Skoda unveils Volkswagen Group’s ‘India 2.0’ plan

Czech Republic based carmaker, Skoda Auto which is part of the German Volkswagen Group has been given the responsibility for the group’s further expansion in India. Announcing this on Monday, Skoda Auto Chief Executive, Bernhard Maier said that Volkswagen Group would invest an additional 1 Billion Euro into the Indian market to build a new research, design and development centre in Pune as well as expand production facilities at the existing Skoda Auto facilities in Aurangabad. India-specific models will be created under the ‘MQB A0’ platform and will be created for Skoda as well as Volkswagen. Incidentally, Skoda Auto was the first brand under the Volkswagen Group to enter India in late-2001.

One key element of the plan for the group is to garner a five percent market-share of the market by 2025 according to Maier, adding that the group has made mistakes in India in the past. To rectify these mistakes, he added that there will be three major factors that will determine the success of the “India 2.0” plan which would be to improve customer experiences, bring down cost levels through increased localisation and to time launches correctly. Gurpratap Boparai, the newly appointed managing director for Skoda Auto’s Indian operations highlighted that getting a localisation right was the key to future success.

Maier added that Skoda’s increased investment in India dovetailed into Narendra Modi’s “Make In India’ philosophy and would allow the Volkswagen Group to use India as a manufacturing base for other fast-growing economies. The investment, would he reckoned, create over 4000-5000 new jobs directly and indirectly. However, he did point out that the first car from this new plan, a Sports Utility Vehicle would only appear in the market in late-2020 and the group would need to endure a degree of hardship over the next two years. “After that we will launch two new products every year for each brand”, claiming that a five percent market share in India which by 2025 will be, according to estimates a five million unit a year market is a modest target.

The investment, according to industry observers reaffirms the group’s belief in the Indian market particularly at a time where it has been suffering the repercussions of the ‘Dieselgate’ emissions-cheating scandal in Europe and the United States that has severely impacted its bottomline. However, internal jostling within the group in India where Skoda Auto and Volkswagen competed at the same price point and where both brands suffered from poor customer service led to them becoming just part players in a market dominated by east Asian companies. Industry observers believe that by giving Skoda Auto the lead role in the group’s expansion in India, it could help quell internal dissent and arguments, allowing Germany’s largest company the leverage to compete more effectively in India with a potential Maruti-Suzuki and Toyota merger looming in the coming years.