Volkswagen on cost-cutting?

One of the world’s largest selling automakers, Volkswagen’s Indian operations haven’t panned out since its entry back in 2007. The German auto giant has now closed down two of its regional offices located in Delhi and Bangalore after witnessing plummeting sales that have forced the firm to change its strategy for India and it is saving on operational expenses. Despite an installed capacity of 1.3 lakh vehicles at its Pune plant, the company has only produced 89,000 vehicles up til January in the current fiscal with major volumes coming from exports.

The regional offices were originally started to streamline marketing and sales functions after facing hostility from customers over the quality of service and availability of spares. The shut down offices are now merged with Volkswagen’s National Sales Company (NSC) that it operates from Mumbai and employees from the shut down offices have been asked to either shift to the metropolitan or continue with a work from home basis based on seniority.

In the past year, Volkswagen has shifted its efforts towards export operations and shipped 57,183 units in the first 10 months of the current fiscal accounting to 60 percent of the total production. In the same period, sales in India saw a decline of 19 percent with 36,588 units sold. As Volkswagen awaits the domestic market to restabilize, the automaker is preparing to launch a compact sedan in the following years to address the demand in the popular segment. The company also plans to open a regional parts centre in Bangalore and a training academy in Delhi in the future.