Volkswagen (VW) is in talks to source certain models from Maruti Suzuki India and sell them under its own badge, sources said.
According to unconfirmed reports, VW is looking to source the new WagonR and also Ritz from Maruti to launch budget models of its own in India and other markets.
It could make specific changes in the interiors of these cars and sell them at a slight premium. Eventually, it could also look at sourcing Maruti’s engines, components and aggregates for its models in India.
VW currently has only two budget models — the VW Polo (1.2 litre) with the base version priced at Rs 4.42 lakh and the Skoda Fabia (1.2 litre petrol), which sells for Rs 5.08 lakh.
Following their global partnership announced in December, Volkswagen owns nearly 20% stake in Suzuki Motor Corp, which in turn has majority stake in Maruti Suzuki India. The two companies are keen to explore synergies in emerging markets, particularly India, and especially on the cost front.
Officials of both companies said they knew nothing about discussions on product sharing as these were happening at the global level.
Maruti chairman R C Bhargava said he had no information on any product deal with VW.
Kurt Rippholz, the group communications head at VW India, was abroad and did not return calls, while a VW India spokesperson declined to comment for this story.
Bhargava conceded, however, that VW teams have been coming to Maruti facilities. Indeed, the teams have undertaken several visits to Maruti’s manufacturing facilities in Haryana and evinced interest in benefiting from its well-established cost engineering procedures.
If this deal does work out, it won’t be the first time a contract manufacturing agreement has worked for Maruti, since it already has a similar arrangement with Nissan Motor Co. Maruti supplies the A-Star to Nissan with minor changes — butterfly windows for rear doors, new front grille, modified bumpers and some other specs — which sells it in overseas markets under the Nissan Pixo label.
A senior Maruti official said that in the Pixo deal, most of the functional parts of the two cars are identical, and so a significant cost advantage remains in supplying the same model to Nissan with only minor alternations.
Hormadz Sorabjee, the Editor of Autocar India —- which first indicated that such a deal was in the offing —- said if this arrangement worked out, Maruti would want “something substantial in return… lots of negotiations and talks are happening. But if Maruti were to share one of their hottest selling models, they would certainly want something substantial in return from VW.”
Sorabjee may have been hinting at technology sharing from VW’s end.
Earlier, there were indications that VW and Suzuki were considering some kind of marketing and distribution arrangement where VW cars would be displayed at Maruti showrooms —- Maruti boasts of the largest sales and distribution network for passenger cars in India, with its reach extending to even the hinterland. But talks on this arrangement did not fructify.
Deepesh Rathore, the MD of research firm IHS Global Insight in India, said most likely the WagonR under VW badge would come below the Polo. “If they are looking at international market, VW has a lot of scope in terms of products below the Polo”.
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