Volkswagen mulls smaller car than Polo for India

German auto major Volkswagen on Sunday said it was mulling the introduction of a car smaller than the Polo in India to tap the fast-growing compact car segment in the country.

"Believe me, we will have something smaller than the Polo. We are working on it," Volkswagen Group's India Communication Head Kurt Rippholz said. He, however, clarified that nothing was finalised yet. "First, you have to conceptualise and then assess the market potential," Rippholz said.

Volkswagen started manufacturing operations in India earlier this year at its Chakan plant, rolling out the compact car Polo. It invested around Rs 3,500 crore (Rs 35 billion) on the plant, which has the capacity to produce 110,000 units a year.

The small car market in India is the second-fastest growing auto market in the world after China. It accounts for about 75 over cent of the total Indian car market, which is approaching two million units annually.

While Maruti Suzuki India is the leader with over 55 per cent market share, new entrants like Nissan and Ford are hotting up the competition. Hyundai, Tata Motors and General Motors are also significant players in the segment.

Asked about the models below the Polo, which could be considered for the Indian market, he said: "There's the Fox in Brazil and Ebisa that's sold in Spain. But, India is a different market. First, we have to decide which car will it be."

VW is also mulling launching a new variant of the Polo in India. "Internal discussions are on," he said, adding that production of VW sedan Vento, which is based on the Polo platform, will start in July in India. Vento would be positioned between the Polo and the existing Jetta sedan, he added.

Commenting on the localisation of components for the Polo in India, he said VW was looking at about 75-80 per cent in the next two years from the current 50 per cent.

Rippholz said VW expected to touch the full capacity of its Chakan plant by 2012.