PRESENTATION ON BUSINESS STRATERGY OF

VOLKSWAGEN INDIA

SUBMITTED TO: PROF. VANDANA BHARTI

SUBMITTED BY: ANIL BHARTI

KAVITA RAJPUT

VOLKSWAGEN…? Volkswagen (VW) is one of the 3rd largest automobile leading manufacturer & the largest carmaker

in Europe Volkswagen in German language means people’s car

Founded - 28 May 1937 (79 years)

Founder(s) - Ferdinand Porsche

Headquarters - Wolfsburg, Germany

Slogan - Das Auto ("The Car")

Area served - 153 countries

Subsidiaries - Audi, Bugatti, Bentley, Lamborghini, Porsche, SEAT, Skoda, Volkswagen and Scania CV

SUBSIDIARIES

INTRODUCTION• Volkswagen Group Sales India Pvt. Ltd. is the wholly owned subsidiary of Volkswagen

Group in India.• Volkswagen Group India mainly catered to the luxury segment of the Indian car market. • Volkswagen entered the Indian passenger car market in 2001 by launching its car brand

- Skoda. In 2007, two of its other brands Audi and Volkswagen, were also launched in India.

• Its operations are spearheaded by four of Group division companies: Audi India Porsche India (assemble in India) Volkswagen India Private Limited Škoda Auto India Private Limited Lamborghini (assemble in India)• They focus on manufacture and sales of Audi, Porsche and Škoda vehicles in India. • Volkswagen subsidiaries, Lamborghini, also sell their cars in India through them.

MARKET SURVEY OF VOLKSWAGEN 70% of passenger cars are small cars in India. The pricing needs to be within the competition. Need for changing its market strategy for India. Majority of Indians did not know anything about Volkswagen, not even

the pronunciation. Brand awareness was 4% as compared to 70% which competition

enjoyed. India is an important market for Automobile manufacturers. Indian automobile market is growing market. Easy Financing Options are available. Expertise in Premium cars Priority to performance Skewed towards

compact cars Priority to economy.

PRODUCTION FACILITIES• Volkswagen Group Sales India Pvt. Ltd. operates a

manufacturing plant at Chakan, near Pune, Maharashtra with an annual capacity of 200,000 vehicles for production of Volkswagen branded vehicles.

• The Chakan Plant is also used by SAIPL to manufacture the Škoda Fabia.

• It also shares a manufacturing/assembly plant in Aurangabad, Maharashtra which is operated by Škoda Auto India Private Limited for production of Audi branded vehicles.

Sales and Service Network

• Volkswagen Group Sales India Pvt. Ltd. vehicle brands have a combined dealership network of more than 153 dealerships in more than 56 cities all over India.

• Skoda and Audi alone having in total around 120 dealerships across the country today.

SALES PERFORMANCE• In the year 2010-11, Volkswagen Group Sales India Pvt. Ltd. recorded

combined sales of 53,341 vehicles.• In 2011-2012 the Volkswagen Group India clocked an impressive growth

of 109.3%. • The three brands – Audi, ŠKODA and Volkswagen together delivered a

total of 111,623 vehicles to customers in 2011-2012.• The Volkswagen Polo is the highest selling model of this group with a

sales of 37,153 in 2011. • From January to December 2012 Volkswagen Group India sold 115,237

cars with a growth of 3.2 percent. • Audi, Lamborghini and ŠKODA achieved impressive sales figures while the

sales figures of Volkswagen and Bentley remained with a slight decrease.

PORTERS 5 FORCES MODELBarriers to Entry: HIGH

the automobile industry has large barriers preventing new firms from entering. Aside from start-up costs, automakers must set-up dealer networks, acquire licensing, and establish trust in the brand (as cars are usually large purchases for consumers). New competitors often come in the form of subsidiaries of current competitors.

Power of Suppliers: LOWSuppliers specialize. They produce parts for only one or two automakers at once, and are heavily reliant on these automakers. It would be devastating for a supplier to lose an automaker contract.

Bargaining power of buyershow strong the position of buyers is. For example,Can customers work together to order large volumes to squeeze your profit margins?

Availability of Substitutes: MEDIUMAs a result of increasing rising gas prices and government initiatives to promote environmental friendly transportation, more consumers are opting to take public transit/walk/cycle.

Competitive Rivalrywe have to analyse the level of competition between existing players in the industry.

VOLKSWAGEN INDIA MARKETING STRATEGIES• Worlds first talking newspaper Volkswagen took advertising to a new level with an innovative audio advertisement in e-

newspaper. On Tuesday September 21, 2010 as readers opened the newspaper a light sensitive chip

attached to the page announced the arrival of “a perfectly engineered car” – the Vento. 25 lakh readers of The Times of India and The Hindu were taken by surprise. It cost VW 7 lakhs rupees.

• Social media VW India’s FB fan page has more than 1.5 million likes and Twitter page has more than

11,000 followers. Official YouTube channel for VW 57 million subscribers worldwide Broadcast numerous

videos for promotion and brand awareness.

CORPORATE STRATEGY• Global challenges such as climate change and

scarce resources demand sustainable solutions.

• Volkswagen Group has been employing various methods to envisage the future and thereby enhance its competitive position.

• Volkswagen Group has charted a clear course with our “18plus” strategy.

MACH 18PLUS STRATEGY• Focus lies on becoming an economic and environmental

leader in the global automotive industry.• Strive for success in terms of profitability, customer

satisfaction and quality, accessing new markets and increasing production output, and attractiveness as an employer.

• The “plus” element stands for more entrepreneurial thinking, more synergies and more ecology.

• Volkswagen will harness the strengths of the Group and its nine brands with an environmentally-oriented model range .

• Volkswagen has set its sights on new environmental benchmarks.

• The company has earmarked annual expenditure for development and investments in new models and technologies in excess of €8 billion over the next few years.

• Boost the sales volume from present 6.5 million to more than 10 million cars.

• The incremental volume aimed for will more or less come from Brazil, Russia, China and India.

INDIA’S CONTRIBUTION IN 18PLUS STRATEGY

• Indian car market is the 10th largest car market with annual sales of around 1.4 million cars.

• The market size is expected to increase to 4 million cars by 2015.• Volkswagen aims to increase its market share from a meager 1%

presently to 10 % in next 5 years.• Volkswagen picked up 19.9 per cent stake in the Suzuki Motor Corp

(SMC) for USD 2.5 billion last year.• Maruti Suzuki India is the crown jewel of the Japanese car maker.• Volkswagen is open to jointly developing products with Maruti

Suzuki India, as part of its efforts to achieve synergy with Suzuki Motor Corp at the global level.

BUSINESS STRATEGY

SKODA AUTO INDIA• Launched its first product, the OCTAVIA, in India in

2001.• Was the only possible step to enter India.• Skoda adopted a Focus Strategy approach relying on

differentiation as a luxury car maker.• It now plans to come up with a new Fabia which will

be more competitively priced and another small car priced between 3-5 lacs(by 2012).

Business Strategy AUDI INDIA• Audi is one of the world’s leading premium brands.• Basis of its success comprises pioneering concepts in the

domains of advanced technology and design.• Audi has been selling its products in Indian market since

2004.• For this Audi AG has earmarked investments of up to €30

million (Rs174 crore) by 2015 in its local operations.• Also Audi India plans to come up with a car in corporate

entry level i.e. Toyota Camry following the lead of BMW.

VOLKSWAGEN INDIA• Volkswagen is the highest volume brand of VW Group.• As a first step, the Volkswagen brand launched the globally successful Passat in 2007.• To expand its portfolio and cater to the mid segment, Volkswagen launched one of the

brand’s bestselling models, the Jetta, in India in July 2008.• Iconic New Beetle were introduced in December 2009.• From December 12, 2009 the new Pune plant has started rolling-out the hatchback

version of the Volkswagen Polo.• After Polo, Vento is VW's second car targeting the mass market. • It will be positioned at the upper-end of the country's mid-sized sedan segment.• Volkswagen India has adopted a top-down strategy to arrive at competitive pricing.• It is directly pitted against market leader Honda City, Maruti’s SX4, Ford Fiesta etc.

Business Strategy

FUNCTIONAL STRATEGY MARKETING STRATEGY OF VW INDIA• China is the 2nd largest market for VW Group after Europe.

• Volkswagen plans to use its learning in China in India.

• Aggressive price tags and high-decibel advertisements.

• Volkswagen’s strength lies in the mass market. Its name, after all, means people’s car in German.

BRAND POSITIONING STRATERGY• When VW started out in 2007, low brand awareness was one of

the key concerns.• Thus Volkswagen came out with 13 advertisements in a leading

English newspaper.• It told readers all they ever wanted to know about Volkswagen —

how the name came about, its product line and so on.• By the time the campaign ended, Volkswagen had used 18,000

television spots, 144 insertions in broadsheet dailies, 50 insertions in magazines, 280 out-of-home sites and 23 digital portals.

• To improve brand recall, the next campaign showed all Volkswagen cars: The Beetle, Passat, Jetta.

COMMUNICATION STRATERGY• Most of the Volkswagen communication takes place through print

media in magazines and newspapers. • This is supported by communication through TV advertisements and

point of sales promotion.

• Now a days a good company has a state of the art web portal ,Volkswagen websites are highly informative, interactive and a pleasure to watch.

• One can get any amount of detailed information regarding the prices, features, retailers, and support services etc.

PRICING AND DISTRIBUTION STRATERGY• Volkswagen India Private Limited currently has more

than 70 dealerships in 56 cities across 18 states and 2 union territories of India.

• There are company specified retailers and distributors through out the world who are in constant touch with the parent and comply implicitly.

• Dealers also have round the clock servicing and repair. • Volkswagen also has a used car portal where one can

choose and buy his/her appropriate model.

MARKET SHARE

SWOT ANALYSIS

STRENGTH•Wide range of cars which provides enough options to choose from

• One of the oldest car manufacturers, resulting into increased reach to masses

•Owner of Audi, Bentley, Bugatti, Lamborghini, Skoda which gives a wide and large customer base

•Volkswagen has manufacturing or assembly plants in Germany, Slovakia, China, India, Indonesia, Russia, Brazil, Argentina, Portugal, Spain, Poland, Bosnia and Herzegovina, and South Africa

WEAKNESS• Intense competition from

global car manufacturing companies

• Controversy and fraud about the emissions of the cars caused global brand image loss

OPPORTUNITY• Create long term

relationships with non-German car manufacturers

• Implement continuous innovations in cars to stand competition

• To enter different markets by offering cars with features attractive for the targeted market4. Increasing purchasing power of people.

THREATS• innovative features

included by competitors

• Increasing fuel costs• Government

regulations and policies to protect interest of local car manufacturers e.g. TATA & Maruti Suzuki in India