Volkswagen may set up engine plant at production facility in Chakan

If you're one of those guys who consider the Volkswagen Polo, the Jetta or the Skoda Superb as an overpriced bunch of cars; here's the reason why: Volkswagen imports engines of these three and all other models offered by all carmakers that work under its shadow. 

The brand, currently importing petrol and diesel engines ranging from 1,200 cc to 3,000 cc, may consider setting up an engine plant at Chakan, near Pune. This facility rolls-out all the mainstream models of Volkswagen and Skoda. The move will help the German giant to increase profits by building the engines locally thus bringing down production costs as currently, the engines imported attract custom duties of 30 per cent. 

However, the company is not happy with the state government and is also considering moving to some other state over the ongoing VAT issue. The outcome of the ongoing tussle will be the deciding factor for the VW investment.“There is a plan to have our own engine plant in India at the group level. It all depends on discussions with Maharashtra government on the tax (VAT) issue,” said Michael Perschke, head of Audi India, a VW group company.

At present, Volkswagen’s world-class production facility in Chakan – where the engines are slated to be made locally – rolls out about 130,000 cars a year including models from Volkswagen and Skoda.