German auto giant Volkswagen is worried over the changes in the rules related to Value Added Tax (VAT) refunds in Maharashtra and has expressed concerns over the future expansion plans.
"The entire automobile industry would be affected because of the new VAT policy issued by the government of Maharashtra and if the issues are not resolved, then further expansion would be a concern," John Chacko, managing director, Volkswagen India said on Friday. "We are discussing this subject with the government. The government has its own issues and I am sure it will get resolved within 15 days or so," he hoped.
The Government of Maharashtra has been wooing auto makers to invest in the state by offering tax soaps. However, earlier in the year, the state government issued a notification that changed rules for VAT, which deferred the refund various companies received on their investment.
Due to the new regulation, the automobile industry, in general, is losing about 15-20 percent of sales over a period of three months, he said after launching the 1,00,000th car from its manufacturing plant in Chakan near Pune..
Three key companies, namely General Motors, Volkwagen and Mahindra and Mahindra, have recently invested huge amount of over Rs 15,000 crore near Pune city.
Despite the decline in sales of automobiles in India, Volkswagen India today commemorated the roll out of the 100,000th car at its manufacturing plant in Chakan, Pune. The Chakan plant currently produces the Volkswagen Polo, the Volkswagen Vento and the Skoda Fabia. Also, the company is ramping up the capacity to reduce the waiting period for its Vento and Polo models, an official said today. For the petrol version of Vento and Polo, waiting period is 2 to 3 weeks and for diesel it is 6 to 8 weeks. The car rolled out of the plant was a Volkswagen Vento.
Even though, Volkwagen has performed well by middle of 2011, as India's automobile market is expected to register a slower growth between 12-14 per cent in the current calendar year, as compared to 30 per cent in 2010, an industry. Volkswagen India has reported 166 per cent increase in sales during June at 5,397 units as against 2,032 units in the same month last year. In 2010, Volkswagen sold 32,500 cars in India, but in the first six months of 2011 alone, it has sold 39,366 units.
"Even though overall car sales are going down, Volkwagen has performed excellent in India. We are not nervous about the current market conditions. As far as production is concern, we are trying our best to reduce waiting period for the delivery of the cars. We have plans to ramp up the capacity in the next six months to reduce the waiting period for the delivery," Chacko added.
