Jul 31, 2008

Business - Volkswagen to hit Mach 18

German giant aims to hit the front of the global automotive pack, ahead of Toyota as well not just in terms of absolute number of units produced but also in market capitalization plus profitability. And much of the impetus would come from its India operations. ET attempts to unravel the grand plan for world domination. "Ever forward, never backward," is the philosophy adopted by Volkswagen's India chief Joerg Mueller. On a preliminary mission to India a few years ago he came upon these words outlined as graffiti on a truck and he has embraced this as mission statement for Volkswagen as it gears up to make its sizeable presence felt in the most meaningful yet pleasing manner in India. To the unsuspecting lot out there, not many identify Volkswagen as the company which owns Skoda and Audi. And both these marques have been present in India earlier than the parent. In fact in many an aspect, Skoda in India has gone on to usurp its parent's perch in the VW Group's pecking order as a maker of affordable luxury cars. This could have had negative ramifications but Volkswagen seems to be counting on a raft of decisions whereby precisely configured stepping stones are being properly laid down for the emerging Indian motoring consumer to take to from next year on. And just for the record, if many have trouble linking Skoda and Audi as VWowned companies, Bentley and Lamborghini are also thundering on Indian roads, holding their own in eclectic company and setting the pace at the rarified end of the car market. Only Seat (VW's funky Spanish brand) and Bugatti (the uber sportscar maker) haven't as yet made it to Indian shores. And to cap it all, VW's new owner, Porsche, is also thriving in India with its 911, Boxster and Cayenne models doing just as well. Ever since it entered the Indian automotive space last year (with the Passat), a certain dignity has marked every move from Volkswagen. There was none of that overbearing Teutonic attitude so clearly visible among the other grand German marques, rather it was a most gentle, caring approach which has gone on to impress industry and consumers by finely clothing the ample Teutonic substance. It is not just about cars alone that I speak of but also the attitude and the zeal because late it might have been, but Volkswagen has surely decided that it is now time to stay. And stay in the style and capacity befitting its stature as both carmaker a new citizen of this country. Committed to the cause Where everyone talks about commitment to the automotive cause and the country, Volkswagen's commitment has to be seen beyond the Aurangabad facility which was set up first to cater to limited assembly operations by Skoda. This has now burgeoned to a 30,000 units per annum plant which is being used to make no less than eight different car models in the VW Group: four Skodas (the Octavia, the Laura, the Superb and the Fabia), two Audis (the A6 plus the recently launched A4 which will get into production later this year) and two Volkswagens (the Pasat and the Jetta). This sort of an operation is unheard of in the Indian automotive manufacturing scene but it just indicates the kind of planning and processes which has seen the VW Group rocket to the top in Europe. Having said that it should come as no surprise that in the global automotive world, platform sharing is the holy-grail of keeping costs and development times pegged lowdown but the Volkswagen Group has helped this science acquire an art form. The manner in which one or two basic underpinnings have helped spawn no less than 20 to 25 different models across group companies is not the surprising part. All of them having decidedly different character traits and performance capabilities is!

So the next time you try linking the Golf, the Jetta, the Octavia, the Laura, the A4, the TT, the Scirocco and some more which I might have missed, just marvel at the fact that while there is a shared DNA among them, they are not the same. This is thanks to their individual genes having been genetically modified in not just the VW, Audi and Skoda skunkworks in Wolfsburg, Ingolstadt and Mlada Boleslav respectively but also in the product planning offices with top management pushing the envelope mightily in the mind. And this mind over matter aspect is what the Germans hold as the key to their doing the business on a scale which not many would have associated them with. Everyone used to talk about scale in the international automotive world first with the American Big Three followed by the Japanese numero uno Toyota. It is now a fist fight between General Motors and Toyota for the top spot but last year Volkswagen spiced things up nicely when it unveiled its grand plan for world domination. At Mach-speed to 2018 Mach 18 is the name given to the programme wherein the aim is for the VW Group to top the automotive world in every way possible: in terms of most units produced and sold, in terms of efficiency of manufacture, in terms of market cap and also in terms of profitability. It is no secret that Toyota is the world's most profitable car maker and has been so for the better part of a decade even though it is only in the last couple of years that it has aimed for the absolute top in units produced and sold. VW intends to trump not just Toyota but every other car maker in its avowed intentions and it intends to achieve this in the ten year programme ending 2018. It has defined a term and it intends to zoom at breakneck speed to achieve this. If you find this laudable or laughable depends entirely on your perspective but factor in the Porsche angle and family. Dr Ferdinand Piƫch who has been guiding the destiny of the VW Group for ages has fiercely carried the torch for his grandfather, Ferdinand Porsche, arguably the world's greatest automotive engineer and designer ever. In recent moves Porsche has worked exceedingly slickly to acquire a majority stake in Volkswagen and in so doing it has virtually taken control of a marque which his grandfather had created in the late 1930s. While this might be the emotional aspect full of symbolism, Ferdinand Porsche's legacy is now in very safe and sure hands.