Volkswagen to invest Rs 20 billion in India by 2013

German car-maker Volkswagen on Wednesday said it will invest a minimum of Rs 2,000 crore (Rs 20 billion) on its Indian operations by 2013 to ramp up capacity, launch new models and strengthen research activities.

The group is also considering to launch its small car Up in India by the end of 2013 or early 2014.

"We have plans for investing at least Rs 2,000 crore (Rs 20 billion) additionally by 2013. This will be an investment by the entire group," Volkswagen Group Chief Representative India John Chacko said.

This investment will be in addition to 580 million euros (about Rs 3,600 crore) that the European auto major had announced in 2008, he added.

"There are huge opportunities to expand in India. This amount will cater to ramping up our production capacity, introducing new models and enhancing our R&D work here," he said.

The group, comprising Volkswagen, Audi and Skoda, at present has two manufacturing facility at Chakan and Aurangabad in Maharashtra.

He said the capacity at Chakan has will be increased to 1.3 lakh units annually this year from 1.1 lakh cars. When asked if the group will set up a new facility in India, Volkswagen Executive Vice-President Ulrich Hackenberg said, "We will first increase

the capacity of our existing plants and later, if needed, we will look for new sites."

On new products, he said the group is considering to introduce small car Up in Indian market. "We have launched the Up in Europe. This car is has a future in India and we are analysing it at the moment... We are looking at a segment where Hyundai i10 and Maruti's Swift is present."

Asked about the timing of the launch, Chacko said it is likely to hit Indian roads by the end of 2013 or early 2014.

In 2008, Volkswagen had increased its investments in India to euro 580 million from the initially planned euro 410 million as it aimed to fully exploit the small car market.

Chacko further said the group's Indian operation is likely to break even in 2012 after its long-term investment that started three years ago.

"We are concentrating on cost efficiency in this year. We are focusing more on producing more cars from one location to reduce cost... I think, we may see profit as a group during this year," he added.

During 2011, the group's average localisation of parts increased to 73 per cent from 60 per cent a year ago, he said.

The group had sold 1.05 lakh cars last year in India. Chacko said its group firm Skoda will start export of sedan Rapid to South Africa, marking it the group's first overseas shipment from India.