Volkswagen India is set to develop an all new compact sedan which would be positioned to take on leading compact players in the domestic market. The investment from the company would cover equipment, product development and production capacity scale-up.

Volkswagen India has announced the allotment of INR 720 crore for this new compact sedan which would take on rivals like the super successful Swift Dzire and Honda Amaze in addition to other players like the Hyundai Xcent and Tata Zest. Production should be commencing in the first half of 2016 as per industry sources. The compact sedan is set to be followed by a new compact SUV and a sub four meter compact sedan according to the director, Volkswagen Passenger Cars, Michael Mayer, in an earlier statement. This new line up would be brought into the market within a period of two-three years.

Volkswagen is making this a part of its cumulative INR 1500 crore investment plan showcased a couple of years ago. Post the engine assembly plant last year, this is the second investment stage according to Dr. Andreas Lauermann, the President and Managing Director at Volkswagen India Private Limited. The company will be further investing to scale up overall efficiency and productivity. This car will be developed at Volkswagen’s plant in Chakan near Pune and will be developed and tailored exclusively for Indian markets according to company statements. The new models will be debuting globally at the February Auto Expo 2016.

This takes Volkswagen’s total Indian investment tally at Pune to approximately INR 5, 500 crore from 2007 onwards. The company has around 3, 200 employees at its plant here and vehicles like the Volkswagen Vento, Volkswagen Polo and Skoda Rapid are produced here. With this new model, manpower will be added and this will foster job creation at the suppliers’ end according to Dr. Lauermann.