Tuesday, 5 January 2010

VW to bring SmallCars to the European Market

Volkswagen have continued their plans to expand buy purchasing a 20% stake in the Suzuki Motor Corporation. This was a calculated move on Volkswagen's part which reflects the changing face of motoring. As fuel become increasingly expensive (despite the drop in the price of oil) and ecological concerns become heightened smaller cars are becoming more popular. Volkswagen are hoping to combine their knowledge with that of Suzuki who have a reputation for building high quality small cars.
“Europe is shifting to compact and small cars due to rising petrol costs as well as concerns of climate change. Suzuki has the expertise to make small cars, Volkswagen does not. The German company has the expertise in environment friendly technology and has invested large sums. Combining the two will reduce cost of making new cars. Volkswagen, which has a stronger dealership network in Europe compared to Suzuki, could source small cars from India and sell them under its own brand name,”
R C Bhargava, Chairman of Suzuki

Between them Volkswagen and Suzuki are aiming to create the first small car with widespread appeal. The Mercedes Smart Car is the most common small car in the UK thus far but Volkswagen hope to be able to provide something even more popular. It is not yet clear what will be produced but given recent events it can be assumed that a more environmentally friendly car is likely to emerge.

The Suzuki-Volkswagen collaboration is also expected to target the Indian market. Suzuki currently sell 20% of their vehicles to India where the small car market is booming. India is developing at such a pace that car and van manufacturers are seeing it as a vital market with thousands of potential new customers.
“VW’s presence in the Indian market is fairly at a nascent stage, while Maruti (Suzuki) has over 25 years of experience. When you develop new cars, you need to tune them to the needs of the local market. Suzuki will bring about a number of such intangible resources that can greatly benefit VW operations in India,”
Abdul Majeed, auto head, PricewaterhouseCoopers

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