Volkswagen, the German car maker that is selling cars at a furious pace in India despite being among the

late entrants, is rapidly building its presence in the country. As it is highly banking on its popular Polo and Vento models for gaining a significant market share, the company is adding dealerships while lining up new models. The German car maker which started with four dealers in 2008 now has 71 dealers across India. With around 38 brands in India, Volkswagen was possibly one of the late entrants in the market. Especially in the volume brands we were last few to enter. But it worked in our favour as we could learn from others' mistakes. Country Analysis Volkswagen - Entry Into The Indian Small Car Market Car-ownership is an emblem of economic progress in India and is very high on a wish list of consumers. The face of the Indian automobile market has changed tremendously following economic liberalization in 1991 and will change further with the introduction of Tata Nano. Rising incomes, better financing and improved roads are

the combined drivers for strong growth of automotive sector in India. In the fiscal year 200607, the Indian passenger car market grew by 20 percent, making India one of the fastest growing passenger car markets in the world in absolute terms. It is expected that the Automobile Industry in India would be the 7th largest automobile market by the year 2016. Current market leader in Indian automotive industry: Analysts say domestic growth rates for small cars have been boosted by the governments effort to tackle the fallout of the financial meltdown in the second half of 2008. As a result, taxes on small cars were cut to 8 per cent. Car ownership in the developing world shows immense potential for growth. A report prepared by Deloitte says there are 511 cars on the road for every 1,000 citizens in the UK, compared to 22 per 1,000 in China and just 11 for India. Analysts predict that the largest purchasing segment by 2020 will be first-time buyers. The company recently rolled its first Indian made car the Volkswagen Polo from its Pune in Maharashtra. The price of Polo is about Rs

6 lakhs which is about 5-6 times that of Tata Nano, depending on options. The modes of entry can be classified as equity and non-equity modes of entry depending on the commitment needed to setup operations in the foreign market. The equity mode of entry, like Joint-ventures or Acquisitions, requires a huge amount of resource commitment from the firm. Non-equity modes of entry, like Exporting and Contractual Agreements, require considerably lesser resource commitment from the firm. The equity and the non-equity... The company had recently increased the prices of its diesel Vento, while prices of petrol Vento remained unchanged. "There is a growing traction towards diesel vehicles. For Polo and Vento, the ratio between petrol and diesel variants is almost 50:50 and if the differential gap between petrol and diesel continues we will see the demand moving towards the diesel side." The Ventos success is a combination of Honda lagging and VW bringing the right product to the

market, namely a diesel engine. With petrol prices constantly going up, VW was right to tap into the Indian psyche of affordability.