COVID-19 not to derail carmaker’s ₹8,000-cr. investment plan, says official
The government must refrain from getting into a ‘protectionist mood’ that may disrupt supply chains for global automobile firms manufacturing in the country, particularly as they emerge from the impact of recent lockdowns, a senior Volkswagen India official said.“If you ask me what would help from the government in the short-term, the first is to stop import duties in the sense of preventing or destroying supply chains,” said Steffen Knapp, director, Volkswagen (VW) Passenger Cars India.He added there was a tendency at the moment to “fall into a kind of a protectionist mood, which is not helping companies here. We are producing in big factories here, and we have to import some of our stuff in order to be functional because the supply chains at the moment are global. And if you are putting more and more tax and more problems on it, that raises an issue for us.”However, noting the government had taken decisive steps to stabilise the economy, Mr. Knapp pitched for introduction of a scrappage policy that will be a ‘win-win situation,’ helping the environment, pushing demand and generating revenue for the government.Mr. Knapp said COVID-19 had not impacted the Group’s plans to invest ₹8,000 crore in India under the ‘India 2.0’ strategy.“The group is fully determined to continue our path to become a sustainable brand in India and they are not cutting down on the investment in India because it is clearly directed to domestic business. And we need to ramp up core business in India to become sustainable in the future as a brand as well as a company,” he said.Asked if COVID-19 had thrown newer challenges for the company when it was in the middle of reestablishing itself, Mr. Knapp said, “No, in contrast, as we’ve been anyhow in a changeover in a lot of our areas… this has actually accelerated our change. For instance, we were focusing on digitization as one of the key strategic priorities and the COVID-19 has moved digitalization at a much much faster pace…People, for example, are refraining from leaving. The attrition has gone massively down…. So, this crisis has taught us to be faster in implementing our initiatives.”On the increasing competition in the SUV segment, he said, it had been growing tremendously in the past few years and would continue to do so. “There is enough cake to eat. I believe when we come out with our product, it will be spot on.” We will be the first time fully accessible when it comes to our price value equation because we are going to ramp up localization in India to more than 93%. Today we are 80% localisation…which refrains us from being very aggressive in the market… And, believe me, there is so much room in India… so big. If you have the right product at the right price, then it’s gonna fly.”Mr. Knapp said his outlook for the sector in India is positive given that in July, the industry inched closer to previous year levels and August trend promises to surpass the last year’s level. “We can say beating 2019 levels barely has an effect as 2019 was already a difficult year, but given the circumstances…COVID-19, multiple lockdowns, people losing their jobs… The fact that we have bounced back to about 2019 levels in July and August, is a good proof that the industry has come back.”He expected to see good demand due to the festive season because, he believed that Indian people, in principle, can cope with all difficult situations very well.. “…They have a sense of let’s say, YOLO, you only live one…,” and can bring joy into the family by buying a new vehicle, combined with the preference for personal mobility as a safer choice due to COVID-19.
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