German auto giant Volkswagen Group on Monday announced an investment of 1 billion euro (Rs 7,900 crore) between 2019 and 2021 to strengthen its presence in India. The strategy will be spearheaded by group firm Skoda Auto.
As part of 'India 2.0' project, Skoda Auto is setting up an engineering design and development centre at Pune besides enhancing capacities at the group's two plants at Aurangabad and Pune.
"We are now investing up to 1 billion euro by 2020-21. This is the biggest investment which we have done in one single market. This the first and most decisive step," Skoda Auto CEO Bernhard Maier said.
The group will launch a new SUV based on VW's flexible MQB platform by the second half of 2020. The group has set a target of capturing 5 per cent of the Indian passenger vehicles market by 2025.
The R&D centre is expected to be ready by the end of the year and the company plans to hire 200-250 engineers to develop cars in India.
The group is looking to create up to 5,000 direct and indirect jobs through setting up of the engineering centre and creation of additional capacities in the two plants.
"We want to exploit the maximum of our current capacities in Pune and Aurangabad, he said adding currently the group is working on finalising the details.
Maier said: Our plan is to have a market share of 5 per cent for VW and Skoda brands together in India by 2025. The VW group has around 2 per cent market share in India, which stood at over 3.2 million units in 2017-18.
In order to achieve its targets, the group which had earlier explored unsuccessfully a partnership with Tata Motors, is looking at launching two models each from Volkswagen and Skoda brands between 2021 and 2025.
Admitting that the group made mistakes in India in the past, Maier said: We decided 1.5 years ago that we want to tackle the Indian market better than we did in the past
The most important part is that the group decided to split responsibilities and Skoda not only got the responsibility to develop in India but also in Russia, he said.