Contrary to earlier automotive industry buzz, European car giant Volkswagen has ruled out plans to set up an engine manufacturing plant in India soon.

The company has decided to go for such a plant only after volumes pick up in the country. Plans to build up its presence n the passenger car market are as strong as ever, and it is looking at all possible opportunities to spread the VW portfolio in the country. An investment to the tune of Rs 3500 crore in its Pune plant which has a capacity to produce as many as 1,10,000 units passenger cars.

Incidentally, it may be noted that the VW plant at Pune is close to the plant of its group company Skoda India at Aurangabad. The VW plant will go on stream by the end of 2009. The plant is near its group company Skoda India’s plant in Aurangabad. Skoda’s latest Fabia is expected to be the first vehicle to come out of the plant considering that VW is looking at synergies between the group companies. However, the different companies will brand their own cars separately take them to the market. The synergies are aimed at maximizing the resources, said a company official. It has also been reported that there will be no sharing of dealerships or showrooms, which means that a Skoda Superb can never be found alongside a VW Jetta as one browses dealerships.

With the Fabia set  to roll out of the VW plant in Pune, Skoda India is on high spirits. The company is mulling over options to unveil a sports variant of the Fabia. This car is proposed to come with a price tag of around Rs 10 lakh and the company brass expects sales of around 20,000 units this year.