"Our current level of localization is 70 percent and our aim is to take this up to 85-90 percent in the next few years. To achieve levels of 90 percent local content, we definitely have to localize engines and gearboxes," Volkswagen India President & MD Mahesh Kodumudi said. (Agencies)
“To start with, the group is considering the assembly of certain engines with certain key components localized in India,” he added.
"We are close to a decision and we will announce as soon as we make this decision," Kodumudi said.
The localization programme is part of the company's planned 100 million euro investments for India to expand business, including launching of sedan and SUV in the compact segment and a hatchback.
Kodumudi said, "Localization is one of the prime targets for us during our current consolidation phase as it helps us in reducing our costs and improving cost competitiveness."
Reiterating the group's long term commitment to the Indian market, he said, "After a strong foundation phase, Volkswagen is now in a consolidation phase since last year. With the five brands under Volkswagen Group India, we are preparing ourselves for the next growth phase which is expected to start within two years."
In the meantime, the company is also working on improving productivity, optimizing cost structure and upgrading of sales and after sales network, he added.
When asked about the company's plans to ramp up production capacity at its Chakan plant, Kodumudi said, “Considering that we can go up to 2 lakh cars on the existing setup, which is almost double of existing production, the domestic market will have to grow further."
He added that the Chakan plant's current capacity stood at 1.3 lakh units in the existing two-shift system and with a three-shift system, the company can achieve 1.5 lakh cars every year.
"With some minor upgrades, we can go up to 2 lakh units in the existing setup," Kodumudi said, adding that the company produced 1 lakh cars in 2013 based on the demand from the domestic and export market.
“Similarly, the company has capacity of over 89,000 units in its Aurangabad plant and it has enough scope to attain full capacity functioning before going for further expansion,” Kodumudi said.
The Wolfsburg-based group, which is present in India through a wholly-owned subsidiary has five brands — Audi, Volkswagen and Skoda, Porsche and Lamborghini — in the Indian market.
"Our current level of localization is 70 percent and our aim is to take this up to 85-90 percent in the next few years. To achieve levels of 90 percent local content, we definitely have to localize engines and gearboxes," Volkswagen India President & MD Mahesh Kodumudi said.