“ Naan late-aah vanthalum, latest-aah varuven (Even if I come late, I'll be the latest),” Tamil superstar Rajnikanth's punchline from Baba (2002) may just reflect German automaker Volkswagen's experience in India.
Though six years behind Group brand Skoda in entering the domestic market, Volkswagen India (which started operations in 2007) is now posting monthly sales of around four times the former. This, even after the Volkswagen models are priced at a premium over Skoda cars in all segments that both compete in.
“Volkswagen has been launching new models and updating existing ones very regularly and that has helped. It depends on what benefits customers see in these launches and they like the look of their cars. They have also spent a lot on marketing,” said Mr Abdul Majeed, practice leader at PwC India .
In 2009, Skoda still had a lead, but within a year after the launch of Polo and Vento, things had changed drastically. By 2010, Volkswagen's lead over its Czech cousin increased by over 10,000 units. A big edge that Volkswagen has is its mass market sedan Vento (extended Polo platform), to which Skoda currently has no answer. The Polo hatchback and Vento together accounted for 92 per cent of sales this September. The launch of Skoda's Vento competitor, a new Fabia-based sedan, is expected only by mid-November.
While Skoda's Fabia competes with the Polo, the Superb with Passat, the Laura also competes with the Jetta. Interestingly, nearly all Skoda models share platforms with Volkswagen. This is also a sign that similar to the developed European markets, Indian customers also identify with Volkswagen's positioning as a “premium, innovative brand”.
“People have accepted our price value proposition and that balance was fantastic. Our volume products (Polo and Vento) got accepted in the market well. We did big spending on innovative marketing campaigns and had a clear strategy in communication,” Mr Neeraj Garg, Member of Board and Director, Passenger Cars, Volkswagen Group Sales India.
Dealer network
The German carmaker extended its dealer network at a very fast pace – a new dealer was appointed every 10-12 days over the last three years. Volkswagen currently has 80 dealerships and is expected to grow at a similar pace.
Marketing and building brand recognition has also been a huge focus for Volkswagen. To target the mass market, it is sponsoring the Indian Premier League cricket series in 2011 and 2012. A lot of thought has also gone into advertising – the Polo launch saw newspapers being cut out in the shape of the car, while Vento ads saw innovation in terms of a pre-recorded “talking” unit put in certain newspapers. For its more recent Jetta launch, the German carmaker had silver newspapers distributed.
The Volkswagen Group has eight passenger car brands in all. Apart from the Skoda and Volkswagen brands, Audi, Porsche, Lamborghini, Bugatti and Bentley are also present in India. The last four, however, don't have local assembly facilities but operate through a direct import route. The only Group brand to not make it to our shores is Spanish carmaker Seat.