Buyers preferences towards SUV to blame?

Volkswagen is in a catch 22 situation for last 4 years that how to manage VW Polo target audience. Despite having ongoing sales of around 2000 units, they still get questioned that why they are not bringing 6th generation Polo that is sold globally in countries like US, Germany and South Africa.

Volkswagen Polo is considered as outdated car by many first time buyers because of its 10 years old platform and design. Even though it has cult following among the enthusiasts who prefer great quality, driving dynamics, long term parts durability and safety over anything else.

But still a prospect buyer has a genuine concern as there are updated hatchbacks in the market like i20 & Altroz which offer fresh designs, latest platforms and better safety/convenience features.

3 Major factors that are keeping good global cars away

So what is stopping VW to launch new Polo in India? Few things are

Buyers not willing to look away from Maruti

In India, buyers are not willing to look away from brands like Maruti & Hyundai. For them, mileage & resale remains the top most priority. With 70% buyers with such preferences, it will leaves a very little market to be a volume player for a brand that prioritise quality, safety and better road driving dynamics.

VW has a notion among buyers that their cars are expensive to maintain, expensive parts and hefty service costs.

Currently, Polo is in price segment same as Baleno & i20 but if newer Polo will be launched, it will have 30% more cost which will leave it in dangerous territory of compact SUV segment like Nexon, Brezza, EcoSport, Sonet and Venue. So, there is a risk that VW may end up losing market share.

Taxes to Blame?

Most prime reason of delaying the launch of latest gen VW Polo in India is tax structure in India. In India, cars under 4 meters attract 28% GST and 1% Cess for Petrol and 3% cess for diesel. This keeps cost low.

However, if car size is above 4 meters, it attracts 28% GST but hefty 22% Cess. This results in more registration costs and heftier insurance.

A car that takes 10 lacs to manufacture by a brand, costs Rs 15 lacs ex-showroom after taxes for above 4 meters.

Later, road tax, CESS and TDS is added and car costs Rs 18 or 19 lacs on road.

So latest gen VW Polo is difficult to launch here with a same size that is there in Europe which is above 4 meters. If it is launched in India, it will start from 9 lacs ex-showroom and goes till 15 lacs for the top variant. This surely will kill the sales and very few niche buyers will buy Polo.

So VW will try to reduce its length to 4 meters so that tax benefits can be taken and Polo remains a VFM product with competition among B2 segment cars like Baleno, i20 and Altroz.

Conclusion

It will be really important for VW to keep their new Polo features rich by providing 6 airbags, pana sunroof and 6 speakers etc because in this segment i20 is considered as most premium hatchback which is feature loaded as well as comes with various engine/transmission options.

VW is looking forward to bring their latest gen Polo is 2023 by modifying it on their flexible platform i.e MQB A0 IN

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