On the importance of India as a market
Skoda is very strong in Europe and China is a place we are fading out. Outside Europe, our most important adventure is India. This is the place to be in going forward. The growth potential, the cultural fit and the investment done by your government makes it a fitting case to enhance focus on India. In business, it’s wise to not stand on just one leg. In our case it’s Europe, but if it gets a little shaky, it must stand on two. The second leg for us is India. We started this journey long ago, but we got serious after we introduced the Kushaq and Salvia under 2.O. Made mainly for India by Indian engineers, produced in India for India, in two years since the introduction of these models, Skoda has sold over 100,000 cars in India. We have never done that.
India being a competitive market
India is not only the most attractive, but currently the most competitive one that you can’t find in the automotive market. You have many new competitors, new entrants, new cars. It’s a predatory market. Skoda was No. 4 in Europe in terms of sales in 2023. We want to take that strategy—everything that makes us successful in India, going forward.
On Skoda being a laggard in India despite a two-decade long presence
We are still humble, are willing to learn and be customer centric. We have learnt our lessonṣ. We build cars as per our own expectations and they tend to be over-engineered, and it comes with a price tag. We want to build exactly cars that customers in India are willing to pay for. If you look at our price positioning versus competition, we are very ambitious and there might be things in the car that are better than what typically is expected in the segment. In terms of fit, finish, sustainability, we score over rivals. In the beginning, we were the only carmaker with a five-star NCAP rating, which makes us proud. We must capitalise on that in terms of volumes. I do think there’s room for more if we get the balance right.
On Skoda entry in the sub-compact SUV segment
We will start selling our first sub-four-meter SUV early next year. We are preparing the network – taking current 50 touchpoints to 300 by the end of this year. The idea is to attract as many buyers as possible. It carries the Skoda genes– comfort, safety and a superb ride and handling. We are on a good track for Skoda overall and for India. There’s cost reduction potential for us in the sub-four metre. More than 70% of the car is engineered, researched, and developed in Chakan (near Pune). This is where things – everything that makes the car attractive. Sourcing locally will benefit us. We clearly must localise everything we do, further.
On price war
Nobody wants a price war. One must be confident that the car you have in the market is worth its price. We are trying to hit the sweet spot with the sub four meter. We had a good start with the products under 2.O. We are super confident of the sub-four meter. In terms of technology, fit and finish the car will prove we do listen to the market. It’s a very crowded segment but its more than 50% of the market.
On collaborating with a partner for India
Of course partnership is one of the scenarios. We are talking to multiple partners in India. They have the local competencies, and they are much closer to the market. We have made some progress but can’t divulge anything. We are looking at an equity partnership. Someone who can help in engineering, sales, and procurement competency.
On the need for a partner despite a long presence
We have done it for 20 years and probably had no clue of the right track, so we are now trying a new track. I am deeply convinced that if we find the right partner, we can both benefit from each other. That partner will benefit from the Volkswagen Group–one of the biggest car manufacturers of the world. We don’t want to rush into it as we need to get this right. Choosing the right partner and the right set up will be a priority.
On what Skoda can bring to the table in the partnership
We have a unified cell which is promising not only from cost point of view in terms of capacity, chemistry, and technology. If we look at India at this point, the battery cell manufacturing is not taking place. When you talk about the electric drivetrain, we have probably the best electric machines with a combination of software and drivetrain that one can buy in the industry. If you look at our conventional business, the cars that you buy from VW Group its superior to most of the competitors. This is what we can bring to the table. If we combine this with cost competitiveness there can be a winning combination.
On the next phase of investment in India
I can’t give you a figure right now. It will depend on the scenarios we chose – there’s a standalone scenario and of collaborating with different partners which brings to the table different packages, different platforms, and top hats (one or more vehicle upper body structures that can share a common platform) . We would like to close it before 2027-28. If you look at the regulations in India in business year 2027-28, the government will levy CO2 penalties for the first time. Whatever we do we have to have a BEV in the market to compensate for the CO2 limit. With a long development cycle of 36 months, there’s no time to relax about.
Outlook for 2024
This year is a special year for Skoda in India and there’s a lot happening. We are ramping up for the new model, investing heavily in increasing our output, onboarding more dealers, and training them. This year is a bridge and will be challenging, Next year, we will go flat out.
