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VW-Suzuki Alliance in doldrums, VW to drive in UP! next year

By Motortrend India Staff   |   12 September,2011

Volkswagen plans to drive in a specially developed variant of its UP! compact car in India next year after Suzuki Motors’ decision to end its alliance with Europe’s largest carmaker virtually spoiled its plans of sharing Maruti Suzuki’s small car platform.

According to sources in the component industry, Volkswagen has scrapped plans to source cars such as A-Star compact from Maruti Suzuki and will now launch UP! to consolidate its position in India’s vast compact car market after the success of Polo hatchback. Small cars constitute more than 70 percent of some 2.5 million cars sold in the country.

“The UP! will herald Volkswagen’s entry into the lower end of the small car segment and will take Maruti’s A-Star and WagonR head on to grab a bigger pie of the Indian market,” a Delhi-based auto component maker said on condition of anonymity.

Suzuki Motors Chairman and CEO Osamu Suzuki on Monday offered to buy Volkswagen’s 19.9 percent stake in his company with cash on hand, and in return, promised to offload its 1.5 percent stake in Volkswagen, to end a two-year-old alliance after the German carmaker accused it of violating their partnership pact by agreeing a diesel engine deal with Italy’s Fiat.

This has virtually shelved the model-cum-technology sharing alliance of Indian subsidiaries of the two firms, which anyway had not made any progress. “There has been no headway at all,” a Maruti Suzuki executive said. “The Volkswagen teams-both from Germany and India-visited us in Gurgaon, but nothing went anything further,” the person added.

Volkswagen now plans to introduce a specially developed variant of UP! that would also be marketed in other emerging markets like Brazil and Mexico.

The UP! is expected to feature the same engines as the Polo, probably with a different tuning, according to component industry sources. The new UP! will be unveiled at the Frankfurt Motor Show on Tuesday and its Indian variant will be showcased at the Auto Expo in Delhi in January next. The 3.54-metre tall boy designed UP! will be the smallest car in the VW family to date.

Volkswagen sold 53,300 cars in India in 2010 and aims to double the figure this year. Maruti Suzuki is expecting a single digit growth over the 1.13 million cars it sold in the country last year after reporting a slide in sales for three consecutive months since June.

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