At the Paris Motor Show, we sat down for a round-table discussion with
Dr. Heinz-Jakob Neusser, Member of the Board of Management of Volkswagen, and Head of Group Powertrain Development. Here, Dr. Neusser talks about Volkswagen’s plans for a sub-four metre sedan and compact SUV for the Indian market.
You showed a compact SUV concept in India, the Taigun, earlier this year. What stage of development is it in, and when can we see it in the market?
Worldwide, the SUV trend is growing step-by-step. There isn’t a single country that isn’t interested in some kind of an SUV. So, we’re looking to our core markets where the biggest volumes are located and where we have to enlarge our activities. In regards to the Taigun, as you know, we have already done a study and are deciding if it makes sense to stay on the Up platform (i.e. based on Volkswagen’s smallest car) or go with the MQB platform – which is the biggest toolkit that we have for our cars. The advantage to stay on one platform with all the variants is that we don’t have to develop new systems – such as driver-assistance systems, connectivity, e-mobility, etc. Everything is available already, so you only need to take things out of their respective boxes and put it in the car. So, coming back to the question, will we do the Taigun? Yes, but the question is – will it be based on the Up platform or the MQB platform? That hasn’t been decided till now. What I can say is that it is absolutely necessary to have an SUV in each segment. You can’t have a car segment without an SUV, that’s not possible anymore. Not every country needs an SUV in each segment, but for us – the technical guys – we have to provide an SUV in each segment.
Will your new SUV be fully produced in India?
That depends on the volume. Normally, in the emerging markets, you need a deep localisation of the parts. For that, we decided to do the 1.5-litre diesel engine in India – because otherwise you can’t get the costs down to where you need them to be. But it’s also necessary to have the supplier base, because we need to have deep localisation. It makes no sense to buy a supplier part, a turbocharger for instance, in India if our Tier 1 supplier buys 80% of those components in Europe.
Looking at the component industry in India, is it still difficult to have deep localisation?
It’s still difficult in India. But we have a clear decision that we will stay with India, and we will bring in new products into India. So, indeed, for the future, India is a very important market for us. But the situation is not that easy. The biggest problem we have is ‘local-for-local’ – that means localised products for the local market. We are more successful with producing cars in India and exporting them to other markets because of the exchange rates. Then we can support the local-for-local market. But it’s important for us, and for our dealers in India, that we bring new products into the market because they need to stay alive. But it’s a clear decision by the company to stay in India.
How come it took so long for you to decide to manufacture the 1.5-litre engine in India – is it a marketing or engineering decision?
It’s an engineering and purchasing decision, because the point is not merely to have engine manufacturing in India – that’s easy. But we need a supplier base for this, and we’ve had a lot of discussions to bring them to a point where they are also willing to invest in India in order to have deep localisation. It makes no sense, for instance, if we only do a mounting in India and the supplier parts are bought in Europe and imported to India. And this takes time, because we are not alone in this regard. In regards to the 1.5-litre engine, we had some components where we were surprised about the quality of components that were being produced there. And we also had some components where we felt that there was a long way to go. But this is not a special situation in India. It’s the same in China. There are start-up companies that surprise you with high quality and super processes, and other companies that have a European mother that should work, but don’t. But this is not new for Volkswagen. To fix this, we have experts in this field.
Can you tell us a little bit about the products you are planning for India?
From the product side, we can tell you that we are working on what is attractive for the market. We are investigating a sub-four metre vehicle. We are actually developing a Polo as a sub-four concept. We have the design ready, and it looks pretty good to be honest. And there’s a lot of pressure to introduce this to the market very soon. So this is one point, because it’s important also for our dealer base. The second is that we want to do deep localisation of the parts, because we need to bring the costs down. We are not on the level where we need to be. And the third is that we are looking at segments that we expect will grow in future – the SUV segment for instance.
Is the sub-four metre concept specifically for India?
Yes. There is no other country that has a need for it – it’s very unusual. It’s a sedan concept that is under four meters! Normally, there is a need to do sedan concepts that are as long as possible. For the customer, there is no positive effect because there’s less space in the trunk.
From a product standpoint, is it possible to be quicker to react to the needs of the Indian market?
We’re reacting as quickly as possible. Independent from our normal processes, this is a special India-made process. Every three weeks, I personally have one update on this car. We’ve looked at areas where we can eliminate a number of time-dependent prototype stages so that we can compress the development time as much as possible. Doing this, we’ve been able to reduce the time to half.
Is Volkswagen toying with the idea of a budget brand?
Yes, we are strongly working on such a concept – a budget concept. We haven’t taken a decision as yet to produce it, but it’s a very interesting concept. We have made some headway on the budget side with a new supplier base, which is different from the typical supplier base of Volkswagen. We’ve had some positive, as well as some negative results out of this. And the positives results can also be used for our global versions of the MQB – to bring less expensive components onto this platform.