Volkswagen India plans to launch five cars in the country in the next two years, including a compact sedan. “We will bring a sub-4-metre sedan exclusively engineered for India and made in India,” Michael Mayer, Brand Director for Volkswagen Passenger Cars, told BusinessLine . The other new models include the new Passat executive sedan, which will be built at group company Skoda’s plant in Aurangabad, Maharashtra, and the premium SUV Tiguan. The German car-maker also plans to reintroduce completely built units of the VW Beetle in India, Mayer said. Edited excerpts of the interview:

Several other auto-makers are already present in the sub-4m segment in India. So isn’t VW a little late in getting off the ground on this?

For us, it was important that when we go to that segment, we should be able to bring in something that makes us stick out from the crowd. VW brings in the highest level of safety, drivability, drive dynamics and also good quality. So, I think now we are ready.

Does the new made-for-India compact sedan have export potential?

The sub-4m segment is a very India-specific story. I can’t remember having seen any country in the world that has this particular tax pocket that is built on length. In this case, the decision we took was primarily influenced by India. There will be people who might take the car from India, but at the moment, it is very few because they don’t enjoy the tax break.

Where is the car being designed? Will the engine be built locally? And are you looking at launching it both in diesel and petrol?

The design work is all done globally. It will come as a diesel model because of our powerful and agile diesel engines and that will bring a difference to the segment and make us stick out. It will also come in petrol. We could make the engine here to make use of our capacities at the engine plant in India.

Will you look at building the Tiguan locally?

Importing fully built cars has become very difficult because of the high tax and customs duty. The competitors we will be going against largely assemble them here, so we are looking at the best cost-effective opportunity. Of course, we are looking at building them here because the capacities to do that are certainly in the VW group in India.

One missing link in the portfolio you just unveiled is the compact SUV, a segment that has lately gained a lot of ground. Is something being planned?

We are seeing this interest in SUVs in any size all over the world; it started with larger car concepts and now it goes smaller and smaller. So we as a global company decided to develop a range of SUVs in all sizes. We decided to make the entry in India purposely with the larger size car (Tiguan) to demonstrate our most successful premium car brand to the customer. Certainly, the SUV in the compact form is very interesting to us and we are looking at it very seriously.

VW products are not seen very fuel-efficient. Have you been able to work on this very important aspect in the Indian context?

You are right that fuel efficiency plays an important role and we are looking into that. One thing that plays for us is our high share of diesel (around 75 per cent of our buyers go for diesel cars) vehicles, which, generally speaking, are fuel efficient. On a strategic basis, all future engines generations we like to bring into India and localise must be always more fuel efficient without compromising on noise, quality and drive dynamics.

Any plan to add new dealerships?

We have deliberately taken a decision not to expand our dealer network in the short term, but rather work on quality and processes. This needs a little cultural change because in India service is not an embedded thing. I can see with my anecdotal experience over the past 10 months that distinct service culture is nothing that you find by nature.

In some places like hospitality, it might be class leading, but in general you have to train people much more in order to adhere to standards that a customer who buys a VW expects. Before we have managed that we will not add to our existing 120 sales outlets. In the medium term of course we will have to add dealerships, but we will go with only those dealers who are up to our standards.

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