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India is crucial for Skoda Auto’s growth strategy

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Skoda Auto, the legendary Czech carmaker, has acknowledged past missteps in the Indian market and is making some changes to its strategy. Speaking during an Indian media tour to the Czech Republic, the company’s CEO Klaus Zellmer said that its previous approach of ‘over-engineering’ cars for India resulted in higher price tags and therefore a weaker competitive position.

Zellmer said the most important lesson was to understand the middle ground between quality and affordability that Indian car buyers place a lot of emphasis on. Skoda previously designed cars based on European expectations, which led to features that may not have been essential for the Indian market, and some features were not present at all. This resulted in higher costs that ultimately hurt their sales.

Skoda’s new approach will focus on delivering vehicles that are competitively priced, whilst maintaining the brand’s reputation for quality. They aim to achieve this through:

Cost reduction: The company plans to reduce production costs through strategic purchasing and greater localization of components.

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MQB-A0-IN Platform: The India-specific MQB-A0-IN platform enables the use of fuel-efficient engines and advanced safety features that comply with stricter Indian regulations.

Focus on driving dynamics and safety: Skoda offers competitive prices, but makes no compromises on the overall driving experience, finish, durability and safety features.

Finding a local partner: Zellmer said the company is in talks with several potential Indian partners and wants to find one that fully meets the needs of the Indian auto market.

The centerpiece of Skoda’s new strategy is of course the upcoming sub-4-meter SUV, which we were able to admire in production-ready form at the design center in the Czech Republic. This compact SUV will:

Highly localised: Skoda claims a localisation level of 75-76 percent, which significantly reduces production costs. The savings are passed on to customers via competitive pricing.

Made in India: Production will take place at the existing Pune plant, alongside the Kushaq and Slavia models. This facility has a capacity of 270,000 cars per year (for both Skoda and VW), allowing Skoda to meet both domestic and export demand.

Export potential: Skoda wants to expand its exports to Southeast Asia, West Asia, the Commonwealth of Independent States (CIS) and North Africa.

While acknowledging the need for change, Zellmer is confident about Skoda’s future in India. He pointed to the success of its ‘2.0’ products, the Kushaq and Slavia, as a positive basis for its new strategy, and also pointed out that the company is bullish on EVs. “With EV penetration expected to grow by 15 to 30 percent, our global strategy is to offer customers the best of both worlds, with a choice of electric or highly efficient combustion engines,” he signed off.

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