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That's the global, 30,000 feet view. How will the partnership work in India, where Suzuki makes some 45 per cent of global volume sales and almost half its profits? There are the obvious benefits of access to small car platforms and sourcing components from India for Volkswagen, selling Maruti-made cars in Europe or South America through the Volkswagen dealer network, and, to stretch the envelope, even sharing future manufacturing platforms, which the German carmaker is really good at (more on that later). In August 2009, Maruti announced plans of setting up a Rs 1,000-1,500 crore research and development centre at Rohtak, Haryana. There has been intense speculation in industry circles that the December tie-up between Volkswagen and Suzuki will lead to joint development activities there.
Volkswagen's [Jorg Muller] agrees. "In the medium and long term, India is indeed a strategic growth market in the literal sense of the term. Engaging in India will allow Volkswagen to participate in (India's growth) and at the same time to meet its internal growth and return targets, " he says. Through its group brands Audi, Skoda and Volkswagen it is targeting a modest 10 per cent share (up from 1 per cent now) in five-six years. This is not much bigger than the targets others such as Toyota and GM have for India and are planning small car launches in 2010. GM is launching the Chevrolet Beat in January and Toyota its muchawaited small car later in the year.
Volkswagen's ad spends, meanwhile, reflect how serious it is. In early December, when it launched Touareg and the New Beetle sedan, it took out the most expensive print advertising campaign in India ever with an estimated Rs 30 crore 'roadblock' campaign across all editions of India's largest English daily The Times of India. Roadblock is industry lingo referring to an advertiser paying a premium to black out all other advertisers. Muller will need a lot more to block competition but it is clear that Volkswagen is the carmaker to watch out for in India this decade. More so, given the pride at stake its success or failure here in India will make or break its dreams of global dominance. And, when dreams are that of your chairman, you had better deliver.
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