Volkswagen India is considering assembling certain engines and locally sourcing some key components from local vendors, and a decision on the localization scope expansion is close to being made, say reports.
VW India President and Managing Director, Mahesh Kodumudi says the localization of products currently is 70 percent and the aim is to increase it to 90 percent. Reaching 90 percent would not come without localizing engines and gearboxes.
Volkswagen could start assembly with the 1.5L four-cylinder diesel engine it reportedly plans to adopt across PQ25 platform products, before proceeding to localize it. The new engine will replace the 1.2-liter three-cylinder and the 1.6-liter four-cylinder units employed on the Polo, Vento and Rapid, and possesses the scale factor to justify complete localization.
Volkswagen produced 1 lakh cars from its Chakan plant last year based on the demand in India and abroad. About 30 percent of the production is being exported. Its second plant in Aurangabad that assembles CKD kits from Europe, has a capacity of 89,000 units which it is yet to exhaust.
The localization program is a part of the 100 million Euro investment (INR 800 crore) the company intends to make over the next few years, before the end of the decade. The investment would realize the launch of a sedan, hatchback and an SUV in the B-Segment.