Volkswagen Cars eyes mass growth in India with compact SUV

Mumbai: Volkswagen Passenger Cars aims to grow its presence in India's mass market with a compact sports utility vehicle (SUV), while stepping up efforts to differentiate the brand from sister marque Skoda, CEO Thomas Schafer told ET. "We are a volume player," Schafer said, adding that Volkswagen's growth in India has so far been constrained by its limited presence across segments.

The company now plans to expand into the sub-four-metre segment next year and subsequently add more segments and powertrains. This will be the German carmaker's most affordable model in India since it phased out the Polo hatchback in 2022, Schafer said.

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Volkswagen Passenger Cars sells the Tiguan, Taigun, Virtus and Tayron models. It saw its dispatches in India decline 11.4% year-on-year to 10,629 units in the first four months of 2026-27, according to the Society of Indian Automobile Manufacturers (Siam).

Schafer said Volkswagen would avoid the kind of product overlap that had historically blurred the identities of brands within the group. "Customers buy brands," he said, stressing that Volkswagen, Skoda and Cupra need to stay clearly differentiated even as they share technology and components.

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The sub-four-metre SUV, based on Volkswagen's locally developed MQB-A0-IN platform-the cross-badged version of the Skoda Kylaq compact SUV-is, therefore, more than a new product for the German brand. It is the first major step in broadening its India portfolio and reaching a significantly larger customer base. Cross-badging is a strategy where two different car brands sell the same vehicle under different names, usually with minor styling changes such as logos, bumpers and headlamps.

Automakers use this approach to eliminate the massive costs and years required to develop a brand-new vehicle from scratch. Notable partnerships include Suzuki and Toyota (Baleno and Glanza) and Nissan and Renault (Duster and Tekton).

"Sub-four-metre is definitely a no-brainer. You have to be in there to be significant in the market, and we've made this decision now," Schafer said. The segment accounts for about 28% of India's passenger vehicle market. Volkswagen has a relatively narrow portfolio in India, he said.

Schafer said the company wants to use the new model not only for India but also as an export opportunity, underlining the increasing importance of India as a manufacturing and development base for Volkswagen.

VW Passenger Cars has spent the last four years separating the identities of Volkswagen, Skoda and Cupra after acknowledging that products had become too similar.

Schafer said the objective now is to retain the benefits of sharing platforms and components while ensuring the brands remained distinct in design, feel and positioning.

For India, this means the upcoming compact SUV will have to occupy a distinct space even as it shares its underlying architecture with other group products. Schafer also sees room to widen Volkswagen's India portfolio through the India-EU free trade agreement, which could make it viable to bring niche European models that currently don't make economic sense as imports. But immediate priority is clear-use sub-four-metre SUV to move Volkswagen into a larger part of Indian market and put brand on a higher growth trajectory.