VW speeds up Chakan rollout by a year

Europe's largest carmaker, Volkswagen, has decided to roll out cars from its new Chakan factory in Maharashtra from April 2009, a year ahead of schedule. The decision is linked to the rise in the Volkswagen Group’s sales despite the slowdown in the Indian car market. Backed by new car launches, the company’s sales grew 66% to 16,695 vehicles from January-October this year. The German carmaker already has a plant at Aurangabad, which is operated by group company Skoda Auto. This plant manufactures the Passat and Jetta, besides Skoda’s Fabia, Octavia, Laura and Superb. Volkswagen had announced investments of Rs 3,500 crore in 2006, out of which Rs 2,650 crore was infused into the Chakan plant. This facility, with a capacity of producing 1.1 lakh cars, will kick-start operations by rolling out Fabia next April. Volkswagen will also launch its own car, the Polo, in the second half of the next financial year. A senior company executive said the design of the Indian version of Polo is inspired by the Scirocco - a three-door coupe - and will be more upmarket and sporty than the current generation Polo available world-wide. Volkswagen will also produce a sedan variant based on the new Polo, which will hit the market in the middle of 2010.Volkswagen is developing smaller engines for Polo to take advantage of the concessional excise duties levied on small cars in India. The company is aggressively pushing for higher localisation of production to price the Polo competitively. These cars will have 50% localisation initially, which will be upped to 70-80% in two years’ time. The auto market has experienced a loss of confidence after a 20% decline in car sales in the past two months forced carmakers such as Maruti Suzuki, Hyundai, Tata Motors and Toyota to cut production. The Japanese premium car maker Honda has deferred manufacturing operations at its Rs 1,500-crore second plant in Rajasthan.