Volkswagen group recasts structure to make quicker decisions

MUMBAI: As Volkswagen Group, the world’s largest automaker, gears up for its second innings in India with ¤1billion (`8,000 crore) in its kitty, it is streamlining its organisational structure to quicken decision making and improve efficiencies. “This will reduce the turnaround time,” the VW group’s India managing director designate, Gurpratap Boparai told ET.

An engineer who started his career on Tata Motor’s shop floor, Boparai will take over the reins of the Volkswagen group in India from January 1. Under the strategy dubbed ‘India 2.0’, the group has restructured its management. Functions such as HR, finance, and to some extent after sales support will be shared by the group companies.

No jobs will be lost as part of the restructuring. The group’s complex organisational structure will be revamped with Skoda at the helm – unlike earlier when there were two different legal entities managing the manufacturing plants at Pune and Aurangabad and another entity leading the group’s brand and sales operations. Skoda will manage the production and engineering operations of India-specific products for both the mass-market brands.

The Czech brand will also be responsible for coordinating the overall strategy of the group that includes the brands like Volkswagen, Audi, Porsche, Lamborghini, and Skoda itself. The brands will continue making their own decisions regarding their pricing strategy, network development, marketing campaigns and product portfolios. “Each brand, of course, defines their strategy but then we will see that there is a consistency in the strategy and that it fits into overall group plans. We did not have this (earlier),” said Boparai, who is an avid biker.

Starting 2021, the group will come out with four all-new vehicles in the market – two each under the Volkswagen and Skoda badges – based on its international platform customised for India. The products under this platform will be having as much as 95% localisation, up from the current level of 76% on the vehicles manufactured at the Pune plant. The first of the four vehicles will be a mid-sized sports utility vehicle from the stables of Skoda. “It would be odd not to start with an SUV. It’s been the flavour of the last few years in all markets, not just Asia,” he said.

For the foreseeable future the group will not foray into the entry-level mass-market segment and concentrate its efforts on establishing itself in the more profitable mid-sized car segment. “The resources available (to us) are not limitless and therefore we have to first concentrate on segments where we can establish ourselves as a credible player and at the same time hopefully making a bit of money,” the MD designate argues.

“So that’s going to be the first (priority).” While Volkswagen and Skoda will share the same platform, Boparai said that the final products have enough distinction to prevent them from eating significantly into each other’s markets, unlike what happened with the Skoda Rapid and the Volkswagen Vento.

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