” as the new product launches will take place later.
Explaining the reasons for the relatively tepid launch of new models-at present Volkswagen India has just three models Polo, Vento and Jetta with a few variants-, he said the Indian market had segmentations that were very specific (to India) and the share of cars priced sub-₹5 lakh was extremely high and Volkswagen did not have products in this lower end of the car market. The company also used the domestic capacity to export to countries like Mexico.
But now the company has a better picture of the future and the economy has stabilised and there were some `very positive intentions from the Government’. The INR (₹) also was now in a more stable position vs Euro (€) and felt that it is `time now to start again’. The company has decided to come with a broader portfolio of new products. The new made for India car was likely to be rolled out next year but it would not be a sub-₹5 lakh car but would be a compact sedan. Volkswagen has a very broad range of cars and as the market matures in India, the company would roll out more models.
Commenting on the slashing of export incentives from 4 per cent to 2 per cent, the Volkswagen India Group Sales MD pointed out that the decision came when the INR was getting stronger, making exports less profitable. India has the advantage of having high quality man power and the quality of cars `we produce in India is absolutely at the best level’. The country could be an outstanding production platform. He felt that it would be wise to `really push and encourage’ the investors to produce in the country for the (global) markets. The signing of Free Trade Agreement between India and the EU would be extremely important. But the complex tax regime prevailing in the country was a deterrent and it should find a `good balance’ between protecting its interests even while encouraging markets.
Lespiaucq was present at the inauguration of new 3S (sales, service and spares) Volkswagen dealership in the city and handed over the 3,00,000th car, a Volkswagen Polo GT TSI model, to a customer here.