Skoda, a Czech car manufacturer, is planning major expansions in India, which its global chief executive described as the 'most important' market outside of Europe. Skoda presently sells Kushaq and Slavia in India but plans to introduce a new compact SUV early next year while planning to almost double its volume sales in the country.
It sold nearly 49,000 units in the country last year. India is now the third-biggest market globally for passenger vehicles and is likely to clock annual dispatches of 4.2 million in FY24; therefore, the market is of strategic importance to the brand. Skoda Auto, which is part of the Volkswagen Group, is also gearing up to launch electric vehicles in the country.
In the discussion, global CEO of Skoda Auto Klaus Zellmer said the brand's customer-centric strategy in India is quite imperative for it globally. Outside of Europe, the most important adventure for us is India because this is the place going forward," he said.
Zellmer said it was the most critical contribution which India is going to make towards the growth plan of Skoda Auto, as it introduces its broadest and most contemporary product portfolio, specifically for customers in India. He said India is very significant to the brand's international expansion strategy: "So much is happening; we believe in the growth potential of India, and of course, we will be a part of that."
Noting challenges in other markets, including Russia and China, Zellmer was sanguine about the prospects of Skoda in India. "In a business, it is always not wise to stand on one leg. In our case, this is Europe. If it gets a little shaky, you want to stand on two legs, and the second leg for us is India," he explained.
Zellmer also acknowledged India's competitive environment and hence reiterated Skoda's commitment to strengthen localization efforts in order to be more competitive on pricing. "Often we build cars according to our own expectations, and they tend to be over-engineered," he admitted, noting the need to align with market demands more effectively.
In 2018, it had restructured its Indian operations to make Skoda responsible for the market. Zellmer said that the talks on partnerships in India continued with several parties. "I really believe in the scenario in which we find a partner to become more in line with society, with customers, with industry—one that has all the preconditions in place to be successful," he said.
Zellmer said any partnership would be equity-sharing-based, but he did not give details on which companies. He cited the agreement already in place between Volkswagen and the Mahindra group for electric vehicle components and said the group remained committed to investing in India.
With this vision, Skoda Auto is going to expand its sales network in the country—by the end of the year, it aims to raise touchpoints to 300, Zellmer said; the brand focuses on smaller towns and cities with a view to Market reach.
On the product strategy, Zellmer said the company would look at bringing such models as the fully electric Enyaq into India at an appropriate time in keeping with global trends toward pure electric and ultra-high-efficiency combustion powertrains. He also harbored ambitions to make India an export hub by leveraging the capabilities it has built up in Pune to regional markets like ASEAN and Middle East.
It is through such initiatives that Škoda Auto believes in harvesting India's growth potential and building on its competitive position within the automotive sector.
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