Volkswagen to exit diesel space in India

Chennai: German auto maker Volkswagen (VW) India has decided to exit the diesel vehicle segment although as part of its new India 2.0 strategy it will continue to bet on SUVs for Indian roads.
According to Steffen Knapp, director, Volkswagen Passenger Cars India, the exit diesel strategy is fuelled by the falling share of diesel vehicles in the Indian passenger vehicle market caused by the sharp increase in price of diesel BS6 vehicles. Globally, VW has made hefty payouts due to lawsuits triggered by the diesel emission manipulation case in big markets like the US and now Europe.
“We have already cut back and right now we have no diesel options in our existing models Polo and Vento and the newly launched T-Roc and Tiguan Allspace SUVs,” said Knapp. “We have also showcased two new models as part of the India 2.0 strategy which will roll out in 2021 — the Taigun SUV and a Vento replacement. Both these products will be gasoline only kitted with a TSI petrol engine,” he added. The no-diesel strategy, he said, has been taken at a group level. “It is a VW group strategy to focus on gasoline and that includes all the brands — Volkswagen, Audi, Porsche and Skoda. For bigger cars we are watching the market but for now the focus is on petrol.”
The reason is the falling share of diesel vehicles in India. “Back in 2017, diesel share in India’s passenger vehicle sales used to be 39%, last year it was 35% and this June it’s down to 23%,” said Knapp.
“Due to BS6 diesel has become a high cost option so we are focussing on fuel efficient petrol with our TSI engine range,” he said. The cost of ownership has also gone up for diesel vehicles.
Even in the used car market, it is petrol cars that are selling faster. “Today it takes 15 days for us to sell a used petrol vehicle and 30 days for a used diesel,” said Knapp.
Apart from the diesel exit, the India 2.0 strategy focuses on SUVs for Indian roads and high localisation. “We plan to increase localisation levels from 81% now to 93% next year and our medium term objective is to cross 95%,” he added.