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MACHINIST - VW to redesign Indian manufacturing to contain costs and up production

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VW to redesign Indian manufacturing to contain costs and up production
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Written by Vijay   
Thursday, 24 January 2008

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German car-maker Volkswagen, which entered the Indian market late last year,has gone one step ahead of its European and Japanese rivals to save cost and make cars more affordable in India.

In a strategy which is the first of its kind to be seen in the country among global car makers,the VW group will integrate all of its manufacturing facilities in India to contain costs and check on uninterrupted supply of auto parts. The VW group owns the Skoda and Audi brands and manufacturing plants of Skoda, VW and the new proposed Audi plant would be designed in such a way that it can produce cars of any of the group companies.
 
The Volkswagen Group has eight brands in its fold: Volkswagen, Audi, Bentley, Buggati, Lamborghini, SEAT, Skoda and Volkswagen commercial vehicles. The current models of Skoda Auto including the Fabia, Laura, Octavia, Superb and future launches such as the Roomster (MPV) and Yeti (SUV) can be produced in VW’s plant in Pune or at Audi’s facility.
 
Similarly, VW’s models such as Passat, Touareg, Phaeton, Jetta, Polo/Golf and Up!, can be produced at Skoda or Audi’s facility. Both VW and Audi are currently using Skoda’s facility to locally assemble the Passat and A6, respectively.

This move will help to amalgamate all its manufacturing lines into one production hub and thereby evade any production constraints in the future.

This strategy will also keep manufacturing and other costs down and the benefits of such cost cuts will be passed on to the consumer making the cars substantially cheaper.

The group aims to garner a 10% share in passenger car market by 2018. According to the company, growth in India will be driven by its small cars, the first of which will be rolled out in 2010.

Internationally, the VW group operates in a similar fashion in competitive markets such as Europe and North America, among others.

Considering India to be the second most important market in the world after China,the group’s funds will be utilised in increasing production at Skoda’s Aurangabad facility, local independent production plans for Audi and also for parts procurement to feed its international plants. Reports suggest that the group is aiming to source components worth more than $1 billion.
 
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