India is a market that holds a lot of potential for car manufacturers. This is one of the reasons why many international brands have set up facilities and are selling their products here. The Indian car market is extremely competitive, and due to this, some companies are more successful than others. Czech carmaker Skoda Auto has also realized this and is now looking for a local partner to grow its business. The chairman of the Czech carmaker called India a “predatory” market.
Skoda Auto CEO Klaus Zellmer said,
India is not only the most attractive region for us outside Europe, but it is also the most competitive environment that you probably find currently in the automotive market. You have many new competitors, new entrants, new cars. So it really is a predatory environment.
Skoda Auto considers India a very important market; however, it is also one of those markets that the brand feels is brutally price-competitive.
Skoda has been present in the Indian market for almost two decades and has invested billions of dollars (tens of thousands of crores), and India has been one of those markets that the brand has not been able to crack.
That is why the brand now plans to look for local partners. By local partners, Skoda means Indian car manufacturers, and by teaming up with a local manufacturer, the brand wants to increase its chances of penetrating the Indian market.
By collaborating with local suppliers, the brand can also learn more about customer preferences and bring down the cost of their products to price them competitively.
Zellmer said that the company is currently in talks with multiple potential partners and will finalize a partner that is suitable for the company, which would help the brand achieve its goal of cost-effective manufacturing in India.
Zellmer said,
Often we build cars according to our own expectations and they tend to be over-engineered. And over-engineering always comes at a price tag and this price tag then, of course, is something that weakens our competitive position. So, we need to learn, we need to be aware of the switch. Where is the engineering ingenuity of a Skoda brand, and how to strike a balance between cost and price. We need to be competitive on cost without sacrificing the quality, fit, and finish that European cars are known for.
Upcoming Skoda
Skoda is currently working on a sub-4 meter compact SUV for the Indian market. It is one of the most competitive segments in the country, and almost every manufacturer has at least one product in this segment.
This segment contributes 50 percent of the total SUV market’s volume in India. The upcoming sub-4 meter SUV is expected to see 75 percent localization, the highest for any product from Skoda in India so far.
The upcoming Skoda SUV will compete with cars like Maruti Brezza, Hyundai Venue, Kia Sonet, Tata Nexon, and the recently launched Mahindra XUV300 in the segment. With 75 percent localization, the upcoming Skoda SUV is expected to be priced competitively.
Skoda will be manufacturing the SUV in India and will be exporting it to other countries as well. The upcoming SUV is expected to give Skoda a 4 percent share in the sub-compact SUV segment.
The upcoming SUV from Skoda has been spotted testing several times, and it is expected to get a design similar to the Kushaq. The SUV is expected to be offered with a 1.0-liter turbo petrol engine with a 6-speed manual and automatic transmission option. The SUV is expected to go on sale in early 2025 and is anticipated to improve things for the brand.
Skoda is betting heavily on the sub-4 meter SUV. They hope India will become its second-largest market once sales of its sub-compact SUV and refreshed model line-up begin to roll out from 2025.
Via Livemint