Volkswagen in talks to sell stake in its India business

Zellmer stated that European cars are often over-engineered, which may not be required in India.

The Volkswagen Group is in talks to sell stake in its India business to a local partner.

Despite having invested over US$2 billion, Volkswagen has failed to succeed in the Indian market, which is highly cost-sensitive. The carmaker is now developing new products for India, where “over-engineered” vehicles have failed.

Klaus Zellmer, global CEO of Skoda Auto, said, “We have been in India for over 20 years and have not proven to be on the right track. So, you try a new track. I am convinced that if we find the right partner, then we can only learn and benefit from each other…”

Although Zellmer did not reveal the potential partner, Mahindra is said to be a front-runner. “We are looking for a true partnership… that is (to have a) skin in the game,” Zellmer said. “It’s a bit like getting married without a contract. It means (getting access to) engineering competence, sales competence, procurement competence,” the CEO added.

Zellmer stated that European cars are often over-engineered, which may not be required in India. The over-engineering also bumps up prices, making these products less competitive when they arrive in the Indian market. He also believes that the government should reduce the tax rates on hybrids. 

Source: ET Auto