More reports on: Maruti Udyog, Volkswagen

Volkswagen, Maruti in collaboration talks for Indian market

20 May 2010

German car major Volkswagen and Maruti Suzuki (MSIL) are in talks for joint engagement in a number of areas with VW officials having already visited MSIL to chalk out areas of cooperation between the two auto majors according to a report in The Times of India.

Joerg Mueller, chief representative of the VW group said the companies were trying to thrash out areas where partnerships and joint strategies could be worked out for the Indian market according to the report.

He confirmed that representatives from VW's international office as also Indian operations had visited Maruti's facilites, the report said.

The report said Maruti officials are also believed to have visited the premises of VW India, though a company spokesperson declined comments.

The talks of engagement between VW and Maruti have come within months of the German company's acquisition of a near 20-per cent stake in Suzuki, Maruti's Japanese parent  (See: VW acquires 19.9-per cent stake in Suzuki for $2.5 billion). Analysts had at the time said that VW's interest in Suzuki could be due to its stronghold on the Indian market through Maruti.

Though a formidable car player in most of the major markets including China, VW, has only a limited presence in the fast growing Indian market. The company's hatchback offering the Polo has to go a long way for it to make any sizeable gains which brings in the joint strategies and engagements with Maruti, a leading player in small cars with an extensive coverage of the market which could be leveraged by VW to change the game in its favour according to analysts.

The report quoted Mueller as sayig that both companies knew each other and were in the stage of discussions and the idea was to look for projects that were right for both. Replying to a question on the time frame for the finalisation of strategies, Mueller said it was a matter of a few months, according to the report.

Analysts believe that the two companies would be looking at joint product development strategies and Maruti's handholding could prove to be crucial and would also help in other back-end operations. On its part Maruti could gain from getting access to diesel engine technology from VW.

''Discussions have begun between the two teams. The proposals are being studied at Volkswagen headquarters and a final picture will emerge in two to three months,'' Mueller told media persons in Pune.

According to industry reports VW could be looking at the new Wagon R and Ritz models from the Maruti Suzuki stable to be renamed and offered as VW cars in India.

The two companies are also believed to be looking at possibilities of sourcing Maruti's engines, components and aggregates for Volkswagen' s Indian models.

Mueller said the company was still interested in the VW Up! model for the India market.

''We still need to look at the Up! concept because small cars form the biggest segment in India, around 50 per cent of the market, he said. Should the model be considered for the India market, the company could be looking at pricing it between Rs 3-4.5 lakh,'' he added.

Meanwhile VW, a couple of days back released its first official sketch of its sedan for the India market.

Also Maruti Suzuki India is planning to introduce a new version of its small car Alto, the highest selling model in India, with a bigger engine.

Industry sources say the company plans to launch the new Alto with a one-litre petrol engine from the K -engines, it latest generation of engine.

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