The Hindu Business Line : Skoda bullish on India despite slowdown

Mumbai, Dec. 18 SkodaIndia, the wholly-owned local arm of the Czech carmaker and part of the Volkswagen (VW) group, has reiterated that it will go ahead with its product launch plans during calendar 2009 despite the current slowdown.

“During this downturn cycle, we plan to focus on quality which will go a long way in building customer confidence,” Member, board of directors, (Sales and Marketing), Mr Thomas Kuehl, told Business Line.

The company’s most critical offering in the second half of 2009 is the Fabia, which will roll out of VW’s integrated Chakan plant near Pune. The car is already being assembled at Skoda’s Aurangabad facility but is constrained by low localisation content and limited volumes.

Once its production ramps up at the Chakan plant, localisation levels for the Fabia will be up to 50 per cent in three years from the present 15 per cent. In addition, Skoda plans to expand the car’s line-up, which will include an affordable entry-level option to attract a larger buyer base.

The company also plans to launch the new Superb and Laura along with the Yeti sport-utility vehicle during 2009. These will be part of the Aurangabad product rollout plan.

The VW plant in Chakan has critical infrastructure like a paint shop, engine assembly etc in place which makes mass production of fast-moving models possible. In contrast, the Skoda facility, being an assembly operation, can focus on high-end cars like the VW Passat and Audi series.

The Fabia shares the same platform as VW’s Polo which is scheduled to debut sometime in 2010. What is even more interesting is that Skoda and VW will jointly develop a platform and a car below the Fabia and Polo in terms of price. This could then retail for under Rs 5 lakh, which could translate into huge volumes in this predominantly small car market.

Only after this can the projected volumes of 1,10,000 cars be attained at VW’s Chakan plant sometime in 2012-13 or even earlier. However, Mr Kuehl said that the cars would be badged separately with exclusive retail plans for VW and Skoda though there could be some synergies on the service front at a later stage. “The idea is to work towards the best cost-benefits through the common platform strategy but that is where the commonality ends,” he added.

Equally, there will definitely be some product overlap between the two companies but price will be the differentiator. As Mr Kuehl put it, Skoda is the price value concept while VW is the premium brand.

Retail initiatives

The company is also putting in place some retail initiatives for 2009 where “some interesting concepts are being developed and the Net will be used in a way nobody has attempted before”.

Apart from India, Skoda is also bullish on China and Russia. In the case of the former, localisation is not so much of an issue thanks to VW which has been around for many years now. The Fabia is being launched during the course of this month and it is believed that the local content will be close to 80 per cent.

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