NEW DELHI, India -- Europe's biggest automaker, Volkswagen (IW 1000/7), said Tuesday it would invest $250 million in India over the next six years to capture a larger slice of local sales, in the face of challenging conditions in developed markets.
The German powerhouse has been striving to make inroads in India and other emerging economies as markets in developed countries become saturated.
"India is a strategic market for us," Volkswagen India president Mahesh Kodumudi said in New Delhi, adding that over the next five to six years the company would invest 15 billion rupees ($250 million) in the country.
Volkswagen, which holds just over 2% of the Indian car market, will pour funds into localizing production in a bid to cut costs and better compete with rivals.
The announcement came as Volkswagen, which entered India in 2001 with the Skoda brand, said in a statement it was launching a newer version of its premium Polo hatchback, priced starting at 499,000 rupees ($8,300).
Last month, in what analysts said could be a portent of better times ahead, new Indian car sales made their biggest gains in 10 months, rising 15% from a year earlier to 160,232 units, the Society of Indian Automobile Manufacturers said.
Volkswagen said it may make engines in India, adding the western state of Maharashtra would be its first preference for setting up an engine plant, according to the Press Trust of India news agency.
Copyright Agence France-Presse, 2014