Volkswagen is considering a compact model for India to take advantage of lower tax rates on sub-4m cars, according to the Economic Times.
It is considering a small notchback or sedan based on the up! platform to rival the successful new Maruti Suzuki Swift Dzire, the sedan variant of the popular hatchback. It will be powered by a 1.5-litre derivative of the country’s 1.6-litre diesel engine to benefit from the small cars excise duty of 12%.
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Cars over 4m or with an engine of over 1.5-litre attract 24% tax. The ET noted that Mahindra & Mahindra and Honda are also planning to enter the sub-4m segment with the compact Verito and Brio respectively. During April-August the super compact sedan segment grew by over 30% to 88,342 units while the overall car market grew just 7.2%.
John Chacko, Volkswagen Group’s chief representative for India, confirmed to ET the firm is considering a sub-4m model.
“After being in India for three years, we have to adapt to a certain extent as far as the regulations are concerned.”
Chacko added that VW India, which is present in only one-third of the overall car market in the country, is currently developing a product portfolio strategy for future. It will eventually enter segments such as small cars, SUVs and MPVs.
VW India doubled its sales in 2010 and 2011 but could not sustain the momentum this fiscal year, seeing sales decline 3.4% in the first half of 2012.
