To pass on the rising inputs material costs to consumers, Volkswagen mulls a 3% price hike

Volkswagen is contemplating a price hike for its models in a month as the German automaker seeks to pass on the rising inputs material costs amid a bullish outlook growth for 2022. 

“Raw material costs have increased by 6-8 per cent, steel prices and other precious parts that go into the manufacturing of premium cars are at all-time high. This is putting pressure on inputs costs and we will have to pass on these to customers. We are planning up to a 3 per cent price hike soon,” Ashish Gupta, Brand Director, Volkswagen Passenger Cars India told BusinessLine during an interaction here. 

Meanwhile, the company is exploring all options to minimise the impact of chip shortage for digital instrumental clusters and other critical components. While the group is exploring alternative supply sources, Volkswagen is looking at the right product mix to ensure maximum delivery of its bookings.

“As long as shortages don’t affect the running of cars, we can look at producing certain variants. We are also communicating to the customers whether some features could be retrofitted later. We have been able to meet about 80 per cent of our demand, which is a good achievement amid the prevailing environment,” he said. 

The new launches have changed the sales mix for Volkswagen in India. South India accounted for 60 per cent of the volumes earlier. But after the Taigun launch, the share of other regions has increased to 45 per cent from 40 per cent earlier. “SUVs are popular in northern regions and so is the increase in share,” said Gupta. 

Volkswagen is also betting on its upcoming premium sedan Virtus, which will be positioned in the mid-size sedan segment, which is dominated by Honda City, Hyundai Verna, Maruti Ciaz and Skoda Slavia. The company was selling Vento in this segment. Virtus will be the successor to Vento, which along with Polo will be phased out as the company is migrating to a new vehicle platform. 

“Competition is very less in the premium mid-size sedan segment where Virtus will be competing. Customers have been bereft of options for a long in this segment. Hence we see growth opportunities and that is evident from initial pre-bookings for Virtus, said Gupta. 

In 2021, the size of the mid-size sedan market was estimated at 85,000 units. Volkswagen hopes that its upcoming Virtus will expand the market size in 2022 

For this calendar year, Volkswagen Passenger Cars aims to clock domestic sales of about 60,000 units, which will be more than double of 2021 amid multiple challenges faced by the PV industry. The company also hopes to maintain the momentum of exports and expects vehicle shipments at about 40,000 units for 2022. 

Published on

April 04, 2022

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