VW Starts Production of First Model Made in India

The Polo hatchback is seen as a vital model for Volkswagen to penetrate the market in India where small cars make up 80% of annual car sales.

Volkswagen began production of its popular mass-market Polo hatchback in India on Dec. 12. The first locally manufactured Polo rolled out from its plant in Pune in western India, giving it a niche in the country's crucial small car segment.

Volkswagen Group said it hopes to capture up to a tenth of the Indian car market in the next four to six years as part of a strategy to boost sales in emerging countries to counter anemic growth in saturated Western markets. The company, which entered India in 2001, now holds 1.5% of the Indian market, company spokesman Kurt Rippholz said.

The start of Polo's production in India "marks a milestone in our journey together into a successful future for the Volkswagen Group in India", Jochem Heizmann, a member of the companys management board, said. India, where new car sales soared 61% year-on-year in November, holds "enormous potential" for Volkswagen, he added.

The Pune plant, which has the capacity to produce 110,000 cars annually, is a key plank in Volkswagens India strategy. The firm has invested $850 million in the plant, its biggest investment so far in India.

Polo is seen as a vital model for Volkswagen to penetrate the market in India where small cars make up 80% of annual car sales. "Volkswagen will be present in the mass market segment and therefore this is an important step," company spokesman Rippholz said. In Europe, the Polo has won more than 130,000 orders since the new model was launched in May.

The Polo rollout came days after Volkswagen bought a one-fifth stake in Suzuki Motor for $2.5 billion, seeking to tap the Japanese firm's small car prowess and dominant Indian market share. The purchase gives Volkswagen an additional footprint in India as Suzuki holds a majority share in Maruti Suzuki, India's largest carmaker with 50% of the market.

Volkswagen already sells its Passat and Jetta sedans in India as well as its premium Phaeton and Touareg SUV. The company also recently began selling in India its new Beetle, the remake of the iconic "bug".

The company aims to boost its market share with the Volkswagen Group brands -- Volkswagen, Audi and Skoda. It began producing its Skoda Fabia in 2009 at the Pune plant and plans to launch a saloon car in the second half of 2010.

Copyright Agence France-Presse, 2009

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