Today, the group finds India where China, VW’s biggest market today, was 10-15 years back
German automaker Volkswagen Group had in July announced an investment of one billion euros in the country as part of its India 2.0 strategy. The India 2.0 strategy rests on two planks: keeping costs low with high levels of localisation and — this follows from the idea of keeping costs low — designing and producing local models based on Volkswagen Group's MQB platform. By standardising components, dimensions and production processes, the company hopes to also cut down production time. Once it gets the ball rolling, the company hopes to grab 5 per cent market share by 2025 for its two brands, Skoda and Volkswagen. Currently, the group as a whole holds a 1.86 per cent market share which includes the sales from Skoda, Volkswagen and the premium but marginal players — Audi, Porsche and Lamborghini.
The India 2.0 strategy has been in the works for well over a year. Now ratified by the board, it is in line with the firm's global strategy under which each market will be led by one brand from the Volkswagen stable. For instance, China will be led by Volkswagen while North Africa will be led by Seat. Volkswagen will also be responsible for North and South America. Audi will lead the West Asian markets as well as South East Asia (excluding China). Skoda will lead other markets including India.
While Skoda will be the focal point of product planning and development for India, the company will introduce a slew of new products in the midsize segment under the Volkswagen brand in India.
The firm’s product-specific announcements had clearly indicated that the older PQ25 platform cars will be phased out and replaced by new cars based on the MQB platform, which is Volkswagen's new platform. The India-specific branch of the platform is dubbed MQB-A0-IN and it will be the foundation of its mass market cars. Skoda did operate in this space earlier with the Fabia hatchback. So there is some expectation that it might revive the Fabia brand with a new MQB-based car.
Skoda Auto India managing director Gurpratap Boparai, who leads the revival project, says, “Volkswagen will launch the first model built on the new MQB-A0-IN platform as early as 2020. The model offensive will start in the mid-size A0 SUV segment. In the mid- and long- term, the new models in the A0 segment will constitute an important addition to our portfolio.”
Gurpratap Boparai Managing director, Skoda India
The year 2020 is also the year India is set to catch up with global emission standards by moving to BSVI. The move might prove to be a game changer as cars developed for India will find more global acceptance.
That said, its performance in India has left much room for improvement. Despite a long presence and offering a range of models across price points, and despite significant recall for many of its brands such as Polo (VW) and Rapid (Skoda), the group has struggled in a market where Maruti Suzuki and Hyundai account for about 66 per cent of the sales. The group hopes its new push will change its fortune in the world’s fourth-largest auto market. “An important part of our strategy is to establish a local engineering project house to ensure the necessary market proximity. We have already hired key personnel for this project house. We will tap into the vast know-how of the highly qualified local engineers. Building constructions are also in progress,” says the MD.
Today, the group finds India where China, VW’s biggest market today, was 10-15 years back. But in appointing Zac Hollis, the former head of sales in China, as the director, sales, service and marketing, for India, the company has signalled the importance of India in its global scheme of things. “India today is a middle-aged society with high incomes offering a huge market potential. Hollis’ experience in developing markets like China will help us immensely to implement the India 2.0 strategy,” says Boparai.
The company will also look to export vehicles manufactured in India to newer destinations other than the 30 plus countries where it exports currently. “It is part of our plan to also make India an export hub for our newly developed models,” says Boparai.
Since Skoda will lead the charge in Russia and India — and both on the MQB platform — there is a good chance that product development and planning will keep in mind the demands and preferences of consumers in both these markets. It might eventually pave the way for India to become a production base for Skoda cars to be exported to Russia as well as to South East Asia.
The company currently has plants in Aurangabad and Pune.
Do electric cars find a place in its plans? Boparai says the Volkswagen Group has the wherewithal “to deliver any market-relevant technology if there is such a trend and demand in the market”.