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Volkswagen to produce engines in India

As per the mission 2018, Volkswagen is highly banking on India to get it some volume and is reportedly on track of a serious expansion. As per the latest information, the German car maker will be manufacturing a range of engines for its group cars such as Skoda, Audi, Porsche and for its own brand cars such as Volkswagen Touareg, Volkswagen Beetle and other cars. As per the information, the plant will be built at the Chakan facility and the production could begin by 2014. However, the state government’s taxation policy is desisting the car maker from making such huge investment.

Once the plant is setup and it hits production, VW will be producing engine in house for Volkswagen cars, Skoda cars, Audi cars and Porsche cars. It seems that the plant would be big enough to produce a variety of engines and it is expected that the in house production of engines by VW will also reduce the cost of the car and the car maker could think of a price slash as well. The motive behind this is that for is plush cars such as Touareg, Beetle, Skoda Superb and other cars of the brand, VW imports engines and it has to face higher duties. If the car maker is able to build these engines in India, it will save this amount and over a period of time, the production of engines will become profitable affair for the car maker.

Also, producing engines in house will mean that the spare parts will also be available in India and this will help reduce the cost of ownership of the VW and its brand cars in India. Currently, VW’s localization content in building engines for a variety of cars including Volkswagen Vento, Volkswagen Polo, Skoda Rapid besides others is low. With the new engine production capacity VW will be able to update the current engine line as well with the new technology coming in. Furthermore, the expansion will make the VW cars and its group cars more affordable to buy as well as own leading to overall brand buildup.