India not a low-ticket size car market anymore: Volkswagen ID4 EV incoming

In recent times Volkswagen India has completely revamped its portfolio in India, phasing out economical models such as the Polo hatchbacks and Vento sedan. In place of these, VW recently introduced the Taigun mid-size SUV, the facelifted Tiguan SUV and now the Virtus premium mid-size sedan. Wondering about Volkswagen’s strategy behind tackling new segments with cars that are more premium than earlier models, TOI Auto held an exclusive interaction with VW India Brand Director, Ashish Gupta and got some interesting insights.
‘Even with the Polo and the Vento, we were always present in the premium end of the segments they were in. That is how we have always positioned our brand and that is what our customers also expect from us. The Indian market is moving towards a transformation, if you look at the data today almost 37 percent of cars sold in India now are above Rs 10 lakhs. So we are no longer a low-ticket size market. And this is a trend that is going to continue because customers now see value in additional features, safety and they are prioritising these factors over price.’ Gupta said.

When asked about why Volkswagen AG chose to launch a Sedan as part of its INDIA 2.0 program, at a time when there is a growing perception that the sedan body style is on its last legs thanks to the popularity of SUVs, Gupta said, ‘Market analysis shows that the SUVs segment has grown at the expense of hatchbacks and not sedans. In 2021, overall sedan sales ended between 90-95 thousand cars. Out of which, 75 percent were smaller sub-4-metre sedans and 25 per cent were premium mid-size sedans where the Virtus is positioned. Going forward, the sedan segment is expected to grow to 140 to 150,000 by end of FY22-23 and Volkswagen intends to capture 15-20 percent of the segment with the new Virtus by selling 2,000 to 2,500 cars per month.
Since May 2022, VW has already received over 4,000 bookings for the Virtus sedan. Volkswagen reports that it has produced around 4,500 units of the car already out of which 2,500 are in dealerships. Of the bookings received so far, 60 percent are for the 1.0-litre engine and 40 percent are for the 1.5 litre mill. In terms of transmission, 45 percent of the Virtus booked are automatic and 55 percent are with a manual transmission. The company anticipates that this split will stabilise at a 55/45 ratio in the future.

While VW’s goal to have up to 20 percent chunk of the expected 150,000 sedans to be sold this year is admirable, it is no secret that the industry is going through turmoil due to several supply chain issues such as the semiconductor shortage. The question is whether VW will be able to keep up with the expected demand for the Virtus and if they plan to introduce sub-variants in near future to keep up with sales targets as few other automakers have been doing. ‘VW as a brand is very cautious of making any changes to existing features such as the information display or driver display which are susceptible to chip shortage. But if the situation does not improve we might consider launching sub-variants which do not offer all the features’, said Gupta.

On a happier note, Ashish Gupta did confirm to TOI Auto that VW will be bringing test mules of the ID4 compact electric to India in late 2022. ‘We will be testing the car in Indian conditions to see how the technology performs in our local environment. And if any modifications are necessary to make it more suitable. Definitely, the momentum in EVs has accelerated in the past six months, not only for the industry but for us as well. And soon you will see some results regarding that. By our estimates, we could see the ID4 electric car launch in India by mid-2023.