Volkswagen records 3.36% sales growth for January 2012 in Indian auto market: Will India–EU FTA boost VW sales

Volkswagen posted a 3.36% sales growth in the Indian auto market for January 2012. VW sold 5,789 units through last month. In a YOY comparison, in 2011 January, VW sold 5,601 units in India. Sales volume for Volkswagen in India comes from the compact car Polo, and sedan Vento, with both cars contributing for sale of 5,402 units for January.

VW’s luxury sedans Jetta, and Passat, account for 387 units of total sales for the month. Neeraj Garg, Volkswagen Group Sales India Member of Board and Director, had this to say. “The first month has shown a decent performance, with sales even growing slightly as compared to the same period last year. We take this as a very positive sign and are confident to go forward during the year with growth in sales numbers.”

With the India-EU free trade agreement (FTA) seeing the light of day soon, the one thing that could influence the Indian car market is that European auto manufacturers Volkswagen, Mercedes Benz, and BMW are likely to benefit from the proposed duty cut. This translates to reduction of import duty on cars from the current 60% that’s levied. The proposed bilateral trade agreement that comes into being under the India–EU FTA would see car import duties stand at 30%. In 2011, Volkswagen recorded an impressive growth of 151% as compared to 2010, and sold 76,107 passenger cars though the year. The Volkswagen Polo performed remarkably last year and sold 37,153 units, which is almost half the number of vehicles VW sold in 2011.

Keeping in mind that Volkswagen would strive for record sales growth in 2012 as well, they would need to work on increasing production capacity, or look at a new plant. Another option would be to wait for the India-EU free trade agreement (FTA) to be finalized, and bring in cars to the Indian auto market via the import route since import duties would be reduced. While this would not be a winning strategy as far as sales volumes are concerned, a premium vehicle will however contribute to sales numbers.