For the automotive industry, 2018 was considered extremely challenging with a series of ups and downs due to macro-economic factors that include fluctuating fuel prices, one-time insurance costs, weakening of the rupee, liquidity issues faced by NBFCs among other reasons.
But while consumer sentiments remained muted, Volkswagen Passenger Cars India performed at a steady growth rate. The brand has a 1.5% market share and intends to achieve a goal of 3% in the next five years.
“Volkswagen has performed at a steady growth rate in FY 18-19. We’ve been continuously working towards strengthening our existing portfolio and enhancing our value-for-money proposition for our customers,” Steffen Knapp, Director, Volkswagen Passenger Cars India, told BestMediaInfo.com in an interaction.
Knapp said the brand witnessed a robust growth in its premium offerings such as Passat and Tiguan and a stable performance on its entry to mid-size range of products starting with Polo.
Knapp shared how localisation approach in its communication strategies has been kept at the centre. Talking about the brand’s marketing initiatives, he said how Volkswagen is focusing more on visuals and pictorials via its campaigns. He discussed the concept of pop-ups and city stores that the brand has imbibed for the expansion.
The brand aims to be more accessible in the next decade, offering a higher value-for-money proposition to its customers.
Volkswagen India last year announced its biggest investment strategy, stating that it will be investing EUR 1bn (Rs 7,900 crore) in developing the MQB A0 IN platform, R&D for enhanced localisation at its manufacturing facility and manufacturing volume models such as A0 SUV that will be showcased in 2020.
The products under this project will have 95% localisation content versus the current 82%.
Knapp said, “With this our main focus is to reduce our Total Cost of Ownership and overall customer perception.”
The brand at the same time is also exploring the viability of introducing newer products for the Indian market.
In the coming weeks, it will launch a special CUP edition that will be in line with the on-going cricket fever.
Expansion via pop-up and city stores
To drive aspiration towards premium mobility among potential customers in high-growth markets, the brand under its initiative ‘Fit for the future’ introduced two new sales formats that include pop-up stores and city store.
Apart from this, 64% Volkswagen customers conduct all their research on their mobile devices before making a purchase decision, said a report by Kantar and Google.
“These findings helped us build an even stronger case towards opening pop-up stores in regional markets. The brand would like to be accessible and available when a customer decides to purchase a Volkswagen car and offer them premium services,” said Knapp.
The concept is aimed to provide a cost-effective yet efficient way of increasing its reach in the country. It will be paperless in nature that will address customer queries seamlessly.
Giving brand an upscale and premium imagery via campaigns:
The brand keeps a 360-degree integrated approach for all of its campaigns. The percentage of investment in a particular medium depends on the campaign. For mass amplification of a campaign, it invests a considerable amount on social media channels.
As a market, the brand is moving more pictorial and visual. To give its campaigns an upmarket and classy feel, the brand is extensively investing in the production quality of its campaigns. Positioning itself as an aspirational premium brand, the brand at the beginning of the last year did a change in its brand imagery.
With the recently launched Passat TVC, the brand made sure that the production quality is unlike other TVCs. It was made more like a film, giving it an upscale and premium imagery. The TVC was released on select movie screenings for a niche audience.
At the beginning of the year, the brand had launched 4Ever campaign. The campaign offers a more affordable customer ownership experience, aiming to communicate its reduced total cost of ownership across its carlines.
The brand has also course-corrected its spare parts pricing, reduced the regular service cost by 24 to 44% along with providing a four years of road side assistance (RSA) and standard warranty and three free services to our customers for the first year or 15,000 km.
Since Volkswagen Polo has completed 10 years in India, it is planning a 360-degree communication approach for this celebration to re-create the magic of advertising.
“The onset of it was through driving the Volkswagen Polo all the way from Pune to Sandakphu, the highest peak in West Bengal. A road known only for 4X4 cars with over 30 steep hairpins driven by a leading automotive publication. The natives of that region were quite surprised to see a hatchback climb up all the way. Several other digital films, influencer engagement and dynamic drive activities will follow this,” shared Knapp.
Volkswagen’s 47% of consumers conduct their research through search engines, which indicate that a prospective car buyer has all the relevant information before visiting the nearest dealership to experience and test-drive the product.
This helped brand to analyse its marketing efforts and further streamline them to ensure its communication reaches its target audience. The brand had also conducted a focused communication on digital media platforms through geo-targeting and other relevant tools that convey the right message across.
“With technological advancements in AI and machine learning, these data-driven analysis simplifies the time spent on research and allows for a more strategic approach towards marketing and reputation building,” said Knapp.
Being the only manufacturer that is directly involved in motorsports in our country, Volkswagen this year is celebrating ‘10 years of Motorsports in India’.
Asked what benefits the championship series like Ameo Cup reaps for the brand, Knapp said, “It does have a positive brand recall and affinity among Indian customers. It reiterates that our cars are safe, have impeccable build quality and offer a fun-to-drive experience.”
“The thrill of driving these cars keeps us motivated to invest further in this expensive sport and encourage interested drivers to participate further,” he added.
In the same space, the brand is planning something bigger and better with the introduction of Polo RX.
Upcoming challenges, trends in automotive industry:
Knapp said that due to the implementation of BS VI norms from April 2020, the beginning of 2019 has witnessed a visible shift in the fuel strategy across the industry.
“OEMs are opting out of diesel engines due to the heightened cost involved around developing BS VI engines. There’s been a focus on alternative fuels such as CNG, hybrid technology and electric vehicles and overall technological development in petrol-driven combustion engines as well,” he said.
The Fame II scheme Rs10,000 crore budget approval has been an encouragement for the auto industry to promote electric vehicles, Knapp said. However, the requirements stated for the subsidies might dampen the timelines as infrastructure still remains a big challenge for electrification.
Commenting on the upcoming trends in the industry, he said there will be a heavy investment in AI and machine learning that will help observe and understand consumer patterns of behaviour, decision making and lifestyles. This will further allow brands to offer curated and personalised services that enhance the customers’ ownership experience across sectors.
With chatbots taking over in the service business, Knapp said that the influx in the influencer community will need to start being more accountable for the content they promote.