Volkswagen and Suzuki Motor, parent of Maruti Suzuki, has tied up to develop new small cars for the Indian market which will be a replacement of Alto model.
"At some point we will need a replacement for the Alto. That price range is the entry level for Indian customers today, so we can't leave that segment open," RC Bhargava, chairman of Maruti Suzuki.
As per the deal signed by the two firms this week, Volkswagen will buy a one-fifth stake in Suzuki for USD 2.5 billion, considering the Suzuki Motors expertise in small cars.
While spokesman for Maruti Suzuki was unable for comment, spokesman for Volkswagen said that the move by the firm was not intended to compete with Nano car.
"Volkswagen will be greatly interested in a car below the price segment of the Up. And that is something we will need to check in our future together with Suzuki," said Fabian Mannecke, the spokesman for Volkswagen.