Can’t compete with Maruti on prices: Volkswagen India's Michael Mayer

Michael Mayer, Volkswagen Passenger Cars' India director talks about the much-awaited Ameo compact sedan, the carmaker's plans for India, the diesel emission scandal and it's impact on the India business, and a ban on the registration of new 2,000cc-plus diesel cars.

Q) You unveiled the Ameo at the Auto Expo this year. What are your plans for India in the next one year?

We have been undergoing some big changes in our company and brand. There's now a refocus on 'economy markets' which have the need for true Volkswagen cars but at a good value proposition. Going ahead, there are two directions for the company. One, credible premium products and second, mass-market cars.

We are looking to bring down premium features to volume cars. This is what we are going to do with our new flagship, the Passat GTE, which will be here in the second half of 2016. It will be launched here in the plug-in hybrid version; we want to test it in India to be a forerunner in alternative drivetrains. We will follow that up with the Tiguan SUV in early 2017 which is a real premium car.

The compact sedan is interesting for a larger part of the buyers. We want Volkswagen to be there when people decide to step up from the hatchback to the compact sedan segment. There's a part of the market where people want a premium brand car and not only the best mileage or the cheapest entry-price car. That's where we move in. The Ameo is certainly not going to be the cheapest car in the segment, but it is going to be the best-looking car; the best driving car, with first-in-class features like auto-dimming mirrors, rain-sensing wiper, etc.

With this, we are also moving our brand representation.

It is a start of a growth plan, where more cars will follow in the next few years. We're also looking into localisation. We have made substantial investments in the last two years -- about 170 million euros into our plant in Pune -- to introduce the Ameo and to introduce future localised engines.

Q) Indian customer is price sensitive. Are you then not looking at competing with Maruti and Hyundai?

Of course, we will, but purely on prices, we can't and we won’t. And it's not necessary. The segment is big enough and there are only three or four serious contenders. We're not looking at the yellow-number-plate taxi drivers, really but rather that person who is brand conscious and what value he gets for his money. We need to be accessible, that's clear. 

Q) Ameo is an India-specific car but are there other markets that you are exploring for exports?

The Ameo is a car built in India, specifically made for India, because the funny rule of four metres doesn't exist anywhere else in the world, but there is a need for economy cars and there is a need for entry sedans in the world. So we are talking to various markets which may be looking for something like that. It will become a part of our global production supply system.  

Q) Maintenance costs also become an important factor when it comes to buying a car in India.

In India, it's not only about which car should I buy, it's also the maintenance cost. The perception in the Indian market is driven by the Maruti Suzuki image -- the generic low-maintenance, 'what mileage does it give' -- you can't ignore that. However, as a brand, we will never ever be able to really match up all these low-cost promises that other people deliver but it's a key challenge for us.

First, we need to get more dealerships out there and in the meantime, also need to increase our service capacity. To widen focus on customer care quality, we'll be getting our dealers engaged in a cultural change around customer culture, which is not inherent in fast growing businesses. We are trying do our homework so that we have an accessible premium car that comes with accessible premium service. 

Q) Last year, VW received a showcase notice pertaining to the diesel emission scandal. You had announced a voluntary recall. Is it going to happen anytime soon?

It's something we're looking at very seriously. We are as disturbed as our Indian customers are because you lay certain trust in a brand and be assured that everything is alright as it can be.

There is going to be a voluntary recall as we had announced in December, and that's going to happen in May-June 2016. Most of the cars will get a seamless simple software update, and in one of the cars, we will have to put in a small plastic tube that goes into the air intake to straighten the air intake of the engine.

We will start contacting each customer individually once the software is available and certified by the Indian authorities, especially the ARAI. We told the ministry and ARAI in December that we are compliant to Bharat Stage IV emission regulations and that is our stand.

We still doing a recall. This is for the element of getting people's trust back.

We want everyone in India to have an engine -- even though the emission norms are lower – with the latest state-of-the-art engine management software like anywhere else in the world where it might matter.

We are preparing our network to do the recall in a seamless manner to make it convenient for our customers. We will put up additional capacity in the workshops and work long hours.

Q) VW’s India business also suffered last year because of this controversy. Are you seeing normalisation in car sales?

There was a serious phase in late last year where the customer was disturbed. During that phase, we noticed people shying away from the brand. But then business picked up. December and January, up to now, have been good for us. There are inquiries so there we can see people coming back.

Q) The government has put a ban on the registration of diesel cars above the capacity of 2000cc. How much will that impact VW and are you deciding any new strategies to get past this.

To my perspective, it's short-sighted and will just disturb customers. A 1.95-litre engine against a 2.1-litre engine doesn't change much.

The major contributors to air polluters are not BS IV diesel engines, it is the ten million BS III trucks and cars that's humming around in the city which need tackling.