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"New Models Are Not Always the Recipe for Success"

Arvind Saxena, MD of Volkswagen Passenger Cars in India, has steered the company through tough times over the last 18 months, and has come to realise that India is a long haul market

Published: Feb 6, 2014 09:41:52 PM IST
Updated: Feb 6, 2014 09:42:47 PM IST
"New Models Are Not Always the Recipe for Success"
Image: Amit Verma

Q: You’ve spent some amount of time at Volkswagen now. How has it been?
Saxena:
Good, challenging and interesting.

Q: Challenging?
Saxena:
That’s because the market has been very challenging in the last one-and-half years since I joined. If you start your move in a downturn, it becomes very challenging. Interesting also, because you have a lot of things to do, in terms of opportunities to work on... that’s good for me.

Q: What’s taken most of your time?
Saxena:
Clearly the network. One of the challenges for Volkswagen was that it had a very quick ramp up of business. I don’t think anybody has been able to do it but it poses its own challenges and opportunities. So, a network needs time to go through different phases like creating capacities to handle customers. Unfortunately India is a very, very novelty-driven market in the sense that whenever you have a new model, you have a lot of footfalls and then suddenly there is a break. We are not fundamentally strong to handle that break. So somewhere in the network the fundamental processes and systems were not as much as one would like to have. As a result, we were not in a very good position from a customer point of view. That’s where I have tried to focus... to really review the whole training, what kind we were doing, activities related to customer satisfaction from sales to pre-sales to post-sales. That was one [area that took up my time].

Second was to move the focus from numbers to market share in the segments we are in. So, we play in very few segments [and can’t] influence my performance against the entire market. Like if a small SUV sells more I cannot compensate it by selling more Polo(s) and more Vento(s). I play in premium hatch and premium sedan. So [I need] to hold people more accountable to better our market share in these segments.

Q: Because the ramp up was so quick and successful in the initial phase, is it that Volkswagen headquarters has turned off the tap for new products to India?
Saxena:
I don’t agree. This is one fallacy which many people have that the only way to succeed in a market is to have more products. I don’t want to take names but I know companies that have launched five models. How many of them have succeeded? But you will succeed with new models if you are fundamentally strong to handle your customers and the models [themselves]. That is also when you have to give time to nurture each brand and model. Initially we had to be very aggressive because we were very late in the market. I am sure we were among the very late entrants in the market. But then we had to make it up soon. So, how many models got launched last year? Twenty maybe? And how many succeeded? I am sure you can count those on your fingers. So, new models are not the real recipe for success.

Q: When you make India’s case (compared to China’s) to your headquarters, how does that play out?
Saxena:
China and India are not a comparison in the same breath for any company [and] not just Volkswagen. China for most multinationals is a separate business vertical altogether. Look at the extent of business. A market which sells over a million [cars] every month, you cannot treat it in the same breath as any other market. But clearly we see India as a very long haul market. It is not either or. As management we need to focus on many things at the same time. So, a model like Taigun for example, right from the time it was designed, was done by keeping India in mind. This is very important because right at the development stage, you can design a car which can cover Indian requirements while at the same time it can also meet some other country’s requirements.

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