Volkswagen to Hire 1,300 Workers at India Factory, Add Polo Car

Dec. 8 (Bloomberg) -- Volkswagen AG plans to double the number of workers at its new factory in India to 2,500 by the end of next year as Europe’s biggest carmaker aims to take on Suzuki Motor Corp. and Nissan Motor Co.

The plant, located in Chakan near the western city of Pune, employs about 1,200 people, Ulrich Proske, finance chief of VW’s Indian unit, said in an interview. The 580 million-euro ($860 million) factory started building the Skoda unit’s Fabia hatchback in May and will begin making VW’s Polo this week.

“We’re taking advantage of the momentum in India,” Proske said yesterday by telephone. The Indian automotive market will grow to 2.2 million cars and sport-utility vehicles by 2014 from 1.4 million this year, he predicted.

Volkswagen, already the largest overseas carmaker in China, is boosting its presence in India after auto sales in the world’s two most populous nations withstood the global recession. The Polo subcompact will compete with models built by Maruti Suzuki India Ltd., maker of half the cars sold in the nation, as well as models from Ford Motor Co., Honda Motor Co. and Nissan.

Wolfsburg, Germany-based Volkswagen, which sold about 16,000 vehicles in India from January through October, is targeting more than 100,000 deliveries a year in the “long term,” said Proske, declining to specify a timeframe. VW plans to expand its Indian distribution network to 120 dealers by 2012 from 14 last year.

‘Long Way’

“There’s a huge appetite for mobility, especially among the growing number of middle-class people,” the executive said. “There’s still a long way for us to go.”

Volkswagen is introducing a hatchback Polo first at the Chakan plant and will add a version with a trunk in mid-2010. Hatchbacks account for more than 70 percent of all cars delivered in India. Honda, Japan’s second-largest automaker, started selling the Jazz hatchback in India in June.

Yokohama, Japan-based Nissan plans to introduce a small car in India by the middle of next year and is setting up a factory with initial capacity of 200,000 vehicles a year in Chennai. Dearborn, Michigan-based Ford said in September that it will sell its first small car for India, the Figo, in 2010.

Asia will be key to a 10-year goal of increasing Volkswagen-brand deliveries by 80 percent to 6.6 million vehicles in 2018, Chief Executive Officer Martin Winterkorn said in April. Volkswagen has a goal of overtaking Toyota City, Japan-based Toyota Motor Corp., the world’s biggest carmaker, in global deliveries and profit margins by 2018.

Up! City Car

The German company is also considering making the Up! city car at Chakan, Proske said. A final decision hasn’t been made, he said. Volkswagen plans to build the Up! at its plant in Bratislava, Slovakia, starting in 2011.

Volkswagen also assembles Jettas, Passats and Audi A4 and A6 models at a Skoda factory in Aurangabad in western India, where it employs 1,000 people.

Foreign investors including VW will face “difficulties” expanding in India unless the government takes steps to improve infrastructure, as airports and harbors operate at capacity while roads and the electricity grid must be overhauled, Proske said. Transport and power-supply restrictions probably cost India at least 1 percentage point in gross domestic product growth each year, Proske said.