It is now official. German carmaker Volkswagen has finally chosen Maharashtra for setting up a $300-million (Rs 1,350-crore) green field automobile manufacturing facility. The plant, which will come up on a sprawling 500-acre site at Chakan, near Pune, is expected to create employment opportunities for about 2,500 people. On Friday, the company's board gave its approval for setting up the plant in Maharashtra. As per the plan, production of small passenger cars will commence by the second half of 2009. The carmaker has been planning to set up a manufacturing facility in India since long, having considered other States, prominently Andhra Pradesh, Tamil Nadu and Punjab, to locate the plant. This is seen as a significant development for Maharashtra, as the proposed unit would spawn spin-off benefits for the State, said a State Government official.

MoU by month-end


A statement on the Volkswagen Web site said: "India is one of the fastest growing automotive markets worldwide, but high import duties on vehicles mean that any meaningful market presence can only be achieved by establishing domestic production facilities. Volkswagen examined a number of locations in India in detail and chose the Pune region because of its economic environment, good logistics links and sufficiently strongly established supplier structure. The region also offers qualified employees who will ensure that production meets appropriate quality standards." Mr V.K. Jairath, Maharashtra Industries Secretary, told Business Line that an MoU with the company would be signed by the end of this month. The land for the project has been identified and the process of clearance from the MIDC and State Pollution Control Board will start after signing of the MoU. He said proximity to ports and the availability of skilled workforce worked in favour of Chakan as the suitable location for the new plant.

In the last one year, the State Government has singed MoUs for eight major automobile projects, he said. The Government has given `mega project' status for the Volkswagen project, which will be the German company's first manufacturing facility in the country. The Volkswagen Group, based in Wolfsburg, Germany, has a major footprint in Western Europe's automobile market. The Group's passenger car business is split into two brand groups. Under the umbrella of the Group, Audi and Volkswagen manage their separate brand groups and are responsible for generating global earnings from them. The Volkswagen Group operates 45 manufacturing facilities in 11 countries in Europe and seven countries in America, Asia and Africa. A workforce of over 336,000 people all around the globe produces over 21,500 vehicles per working day, as well as providing vehicle-related services. The Group's models are sold in more than 150 countries.

Good news for car enthusiasts in India. I wonder how well they will do in sales however given the fact that VWs come up lowest in studies for quality and have a lot of problems, especially compared to Japanese cars.

This is the problem Fiat had, and still has. They produced some great looking cars in India but reliability did not match up to Maruti and the number of maintenance shops were also less. With all this they are struggling.

Selling cars in India is a very different ballgame from that here in North America.