The German car maker, Volkswagen (VW), which holds 19.9 per cent stake in Suzuki Motor Corp, is likely to finalise by the first half of 2011 on the development of an India-specific small car with the Japanese firm.
"A small car, specifically for India, is one of the areas we are discussing with Suzuki... This decision for India will probably be taken by spring 2011," Volkswagen AG Chairman Martin Winterkorn said.
He, however, did not specify whether the car will be positioned below the Polo, Volkswagen's latest hatchback in India, although officials of the Indian arm of the firm have confirmed that a small car is being planned below the Polo.
"India is very important for us. Volumes are growing in markets like India and China," he added.
VW had last year picked up 19.9 per cent stake in Suzuki Motor Corp (SMC) for $2.5 billion, following which the partners have been exploring possibilities of joint production and vehicle design.
"We are discussing about engine development, hybrids for Japan and many other issues," Winterkorn said, adding he usually meets SMC Chairman Osamu Suzuki every three months.
He said VW and SMC are talking to share technologies to develop diesel engines, which in future may come to the Indian market.
Earlier, top officials from both VW and SMC's subsidiary Maruti Suzuki India (MSI) had confirmed a possibility to jointly develop products, including a contract manufacturing agreement, for the Indian market.
In May this year, top officials of MSI and VW India met to explore synergies in production and vehicle design.
The two companies are exploring synergies in areas such as product design — not necessarily sharing models — and product testing, evaluation or part designing of future models and special projects.
While SMC is keen to get VW's technology, the German firm is interested in MSI's expertise in high volume production at a very competitive cost and efficiency.
A new entrant in India, VW is yet to gain any firm ground. It has started production in India from this year at its Chakan plant, where it invested around Rs 3,500 crore, having a capacity to produce 110,000 cars a year. In contrast, MSI is the largest brand, with just less than 50 per cent in the 1.5-million units Indian car market.
