German auto major, Volkswagen, is planning to use Maruti Suzuki’s help in developing a small car priced under Rs 4 lakh. In December 2009, VW had bought a 19.9 percent stake in Maruti’s parent company, Suzuki Motor Corporation, and is exploring the possibilities of joint product development and contract manufacturing with the latter. At present, the German company has two compact car models in its portfolio – the VW polo and the Skoda fabia – and is keen on increasing its share further in India’s rapidly growing small-car market.
While the new car will be developed using Maruti’s expertise in small-car manufacturing, the Indian market leader itself will gain by getting access to VW’s diesel engine technology. Maruti may also directly source engines from the German carmaker. In addition, the company will get easier access to the European auto market, where compact cars are slowly replacing sedans and bigger vehicles as the preferred mode of passenger transport.
