Volkswagen India is functioning on an innovative range of lower capacitance engines and smaller sedans for the Indian market, with the aim to meet up the administration’s lower excise tax category of 12%.
With the objective to increase fading sales, the move will swell the German company’s mass car collection and result in a sharp decline in rates of subsisting vehicles comprising the Polo hatch and Vento entry sedan.
John Chacko, Volkswagen Group Chief Representative for the Indian market, stated that part of the strategy is to diminish the 1.6-litre diesel engines utilized in the fabrication of Polo and Vento, to 1.5 litre.
This by itself will result into a 3% decline in excise duties for the Vento from around 27% to about 24%.
“I plan to alter the engine series with a completely new set, which is developing and will assist us meet up the rules. There are a few surprises approaching,” Chacko said.
At the present time, passenger cars larger than four mtrs length draw a 24% excise duty. But, those that in addition have an engine capacitance more than 1.2 litre petrol and 1.5 litre diesel are charged up a higher 27% excise duty (with ad valorem rate).
The company is also functioning on a smaller sub-four metre sedan, or notchback, on the ‘Up’ platform. Placed below the Polo, the Up compact city car was rolled out in the European market during April 2012.
During the last financial year (2011-12), the company had registered an increase of 52% in its sales, which stood at 78,281 vehicle units. In 2012, between the months of April and August, sales dropped 19% to around 25,306 vehicle units.
The Polo witnessed a 14 per cent decline, whilst the Vento sedan reported a sharper 28% drop – both on weak demand and relatively higher victory of Skoda Rapid.
“This move could entail a huge decline in valuations – by approximately Rs 50,000-60,000 for sedans. It could make or break a product,” an industry representative said.
Volkswagen India strategy mimics that of market head Maruti Suzuki and Tata Motors.