Skoda Auto Volkswagen’s Made for India compact SUV may hit roads by 2023


Skoda Auto Volkswagen, the Indian arm of the world’s largest car maker Volkswagen Group, is planning to enter the fast growing but highly competitive market for sub-four-metre SUVs in India to challenge the likes of , Hyundai Motor and Tata Motors.

After having committed to invest more than 1 billion euros in the Indian market under its 2.0 strategy, the group is now working on a plan to make an India-specific sub-compact SUV to gain from lower tax for such vehicles, people in the know said.

Project discussions are in the final stages and if all goes well, the SUV under the Skoda badge which is being called as project 2.5 will hit the roads by the second half of 2023. Interestingly there is no Volkswagen alternative deliberated as yet. The group is looking at a volume of 50,000 units per annum from the proposed sub-compact SUV.

According to the people, the project is likely to be funded from the billion euro investment the group has committed to in India, thanks to savings generated by the aggressive development and localisation effort executed by it under India managing director Gurpratap Boparai’s leadership.

Skoda Auto Volkswagen did not respond to an email seeking comment till press time Tuesday.

“Skoda has set a target of gaining a 5% market share in the Indian passenger vehicle space by 2025. It is currently less than 1.5%.”

— Eyeing Larger Pie

Even as discussion on projects 3.0 and 4.0 are deliberated, the success of the upcoming Skoda Kushaq, Volkswagen Taigun and sedans are going to be critical for parent Volkswagen Group to repose confidence in India and release future investments.

The proposed sub-compact SUV would likely help Skoda and the VW Group to move towards higher volumes and capacity utilisation.

The new vehicle would be designed in Europe, but the Indian R&D will ensure its execution with a deep localisation of over 95% in order to compete aggressively in the market, people in the know said.

Unlike Skoda Kushaq, which has just Hyundai Creta and Kia Seltos to compete against, the new SUV would be entering a highly crowded segment with buyers having options of 10 models to choose from. In fact, the VW Group is late to enter the segment, which accounts for 15% of the overall passenger vehicle market and over half of utility vehicle sales in India at 50,000 units a month.

Led by the new Kushaq compact SUV, which has received 3,500-4,000 bookings so far, Skoda Auto is aiming to more than double its sales to 30,000 units in 2021 from last year and grow it almost threefold in the coming three years.

Skoda Auto Volkswagen has set a target of gaining a 5% market share in the Indian passenger vehicle space by 2025. It is currently less than 1.5%.

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