Why Volkswagen And Skoda Cars Are Getting More Affordable To Own And Maintain: Explained!
Skoda and Volkswagen continue to be two desirable brands among Indian buyers. Despite their European flair, many Volkswagen (VW) and Skoda models from the past were expensive to own. These vehicles have recently become more affordable to own and maintain. A strong reason for this is the extensive localisation in manufacturing that Volkswagen-Skoda has adopted. Almost everything from the platform to the engine (of the India 2.0 vehicles- Kushaq, Kylaq, Taigun, Slavia and Virtus) is made in India. The company recently announced the production milestone of 500,000 locally manufactured engine units at the Chakan facility...
5 Lakh Made-In-India Engines
The 500,000th engine to roll out of the factory was a 1.0 TSI. Skoda Volkswagen uses this petrol engine on the Kylaq, Kushaq, Taigun, Virtus, and Slavia. This engine continues to be in huge demand for its lower capacity and affordable nature.
The Chakan factory started producing engines in 2014. Not all of these are sold in the domestic market. Andreas Dick, Škoda Auto a.s. Board Member for Production and Logistics, commented:
"Producing 500,000 engines at our Pune facility is a significant milestone, reinforcing India’s role in our global manufacturing network. Our investments in technology and workforce development continue to enhance our production capabilities, ensuring high-quality and cost-effective powertrains.
India’s advanced manufacturing ecosystem and skilled workforce play a vital role in meeting global demand with high-quality, efficient powertrain solutions. This milestone reinforces our confidence in India’s ability to support Group’s international operations and future growth."
Piyush Arora, Managing Director & CEO of the company said in a statement "This milestone highlights our commitment to localization and innovation in powertrain manufacturing. Since 2014, we have built a strong foundation, evolving to meet market needs with world-class engines.
The high degree of localization in our made-in-India engines showcases the Groups focus on domestic sourcing and contribution to strengthen the Indian automotive manufacturing and supply ecosystem. We will continue to invest in expanding our capabilities and strengthening India’s position as a hub for world-class automotive manufacturing"
Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL) has a strong focus on exports. The group operates two manufacturing facilities in India- Chakan and Chhatrapati Sambhajinagar (formerly Aurangabad).
At present, up to 25-30% of the Group's total produce from these facilities is being exported to global markets. Latin America, Africa, and the ASEAN region are among the most important markets receiving made-in-India engines and products. Talking of vehicle exports, the Virtus and T-Cross (essentially the Taigun sold in the Indian market) top the charts.
Volkswagen Group's success mantra: As it turns out, Volkswagen Group is doing relatively modest numbers compared to some of the market leaders. Despite this, the strong focus on exports aligns with the Indian government's "Make in India" initiative and this has helped the manufacturer build better economies of scale. This has helped it offset some of the challenges posed by modest monthly volumes.
Extensive Localisation
Circling back to why VW and Skoda vehicles are getting cheaper to own and maintain, the heavily localised MQB A0 IN platform is another reason. This iteration of the MQB has been heavily localised. It has more than 95% of localisation gone into it. Volkswagen seems to have got the supply chain sorted to ensure hassle-free production.
The localised nature of this platform has helped in bringing the vehicle costs and repair costs down. Plus, Volkswagen Group has also been actively expanding its warehouse capacity to make it easier for owners to source parts in a cost effective way. The company is also working on establishing dealerships and touchpoints in more cities and small towns for better customer outreach.