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Volkswagen Dilemma in India continues!

Rumors are afloat that Volkswagen or VW might be the next auto major to follow the unceremonious exit of General Motors as its struggle to gain any major foothold in India, despite a-decade long presence in Asia's second largest motor market.


Sales have been dismal and most Volkswagen AG brands and badges have taken a hit in the past, except few notables from Audi, the premium brand renders some credibility to the German behemoth. India has one of the lowest market shares globally for the VW brand. It retails five major car brands in India – Volkswagen, Lamborghini, Porsche, Audi, Skoda and the bespoke Bentley is imported on customised orders by high-end customers.


But the biggest disappointment has been the parent VW brand, which is again in the news with haphazard management changes that is completely rattling operations and the consumer confidence.


VW has recently appointed Bishwajeet Samal as its marketing head (Volkswagen Passenger Cars in India) from its International Communications portfolio at Volkswagen AG, Germany. Industry veterans say that for a company which struggles continuously to match its sales and brand expectations, where exports have overtaken domestic sales with a big margin, a novice might not be able to deliver much in the local market amid growing competition.


Earlier amongst the spate of exits, it's head of sales - Pankaj Sharma, national head of corporate sales - Neerav Shah and regional sales manager South- Ravi Prakash had left the company.


Industry insiders say lack of effective Indians in the top management has made Volkswagen Group highly vulnerable. The German carmaker, leads across many country markets where it sells its cars, but India has been a thorn for the global leader as despites a decade of existence its hardly on a sound footing and is no challenger to its stronger Japanese and Korean rivals.


The frequent changes are so rampant that not many honchos from rival and deep rooted Maruti Suzuki, Hyundai or Honda Car India are willing to join or lead the company and have turned down offers to navigate it through turbulent times.  


Its tagline 'Das Auto' meaning 'The Car' signifies its tumbling operations, where it has totally failed to ignite passions of Indian customers, so far. 


The high headed European running the operations have failed to understand the Indian psyche and not been able to streamline operations in-line with the changing needs and circumstances, giving way to much smaller rivals like Suzuki and Hyundai to rule the roost.


Its dealers are also up in arms with a large numbers raising the bogey against the company on limited profits and failure to introduce newer models at faster pace for Indian customers. Except for its mainstay Polo hatchback and its sedan sibling Vento, none of the models have created any ripples. What comes as a surprise is the latest offering, Tiguan, an SUV has also fallen to dismal sales and is no match to competitors and segment leaders like Toyota Fortuner or Ford Endeavour.


Its image has been hit hard with the global emission scandal which has effected its operations in India as diesel was the mainstay for its Skoda and Audi brands that performed fairly well in the past and are now struggling on diminishing goodwill and fading brand equity.


The emission cheating scandal takes it closer to disgraced General Motors India which has fudged its Tavera utility vehicle engines to confirm tail pipe emission to Indian standards. As always none of these revelations let to any concrete results and while General Motors was allowed to exit India easily, nothing concrete has come out of the German peer's operations too.


Volkswagen has now diverted its focus to exports and in fact its shipments have been surging enough to keep its Indian operations on surface, but the future is intensely unpredictable. The parent Volkswagen brand has not lived up to its expectation, despite the multiple sacrifices coming out of its sibling Skoda repositioning on lower notch and is now aiming to make a comeback as a formidable force with some renewed compact models. 


That still leaves VW in disarray as its ambition to scrape the Indian market seems to have fizzled out and a second chance is not accorded by Indian customers, easily.