Volkswagen has officially confirmed the development of a brand-new sub-four-metre compact SUV tailored specifically for the Indian market, with a planned launch in 2027. The announcement comes just over a week after initial reports revealed that the project had secured global approval. Confirming the move, Thomas Schäfer, CEO of Volkswagen Passenger Cars, highlighted that the new model is being developed specifically for India as the brand looks to solidify its position in the region.
Platform, Engine, and Gearbox Choices
Under the skin, Volkswagen’s upcoming compact SUV will be built on the localized MQB-A0-IN platform—the same base used by the Skoda Kylaq—and will be manufactured at the Chakan plant in Maharashtra.
Under the bonnet, the SUV will feature the familiar 1.0-litre TSI petrol engine shared with the Kylaq. Drivers will be able to choose between a 6-speed manual transmission and an 8-speed automatic gearbox (8AT). While the Kylaq currently uses a 6-speed automatic, Volkswagen’s new model will launch directly with the 8-speed automatic, though the Kylaq is tipped to receive the 8AT upgrade during its next update.
Visual Identity and GT Line Trims
Although it is essentially a badge-engineered sibling to the Kylaq, Volkswagen is giving the new SUV a distinct brand identity. Expect substantial design changes across the exterior and interior, along with tailored equipment levels and market positioning. The variant lineup will also differ, with sources hinting at the inclusion of sporty GT Line trims featuring blacked-out exterior accents.
While an official name for the Indian model has yet to be announced, Volkswagen already sells a closely related compact SUV called the Tera in the Brazilian market.
Market Context and Re-entry into the Segment
This upcoming model marks Volkswagen’s re-entry into India’s highly competitive sub-four-metre vehicle segment. The brand previously exited the space following the discontinuation of the Polo hatchback and the Ameo compact sedan. Currently, Volkswagen only produces the Taigun SUV and Virtus sedan locally, both of which sit above the four-metre mark. Adding a sub-four-metre SUV will significantly lower the price barrier to entry for prospective Volkswagen owners.
The decision follows the strong market response to the Skoda Kylaq, which racked up over 45,000 unit sales in 2025 to become the single largest contributor to the VW Group’s domestic sales in India. Demand in the sub-four-metre compact SUV space continues to be driven by hatchback owners upgrading to SUVs, a reduction in GST from 28 per cent to 18 per cent last year for vehicles meeting size and engine displacement limits, and a broad range of powertrain choices.
Pricing, Production, and Strategic Outlook
Expected to carry an ex-showroom price tag ranging between ₹8.00 lakh and ₹13.50 lakh, the new sub-four-metre SUV forms a crucial part of Volkswagen’s long-term strategy. Thomas Schäfer noted that India is set to play a far more vital role in the firm’s global operations as Volkswagen adapts to shifting geopolitical and automotive landscapes, stating that introducing a compact SUV next year is the right step toward remaining a major player. Additionally, localized production of the SUV will help optimise capacity utilisation at the Chakan production facility while delivering stronger economies of scale.
