Volkswagen Group puts Skoda on driver's seat for India, emerging markets

Volkswagen Group is rebooting its India operations as it seeks to make inroads into a market that is expected to be the third-largest in the world by 2020.


As part of the India 2.0 project, the Wolfsburg-based company has given Skoda the job of strengthening the group’s position in the Indian market, the company said in a statement on Friday.


This is in continuance with a project that started a year and half ago. As part of that, Skoda was asked to develop a sustainable model for the Skoda and Volkswagen brands in the volume segment in India.


As part of India 2.0, Volkswagen will produce a new series of cars. All these models will be designed and produced locally in India and based on Volkswagen Group’s modular platform strategy, codenamed MQB.


This fulfils the stricter legal requirements for India, which come into force in 2020.


Volkswagen Group is planning to invest around 1 billion (over Rs 78 billion) in India over the next few years to develop six new models, PTI reported in January.


The modular MQB platform will enable the company to standardise components, dimensions and production processes; lower costs; and shorten production durations. MQB also increases flexibility when developing new vehicles. Most of the technical development will take place in India. With India 2.0, the Czech carmaker is also assuming the responsibility of making a sub-compact model, codenamed MQB A0 platform, which will focus on the Indian market (MQB-A0-IN). Preparations for the India-based development and production of the new “technologically pioneering volume models for the Skoda and Volkswagen brands are already in full swing,” the company said.


The first of the Skoda models based on the subcompact platform is expected in 2020. “We are firmly convinced that — after one and a half years of intensive work — together with Volkswagen we now have a suitable approach to bring the right vehicles into the Indian market at the right time. We will present the first model built on the new MQB-A0-IN platform as early as 2020,” said Bernhard Maier, chief executive, Skoda Auto said, adding, “I am confident that we can make the ‘INDIA 2.0’ project a success.”


Gurpratap Boparai, managing director of Skoda Auto India, who has an extensive leadership experience in the Indian car market, will head the project.


Volkswagen has been struggling to come up with an India-specific model that can compete with Maruti Suzuki and Hyundai Motor India, which together control more than 65 per cent of the market.


The decision to give Skoda the job of steering the company’s India innings in the volume car market gained momentum after talks with Tata Motors to jointly develop models for India and other markets hit a wall and were called off in August last year. Even then Volkswagen had commissioned Skoda to lead talks with Tata Motors.


The duo was exploring an entry-level car platform using Tata Motors’ advanced modular platform.


Skoda dropped the idea of developing the AMP platform on fears that it would need significant investment to meet future crash-test and engine emissions requirements and would instead explore the parent VW’s MQB platform for possible further savings.


“They seem to have learnt from their mistakes,” said Puneet Gupta, associate director, IHS Markit, adding that an India-centric platform was inevitable and Skoda is competent enough to execute the project. “While this could have been done earlier, it’s not very late,” he added.


Volkswagen entered the Indian market with the Passat in 2007, followed by the locally made Polo in 2009. A high cost structure and lack of models in its portfolio have stymied its innings in a value-conscious market like India. Despite a decade-long presence in the country, Volkswagen has been on the fringes with a lower than 2 per cent market share.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel