Andhra Pradesh's loss is Maharashtra's gain. German auto giant Volkswagen will drive in with investments to the tune of $500 million for the manufacture of its premium and small cars.
In one of the most fierce and controversial battles for investments, Maharashtra -- specifically, Pune -- beat 17 locations and 6 states, including AP to win over Volkswagen and consolidate its position as India's Detroit.
Excerpts from exclusive interview with CFO, Volkswagen, Hans Dieter Poetsch:
Have you worked out a settlement with AP?
Rather than talking about the settlement, it is important to say there were criminal dealings involved which are being investigated and that is why I don't want to comment on it.
We did our best to try to settle with AP. At the end of the day, we embarked on a very deep analysis and we were analyzing our business in 17 different locations and six states. We were running around, but in the end Pune was our decision, which we took for a couple of reasons. One being logistics, the other being infrastructure. They also have a lot of skilled people and importantly, the market is just in front of the factory.
The 'Passat' will be assembled in the Skoda plant in Aurangabad starting in 2007 and is going to be priced under Rs 30 lakh (Rs 3 million) to compete with the Toyata Camry. What kind of a sales target have you actually set for the Passat and just how much under Rs 30 lakh is it going to be?
For obvious reasons we do not want to warn competition too early because the model is going to be brought into the market in the second half of 2007. But it will be very competitive and, of course, we will try to sell as much as possible, which, taken the characteristics of the vehicle and the price levels there, is not a huge quantity, but is something which is a good basis for VW to start business in India.
The small car you are talking about will compete with the Maruti Swift and Hyundai Getz, is that going to be the model just for India or will it also be exported to other European markets?
What we are trying to do is satisfy customer needs and what we did was to identify specific customer needs in India. That is why the model will be specifically designed for India. But a lot of models can be very suitable for other markets and in fact, we would not be surprised to say that this is a sort of a real car serving many markets - like Russia, China, South America and India and few more markets.
We understand that Porsche wants to increase its stake further from 27% to almost 30%, any apprehensions on that and will they have to make an open offer if they touch 30%? Any repercussions for you?
You are only suggesting what Porsche said in public, which is that they want to bring their stake up to somewhat less than 30%, and about making a public offer. You can ask Porsche for anything else, I can only comment that it is very valid and well thought out move.
If one looks at the returns on their investment so far, I think they can be happy and we are happy too.
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