‘Volkswagen network is now across 80% of the country’
With the upcoming launch of its mid-size sedan Virtus next month, automobile major Volkswagen aims to double its sales in India by the end of 2022. Brand director Ashish Gupta speaks to Christina Moniz about the company’s growth plans, its efforts in bringing down the cost of ownership and its aim to capture a 3% market share by 2025. Excerpts:
Volkswagen sold over 26,000 units in CY 2021. Do you expect to surpass that figure this year?
CY 2021 was a good year for us, and Volkswagen started 2022 on a good note too, with 70% growth in sales in Q1 against the same quarter in CY21. Our growth has been aided by two of our recently launched models, the Taigun and the Tiguan. Now with the launch of Virtus in June, we aim to at least double the sales we saw in CY21, though a lot depends on the semiconductor shortage issue and the geopolitical situation in Europe. Across segments in the industry, we are seeing high demand, but it is important to look at the demand in the context of supply gaps.
What was the insight behind widening your sedan portfolio with Virtus?
The love for sedans had never really gone anywhere. It’s just that customers didn’t have enough options, perhaps also because manufacturers have been focussing on ramping up their SUV offerings, since that is where the highest growth is seen, globally. If a company focusses on one body style only, it tends to miss the opportunities in other segments. Last year, the premium mid-size sedan segment was at 90,000-95,000 cars, and with our newest launch, it could grow to 1,50,000 this year.
We are also present in the SUV segment with the Taigun, which has performed well since its launch last year. Our target is to gain a 10% share in the mid-sized SUV segment. Additionally, we have the new Tiguan in the premium SUV range, and the car is already sold out for the next six months.
What kind of traction have you seen on the brand’s online retail platform, especially since the pandemic struck? What other shifts have you made during this time?
We already had our plans in place to make all our touchpoints digital, and the pandemic accelerated the process. During the pandemic, we digitised the entire car purchase journey, right from providing virtual showroom experiences to planning test drives and car bookings. Before digitalisation, the share of digital inquiries was 40-45%; today, it has crossed 70%.
One of the biggest factors driving demand is the move towards personal mobility. It is also a key factor driving growth for the pre-owned cars segment. We rode that transformation, and had started our focus on used cars in 2019 itself with Das WeltAuto. Today, our outlets are equipped to take used cars from customers and offer them not just Volkswagen models, but also pre-owned cars of any brand. In 2019, through the Das WeltAuto network, we sold close to 3,000 cars. In 2020, that number increased to 10,000. Last year, it doubled to 20,000 cars.
At 152 touchpoints, Volkswagen has fewer service centres across the country compared to other players…
The goal is to get a 3% market share in India by 2025 and our network is planned accordingly. We aim to reach the 2% mark by the end of CY22. With this network, Volkswagen is now present in 80% of the country’s geography. Further, we have 11 mobile service units across India serving the remaining 20%.
Under our India 2.0 project in 2018, addressing the high cost of ownership was a major product strategy. So we took some definitive steps to bring down the cost. Taigun and Virtus are up to 95% localised, bringing down the cost of procurement of spare parts. To put the cost in perspective, the service price of a Taigun is `6,000 a year, much better than some of our competition in the lower segments. These steps have helped us bring down the cost of ownership by 27-30%.
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