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Mahindra, VW could set up new plants in Uttrakhand

With aggressive launch plans in 2012 and the years to come, two car makers, on Indian - Mahindra and one German – Volkswagen, are on the lookout for new production facilities in the country. As per reports, the duo are considering Uttrakhand as the new destination for producing Mahindra cars and Volkswagen cars in India. Notably, where Mahindra has laid down launch plans for five new cars this year including Mahindra Verito CS, Mahindra Xylo Mini and two Ssangyong cars including Ssangyong Rexton and Ssangyong Korando besides the electric car Mahindra Reva NXR, Volkswagen has plans to launch Volkswagen Up!, Skoda Citigo and other new cars in the country.

Why Uttarakhand could be a possible location is because other car makers such as Tata Motors and two wheeler maker Hero Moto Corp has their plants in there. Besides, the trigger for search for newer destination for manufacturing cars began after the policies of the Maharashtra government irked the two car makers. As per the reports, the Maha government’s new VAT policy greatly reduces the profit margin of the car makers and thus in rising prices commensurately will be pulling down sales and thus the car makers have figured out to jump out of the state. Recently, Gujarat was also on the target but things didn’t work out there as well.

Notably, where Mahindra has its plant in Maharashtra Volkswagen produces Audi and Skoda cars at the Aurangabad plant and this new VAT policy is considered to have forced the car makers to search for new lands. At the Aurangabad plant, VW assembles Skoda and Audi cars and in order to launch new cars it has to increase the capacity but the new policy will mean higher taxes and thus it cannot then keep the new car prices down. In such a situation, VW is on the lookout and Uttrakhand has come out to be the most feasible solution with high availability of manpower as well as suppliers which are already supplying a lot of components to Tata in case VW thinks of increasing the localization content.