Volkswagen India Plans Major Biz Rejig Amid Market Competition, Key Executive Exits

The Volkswagen Group is on a new operational rejig in India as the German automotive giant seeks to enhance its competitiveness in one of the world's largest car markets. The restructuring initiative comes as the company grapples with intensifying market pressures and key leadership exits, news agency Reuters has reported.

Skoda Auto has served as the primary driver of Volkswagen Group's Indian market strategy since it assumed this role in 2018.

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Currently, the Volkswagen Group commands merely 2 per cent of India's substantial four million-unit annual automotive market. The company is pursuing strategies to expand its Indian operations while decreasing its dependence on European markets.

Internal Communication

The report quoted an internal communication distributed to staff members on September 8, which outlined the company's strategic direction. Piyush Arora, head of Skoda Auto Volkswagen India, addressed employees regarding the engagement of external consultants in the memo.

"To provide a neutral perspective and some out-of-the-box ideas. I request you to support and cooperate with the team," Arora wrote to employees, as reported by Reuters. 

The executive highlighted the company's long-term commitment to the Indian market, stating that Skoda remains dedicated to investing in advanced technologies and production capabilities despite evolving market conditions and intensifying rivalry.

Arora deemed the transformation as a "high-performance organisation" journey, signaling the company's ambition to optimise its operational efficiency.

Focus On Organisational Agility

Industry sources indicate that the restructuring efforts target creating a more streamlined and responsive organisation capable of competing effectively against more agile competitors, particularly in preparation for future investment commitments. However, the internal memo did not specify potential modifications to investment plans or workforce adjustments.

Senior Leadership Transitions

The organisational changes occur alongside the departure of approximately ten senior management personnel, including finance chief Nalin Jain and HR head Sarma Chillara. The company suggested these personnel movements as part of routine human resources procedures.

EV Market Strategy

During a recent interview with news agency PTI conducted in Munich, Skoda chief executive officer Klauss Zellmer outlined ambitious plans for the Indian electric vehicle sector.

Zellmer indicated the company is preparing for a "big game" in India's electric vehicle market through complete localisation of its CMP21 (China Main Platform), which was originally developed in China. The executive also mentioned exploring the potential introduction of an additional compact electric vehicle model.

Partnership For EV Components

Reuters further reported that the firm has inked a collaboration with homegrown Mahindra & Mahindra for the supply of specific electric vehicle components, demonstrating the company's commitment to building local partnerships in the evolving automotive landscape.