Up city car is too expensive for India; VW Group to rebadge Suzukis as Skodas and VWs instead

Badge-engineered Suzuki Alto and Wagon R hatches are poised to become the first solid signs of co-operation under the Volkswagen and Suzuki industrial tie-up signed last year.

According to sources close to our sister magazine, Autocar India, VW and Suzuki are discussing rebadging the latest Alto as a Volkswagen and the Wagon R as a Skoda as entry-level models in the European brands’ line-ups in India, starting in 2012.

See Autocar’s exclusive rendering of VW- and Skoda-badged Suzukis

They will fill slots in the range originally earmarked for the Up family of city cars that VW, Seat and Skoda are currently developing in Europe.

The Up won’t now be sold in India since the technology in the cars, together with the cost to set up production locally to avoid high import duties on European-sourced production, will price them out of the market.

Because of the tight deadline and costs, the rebadging is likely to be limited to revised bumpers and headlights and minor new trim, but no metalwork or interior changes. VW is even understood to be prepared to put its badge on a car powered by the Fiat 1.3 Multijet diesel, which Suzuki builds under licence in India for the Alto and Wagon R.

Read more about the tie-up between VW and Suzuki

Production, however, is likely to be handed over to VW’s Chakan facility, since Suzuki’s plant, which operates under the Maruti brand in India, is flat out meeting demand. Last year Suzuki/Maruti built 1.1 million units for a 54 per cent share of the 2.2m-strong market and will have to add a further 500,000 to satisfy the growth to three million units a year expected in the next two years.

Exports to Europe of the rebadged VW and Skoda seem unlikely, at least in the early years, unless the European market — particularly in the east — demands more low-cost cars. Nissan, for example, is importing the new Micra from India, while the Pixo is a rebadged Alto built in India and Suzuki itself satisfies European demand for the Alto from the Maruti Delhi plant.

Julian Rendell

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Comments
18

19 October 2010

VW empire is going the same way GM and Ford did: keep adding the brands until it bursts one day.

The Group is really pushing the concept of "platform sharing" to the limit: Let's assume for a while that brands like Porsche, Bentley, Lambo and Bugatti can name their asking price and therefore pay their way to differentiate each of their products, but what about the rest? To what extent will the consumers believe that their Audis, VWs, Skodas, Seats and now VW-badged Suzukis are really not about the same lots of parts put together, dressed and priced in different ways?

OK, granted, VW is not GM, it has very competitive cost base, and much more efficient manufacturing technologies, but I just can't see how the complexities of maintaining different brands (and their whole marketing / sales / distribution overlaps) are not going to twist the group upside down in not too distant future. Already there is news of VW "decontenting" Skoda because it flies "too close to Airforce One". Take into account the super egos of top automotive executives currently recruited from elsewehere to run each division and you have a recipe for a disaster if discipline of group coordination slips. The classic argument is: better make war among and cannibalise our own brands than losing sales to competitors. Are we sure about this?

Badge engineering is the lowest level of artificial marketing: it assumes the consumers are as blind as we were in the 70s about cars engineering. It has never worked and will never work in the long term. Just ask Ford and GM, they have plenty of not-so-fun stories to tell.

19 October 2010

I agree. However, Most VW and Audi owners that I know don't even realise there is a commonality between their cars, let alone with Skoda, Seat and eventually Suzuki. And if they did, they'd probably never admit it!!

I think that if a large company runs several others, then a clear policy about who makes what is needed. As mentioned, GM and Ford have fallen foul of this, as did BL in the 70's (even without all the strikes!)

At least Ford tried to keep some distinction between brands, with Ford providing the main bulk of average transport, Mercury the mid luxury and sporty cars and Lincoln the upper luxury.

Unfortunately, in this day and age it's harder and harder to distiguish between these types. The things that were considered luxury 20 or 30 years ago are found on the most hum-drum of cars these days.

19 October 2010

There will be an interesting outlook for the VW group if it continues to keep gathering up different car brands, with Alfa seeming to be next, there seems to be too many already and the worst case scenario would be the GM model where they are the world's biggest manufacturer and still making unsustainable losses.

19 October 2010

Platform sharing is one thing, but putting a VW badge on a Suzuki, and marketing it as a VW, is surely verging on the fraudulent, at least deceipt?

19 October 2010

The worldwide demand for cars is shifting and the needs of the developing nations are now much more important than ours in europe.

A car carrying a VW badge no matter what the actual car is, is a very potent sales pull in countries like India. This is a smart move by VW so long as the cars stay on the subcontinent.

The blandification of the rest of the VW range may not appeal here but the chinese love a nice german, bland saloon car. Make no mistake our needs are now very much behind those of the chinese et al.

19 October 2010

If anyone has made a success of badge engineering, it's VW Group.

Volkswagens are still revered as the benchmark of automtotive engineering, Audi has taken over the premium sector (sending BMW off to seek collaborations with PSA and sell engines to Saab to try and stay competitive with VW's platform sharing capability), Skoda has added some funky new shapes to its new-found value-for-money offering (something which ultra-conservative Volkswagen wouldn't) and the supercar stable of Bentley, Lambo and Bugatti add polish and prestige (and give engineers something to aspire to within the group). Only SEAT struggles for a clear identity.

In rapidly growing markets, VW has worked out how best to take an early slice of the market early on, often with products which would shame the badge back home, and VW-badged Suzukis ensure they don't miss the boat while they develop more sophisticated future technologies in the crucible of Europe.

Will it damage their 'brand'? Not if they ultimately keep their core product values aligned and use their platform-based approach, marketing nous and new technologies to stay a step ahead of the competition: people don't care what's under the skin of their Audi - they just know they want an Audi.

19 October 2010

VW sells all kinds of horrible product in developing markets. This move is no biggy.

19 October 2010

Suzuki is not the most exciting brand around but they are very good at what they do, small high quality cars.

They can make them more efficiently than VW and this is where the German giant sees them as an advantage. Anyone would prefer a Swift over a VW Fox, in fact the Kizashi is a better car than the Passat (except for the fact that it has no engine options).

In Europe Skoda desperately needs a smaller and cheaper car than the Fabia to make up for sales lost to the likes of Hyundai, Suzuki, Kia etc...

19 October 2010

I said that VW were overdoing it when they bought 20 per cent of Suzuki and i still hold that view.They are doing alright at the moment but what happens when car sales decline again??It seems Toyota with its vast cash reserves are prudent by not adding other brands to their portfolio.I mean how big before the bubble bursts??

19 October 2010

suzuki make an excellent mini people carrier, the APV, sold throughout asia. however if vw put some suzuki badges on some golfs, i might but one. what a shame, the're scrapping hms ark royal. they should sell it to the indians for some spare cash. these future aircraft carriers are a complete joke. much too big, and now with no aircraft because joint strike fighter is a complete nightmare. they will be 20 years late and £20 billion over budget.

www.KOOOLcr.com

 

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