German automaker Volkswagen Group is likely to deploy its Skoda brand to enter the mass-market segment with the hope to increase and maybe double the market share in India. Skoda is likely to take a call to invest in developing a low-cost version of VW’s small-car platform confirms Automotive News Europe quoting CEO Bernhard Maier. The new MQB A0 platform is aimed at cost-sensitive car markets like India.
Volkswagen Passenger cars, Skoda and Audi are currently present in India with two facilities in Pune and Aurangabad. If the management of the company approves the use of this platform, then we could see a new budget car in making and would go on sale in 2020-2021. Skoda and Volkswagen both could make their own versions of the car and sell them. Similar to what Renault and Nissan do.
Domination by the likes of Maruti Suzuki and Hyundai has not allowed European manufacturers like Volkswagen, Skoda and Renault to have a smooth outing in the Indian market. India recently overtook Germany to become the fourth-largest automobile market in the world. Skoda’s sales in India currently are at all-time high and the new products like Skoda Superb and Skoda Kodiaq have been fairly successful. Skoda’s plan to co-develop a low-cost platform for India with Indian automaker Tata Motors did not work out. Skoda said that the cost to upgrade Tata’s AMP platform to meet the upcoming stronger emissions and safety standards.
Instead, Skoda now plans to make its modular MQB A0 platform more cost-effective and base its future India models on the same. The popular Volkswagen Polo in India is based on the PQ25 platform. However, globally the new Volkswagen Polo underpins the MQB platform as it is too expensive to bring the Polo’s MQB platform to India in its current form.
Renault-Nissan’s CMF-A platform that underpins the Renault Kwid and Datsun Redi-Go have seen some success in the country. In fact Renault Kwid sales have crossed 1 lakh mark and helped the company to improve its market share as well.
However, we don’t expect Skoda or Volkswagen to build an Alto or a Kwid rival. The future small car built by Volkswagen Group for the Indian market would be more expensive than Renault Kwid. We expect Skoda to build a Maruti Suzuki Swift or a Hyundai i20 rival for the Indian market. After making the platform further cost effective by increasing localization, more products including a sub-4-meter SUV might be possible to counter Ford Ecosport and Maruti Suzuki Vitara Brezza.
Skoda’s Head of finance and IT, Klaus-Dieter Schuermann further said Automotive News Europe, “The Kwid is not really our competitor vehicle. We see ours as a bit more sophisticated, Renault has found their own way, but that wouldn’t be quite the standard we’re looking at. He further added that VW and Skoda would both develop their own small vehicle on the platform if the Volkswagen Group Board approves this plan.
The real key to success in India is sourcing parts and materials locally. “To launch a vehicle in this class, you have to have very high localization because import taxes are too high,” Schuermann said.
Reports further confirm that VW and Skoda are involved in intense conversations with suppliers to ensure low costs on the platform.