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VW Group India eyes passenger car business merger this month

Merger process said to be completed by September 21, 2019; new organisation proposed to be named Skoda Auto Volkswagen India

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Volkswagen Group India, Passenger car business, Volkswagen Group India Sales, Skoda Auto India, Skoda Auto Volkswagen India, SAVWIPL, National Company Law Tribunal, India 2.0, Czech Republic, Skoda, SUV, Sedan, MQB platform

It was earlier this year that the Volkswagen Group India announced its intentions to merger its passenger car business – Volkswagen India, Volkswagen Group India Sales and Skoda Auto India – in the country. The Group is eyeing the completion of the merger process by September 21, 2019, subject to all requisite approvals, with the new organisation proposed to be named Skoda Auto Volkswagen India (SAVWIPL).

As per a source, the National Company Law Tribunal has approved the merger, though a written approval is still awaited. With the planned merger, the Volkswagen Group aims "to combine the technical and managerial expertise of the three companies to unlock the Volkswagen Group's full potential in India".

Under the 'India 2.0' strategy, the Volkswagen Group had decided to make its Czech Republic-based Skoda business unit head the fresh attempt to gain a fair share in the highly competitive Indian passenger vehicle market. While Volkswagen cars couldn't find strong favour among Indian customers, the Skoda brand has a good chance as at least some of its models fall in 'sweet spots' of the Indian car market, according to an industry veteran.

The Volkswagen's Group's move is also seen as a scaling down of the VW brand's presence in India. Does this mean the brand will exit the market, as General Motors' Chevrolet did? A company source says it won't.

Under the 1 billion euro (approximately Rs 8,000 crore) plan announced on July 2, 2018, the original strategy is to develop eight new offerings – four each for domestic and export markets. The four models include an SUV and a sedan under the Volkswagen brand and the same for Skoda. Sources say that these models will be based on Volkswagen's MQB platform and there will be badge engineering involved.

The company may launch one model every six months, and the first of these models could be launched in March 2021. Volkswagen's India 2.0 plan also involves tapping the India base as a technical and an export hub. A set of four left-hand-drive models – two each for Skoda and Volkswagen – may be produced by 2022.

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