India key to Skoda’s exports strategy, says country CEO

New Delhi: India will play an important role in Czech carmaker Skoda Auto’s ambition to expand into South-east Asian markets, as the European automotive group Skoda Auto Volkswagen India (SAVW), which operates five major automobile brands in the country—Skoda, Volkswagen, Audi, Lamborghini, and Porsche—looks to tap into India as a major source of and enabler for exports into other South-east Asian economies, a top company official said.

Skoda Auto will supply completely knocked down (CKD) kits to Vietnam, for local assembly of cars such as Kushaq and Slavia, from a new logistics hub in Pune. Already, the company exports 30% of its entire production overseas, Piyush Arora, managing director & chief executive officer, SAVW India Ltd, told reporters. In 2023, of nearly 150,000 cars that the group manufactured here, over 42,000 units were exported.

Additionally, India could serve as a source market for exports into geographies which are “behind” in their electrification journey, according to Ashish Gupta, Brand Director, Volkswagen India.

“There’s a lot of interest from markets like South America and Africa in markets such as ours (in India), where cars from India have very high acceptability now. Many neighbouring markets like Sri Lanka, Bangladesh and Bhutan, too, want to import our cars,” Gupta said.

“The Indian automotive industry is today exporting 15% of its overall production. Globally, the expectation of the government from the industry is to take it up to 25% by 2030. We (the Skoda group) are already at 30% plus, and we are not slowing down,” Arora said, adding that the legacy of parent Volkswagen’s Vento and Polo are helping the group push new cars such as the (Volkswagen) Virtus and Taigun into other markets, and the group now plans to leverage the Skoda brand to export Kushaq and Slavia to Southeast Asia.

“We have seen a substantial 30% growth in our exports since we started exports of these models last year,” Arora said. “Our effort is to add on more export markets. As part of Skoda’s internationalization strategy, India is a very significant corner piece that will support this plan. Volkswagen has been present in Southeast Asia for a while now.”

Skoda Auto, which leads the SAVW group’s affairs and brands in India since it formulated the India 2.0 strategy in 2018, is looking to launch its Enyaq EV (electric vehicle) this year. Arora said the EV will be imported into the country as a fully built car as the car volumes being low will not justify investments in localization the platform in the country.

The Enyaq, which is an electric SUV, was launched in 2020 in Prague, and is likely to be imported into India.

iD.4, the group’s electric SUV from the Volkswagen badge, on the other hand, is being tested for the Indian market and may only be made commercially available at the end of 2024 or in 2025.

The Group is also considering introducing an entry-level electric car in India that will be much smaller than the Enyaq EV. The vehicle, which will likely belong to the lowest or A0 category, will be manufactured in Spain starting 2025, Mint had reported earlier.

If realized, the EV will make Skoda the first European automaker to tap into India’s mass-market electric vehicle segment. It’s unclear if the entry-level car will be made in India as well.

The EV may be launched in several markets under the Skoda, Cupra, and Volkswagen brands as part of Volkswagen’s Accelerate strategy to become the top brand in sustainable mobility.

According to Gupta, the Volkswagen brand will attempt to strike a balance in India between attaining leadership of a niche segment (VW’s Virtus and Skoda’s Slavia comprise nearly 50% of the compact sedan segment), and playing into a large segment like SUVs, where the group’s brands are smaller players.

On the group’s wider plans to switch to clean mobility technologies in India, Arora shared that the SAVW group will align with the Volkswagen Group’s global vision to be an all-electric brand.

“Right now, the government push is also electric, and we are seeing all upstream to downstream benefits for that segment. There is no benefit on hybrids from the government side, so we are focusing on EVs,” Arora said, weighing in on the ongoing discussion on potential tax rationalization on hybrid technologies, which has split the automotive industry.