VW to Invest €1 Billion In India

Volkswagen AG says it will spend about €1 billion ($1.2 billion) in India on new models, additional production capacity and a new engineering and product development center.

VW’s Skoda brand will lead the initiative, aiming to capture 5% of the Indian car market within 10 years as the country implements tougher safety and emission rules. Last year Skoda’s sales in India jumped 30% to 17,400 units.

Part of the investment will add capacity at VW’s 8-year-old assembly plant in Chakan, Pune. The facility currently has the capacity to make 200,000 vehicles per year. The facility produces the Skoda Rapid hatchback and VW Polo supermini and Vento sedan variant.

Skoda abandoned talks in mid-August with Tata Motors Ltd. about co-developing an entry-level car for the Indian market. Instead, Skoda announced a plan to launch its own low-cost model, which will ride on VW’s modular transverse matrix platform, by 2020. The brand is studying a plan to add two more models that share the same chassis.