German automotive giant Volkswagen Group plans to drop out from the race to participate in the extremely competitive sub-4 mtr sedan category in India from 2020. A late entrant to the segment, the company was struggling with poor sales and a low single-digit market share.
The 460,000-units-per-annum category is currently dominated by the Maruti Suzuki Dzire, which has been outselling vehicles even in cheaper segments. Volkswagen had driven in the Ameo in 2016, a car specifically tailored to benefit from the Indian tax structure which incentivises smaller cars, but the sedan failed to make a mark. In a market cluttered with cars such as Hyundai Xcent, Honda Amaze and Tata Tigor, Ameo ended up cannibalising sales of other Volkswagen models like hatchback Polo and mid-sized sedan Vento.
We will not do any products like the Ameo. The sub-4 mtr sedan is a very, very tricky product. It works only when the hatch that it's based on is significantly below 4 metres (in length), otherwise, the aesthetics of the car won't work
"We will not do any products like the Ameo. The sub-4 mtr sedan is a very, very tricky product. It works only when the hatch that it's based on is significantly below 4 metres (in length), otherwise, the aesthetics of the car won't work," Gurpratap Boparai, head of Volkswagen Group India, told The Economic Times.
In 2018, the automaker managed to sell a paltry 820 units of Ameo a month, in a market of almost 40,000 units a month. Moreover, sales of the vehicle had dropped 40 percent in 2018 to 9800 units, in stark contrast to a growth of 14 percent for the overall segment.
"Nobody makes a global car to fit a length," Boparai told the newspaper, adding that globally, the length of a car is decided by design considerations like interior space, powertrains, and safety features.
The auto major feels that the sub-4 metre sedan does not fit into its revised strategy for India, which will be led by Skoda. As part of the rehashed strategy, the Volkswagen Group plans to invest 1 billion euros (around 80.9 billion rupees) in India, with a target to shore up market share to 5 percent across brands by 2025. While Skoda and Volkswagen, after the discontinuation of Ameo, may not have an entry-level sedan in the country, the German carmaker has not ruled out a sub-4 meter hatchback or a sports utility vehicle in the future.