Skoda Auto CEO Klaus Zellmer says that for the compact SUV, the “price position versus competition is very ambitious”.
With localisation being key to Skoda Auto India’s plans for the Indian market, the upcoming compact SUV is going to have quite a high level of local content in order to keep prices in check. Underlining this, Skoda Auto CEO Klaus Zellmer said, “The sub-four-metre SUV will have 75-76 percent localisation. Its pricing will use excise benefits and pass them on to customers. What we are going to do differently is to learn from the lessons so far.”
He added, “We had a really good start with the 2.0 products.” For reference, Skoda had aimed to achieve 95 percent localisation in its India 2.0 products, namely the Slavia midsize sedan and Kushaq midsize SUV. Considering the 1.5 TSI engine and the 7-speed dual-clutch automatic transmission are not fully locally made yet, it seems like Skoda is still in the process of achieving this target.
- Skoda to avoid ‘over-engineering’ misstep starting with compact SUV
- European car buyers in India go for quality says Zellmer
- Skoda to cut costs by scaling where they source from and localise more
Skoda’s CEO also said that ‘over-engineering’ was a misstep for the Indian car market in the past and its new lineup, specifically the compact SUV that’s coming by March 2025, is set to change that. “We have a lot of lessons learnt in the Indian market. Often we build (a) car according to our own expectations. They tend to be over-engineered. And that comes at a price tag. And of course that’s something that weakens your competitive position,” he said.
He added that the company needs to learn and be aware of the sweet spot. “That’s what we’re after. We want to build the cars that customers in India are willing to pay for. And this is a lesson we continuously need to learn. Our price position versus competition is very ambitious. The idea is to provide a car that’s even better than what’s typically being catered to, in that segment,” he said.
Zellmer added that the company will capitalise the way its cars drive, the fit and finish, sustainability, safety, etc. to get more volumes. He explained, “Competitors are outselling us. There’s room for more if we get the sweet spot better. There are certain things which are undebatable. People who buy European cars in India go for quality. The cost reduction potential for us is exactly what we’ve done with the sub four-metre.”
The company plans to cut cost by scaling where they source from and localise more. One of the engine derivatives (the 1.0 TSI) is now fully built in India, he said, adding that benefiting from procurement and localisation is the way forward. The new compact SUV will be the third Skoda product on the MQB A0 IN platform, which is the first platform developed by the company outside of Europe and tailor-made for the Indian market. The platform is said to enable the use of efficient engines and advanced safety systems, specifically for the Indian market, and to meet the country’s new, stricter safety and emission requirements.
About 50 percent of Skoda cars manufactured outside of the Czech Republic are produced in India, and the company’s export strategy of India-developed products, too, will see a renewed focus going forward.
Skoda’s upcoming compact SUV will be produced in the same production line where the Kushaq and Slavia are made. The Pune plant’s production capacity is 2.7 lakh cars per year for Skoda and Volkswagen combined. Skoda Auto expects potential annual volumes of over 90,000 units to serve Skoda’s domestic and export markets. The brand is trying to build its presence in Southeast Asia, the Middle East, the Commonwealth of Independent States and North Africa.
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