India or Bust: VW to Build version of Up! in Chakan

Up! Concept Photos

VW wants to expand in India, but must sell and build smaller, cheaper cars to do so. The up! is key to this plan. (Photo: VW)

With an estimated starting price of about $7,500, the car would be affordable to many new car buyers. (Photo: VW)

It won't contain as many high-end features like the touchscreen navigation system, mind you... (Photo: VW)

For all of Volkswagen’s German heritage, design and engineering, the brand has done extremely well for itself in developing markets. Take China for instance, where it beat the recent boom by launching production as early as 1984, and has dominated the market since the ’90s. It has had time to develop a name amongst the car buying population. While VW maintains its focus on China, it’s got a new target in sight - India.

Unlike China, which has recently seen a giant spike in car production from Chinese-domestic and international automakers, India has been producing cars for decades, although growth hasn’t been as rapid. Volkswagen is about to stoke this fire in a major way, as it’s building a new facility in Chakan, India to produce a pair of high-volume models for the local Indian marketplace. In total, Volkswagen hopes to add 240,000 units to its global sales volume from this plant by 2012, just five years from now.

Currently, Volkswagen’s position in India is that of a premium carmaker. It sells only two vehicles there, the Passat and Touareg. And while plans are to import the ultra-luxurious Phaeton to the Indian market as well, the primary focus is to make more budget-friendly models available as well.

The cars expected to be built at the new plant will be in the compact and subcompact categories, with the first model to roll off the line expected to be the next generation VW Polo; a car that should be shown internationally next year. Indians, like the Chinese and Eastern Europeans, like their small cars with trunks, and so expect to see the Polo available as a sedan. The Polo will face up against the likes of the Suzuki SX4 Sport, and the Honda City (a sedan version of the Fit), and will be considered a premium small car. Likewise for the next generation of VW Golf, once it is officially introduced. Production is expected to occur in India for this vehicle as well, and the car will compete against vehicles like Toyota’s Corolla.

But perhaps the most important factor of establishing a strong foothold in India will be Volkswagen’s ability to produce a car that the masses can afford. That’s where the tiny, rear-engined up! will come into play … or at least a version of it. When the up! was launched in Frankfurt this past year, it was announced that a lineup of small cars based on the concept would be VW’s new global project, and would be built in a variety of different configurations to suit local market needs. The Indian version will provide basic and efficient transportation, and will first be offered as a four-door hatchback. Rumor has it that VW has set a goal of pricing the vehicle below the equivalent of $7,500.