Forbes India 15th Anniversary Special

Skoda Auto's next big India push

Entering more mass-market segments, an aggressive EV plan and fully utilising its India base seem to be at the core of the carmaker's plans

Published: Oct 17, 2023 01:56:15 PM IST
Updated: Oct 17, 2023 02:10:32 PM IST

Skoda Auto's next big India pushA more ambitious India plan for Skoda is that of a low-cost electric vehicle (EV).

Skoda Auto's India outpost, Skoda Volkswagen India, sold 4,232 cars in September with its two mainstream brands Skoda and Volkswagen. This may seem small fry in light of the Japanese and Korean giants that dominate this industry, but there seems to be a plan at play here.

Speaking on the sidelines of the launch of the Skoda brand in Vietnam, Martin Jahn, board member for sales and marketing at Skoda Auto, gave some insights into the firm’s plans for the Indian market.

Skoda-VW's most mass-market push yet

With the next leg of Skoda’s India 2.0 plan, the focus will be on cracking a more price-sensitive, mass-market segment with a sub-4 metre SUV. This model is set to debut by late 2024 or early 2025 in India. Expectedly, there will be Skoda and Volkswagen-branded versions of this SUV.

Jahn says Skoda will stick to the MQB architecture for the new SUV, and use a different variant of the architecture, since an even more low-cost, India-specific architecture isn’t viable. The MQB architecture’s flexibility, its proven effectiveness and the high levels of localisation it has managed to achieve with Slavia and Kushaq give Skoda the confidence to continue with this architecture.

It can be assumed that quite a few components will be shared with Slavia and Kushaq. So, expect to see the localised 1-litre, turbo-petrol engine with the 6-speed, manual and torque-converter gearboxes. A good list of features is also expected as is a high degree of safety.

The new SUV also has the potential to be a global model, said Jahn. While the sub-4 metre length restriction is typically Indian, Skoda will still look at the viability of exporting this SUV to various developing markets.

Aggressive EV localisation plan

A more ambitious India plan for Skoda is that of a low-cost electric vehicle (EV). It is looking at an aggressive price tag for this EV, which is likely to be an SUV of between Rs 13 lakh and 18 lakh. To keep up with the competition, it will be heavily localised in India.

Skoda will not rework the MQB for this EV but will either use the MEB EV architecture in its entry-level MEB21G guise or might even partner with another manufacturer for this venture. The MEB architecture will be reworked like the MQB-A0-IN to dimensions that suit the Indian market as well as to accept high levels of local content.

Also read: After Tesla, India will soon have another global electric car maker. What's VinFast planning?

The Volkswagen Group already has a relationship with Mahindra to supply EV components for the Indian carmaker’s upcoming INGLO-based EVs and it would make sense to deepen this relationship further to share costs and technology in developing a low-cost EV.

Jahn explains that the biggest hurdle facing this model currently is achieving a package that is priced well but is also profitable. Most entry-level EVs in the West aren’t profitable, largely due to the high cost of batteries. Skoda too is working on a solution to fix this issue; the idea seems to be to offer practical range while still being priced well. To this end, the company is open to all possibilities, including tie-ups with the local lithium-ion cell manufacturing plans in the works currently in India.

The EV plan is still at a nascent stage, only expected to come to fruition by 2025. While Tata Motors has a lead at this point in this segment, the next couple of years will see quite a few carmakers enter or widen their presence in this segment, most notably Mahindra, Hyundai-Kia and Maruti Suzuki-Toyota.

India as a manufacturing hub for Skoda globally

Aside from its ambitions in the local market, India is now of immense importance to Skoda Auto in the global scheme of things. India is already the second-largest market for Skoda globally, and the company is now looking to cash in on the high levels of manufacturing self-sufficiency and low-cost structures it has managed to achieve in India. The current India 2.0 models already have opened up new markets for Skoda Auto. Vietnam is one such example, where kits will be exported from India for local assembly. Eventually, Vietnam will turn into Skoda’s hub for the Asean region supported by its Indian infrastructure.

Also helping fuel India’s prominence are the models being developed here. As Europe moves further away from affordable cars, the low-cost models being developed here in India give Skoda a bank of products to sell in markets outside of Europe. To this end, the next generations of Slavia and Kushaq will also be developed as global models, taking into account markets like Latin America, Africa and Southeast Asia.