Czech car maker Skoda Auto has kept a low profit ambition for India despite being in the market for more than 20 years even as the top five carmakers in the very same market, have had a profitable run – most recently, led by a sustained gain in volumes of pricier models.
The Volkswagen Group company that is responsible for driving the group strategy in India is reinforcing its commitment to the market by getting into the next phase of investment through entry in the competitive sub-four metre compact SUV segment and launching electric vehicles. But its expectations from a market where the Asian rivals had a head start, remains moderate, the company’s top official said.
“Profit is not the main target for India. We have to have some profits but the level of profit is not important. We believe in this market and its long term potential. We are still in a phase in which we are trying to enhance our footprint and increase the car park,” Martin Jahn, Member of the Board of Management for Sales & Marketing Skoda Auto a.s told ET.
Jahn added that Skoda “cannot continue to lose money” in India and the CSUV planned for the first half of 2025 could give the much needed volume thrust to Skoda’s India operation –its third largest outside Europe. This would also help the company utilise its network of 260 dealers, optimally, he said.
“We have an intention to sell as many cars as possible but the market has to also accept it and it should be at some profit. We are learning as we go,” said Jahn, adding that increasing India volumes substantially is also his key responsibility. He was in Mumbai to meet the company’s dealer partners
Avik Chattopadhyay, co-founder at brand consulting firm Expereal points out, it’s one thing to know the brand and quite another to know about the brand. The onus lies on the brand to communicate with the market on the same and connect with people who appreciate the brand DNA and wish to associate with it. Skoda needs to work on creating awareness about the brand, he added. It’s seen as just another European car brand. “Skoda has to create its space in the mind.”
Meanwhile, updating on the company’s EV plans for India, Jahn said, Skoda “continues to explore all possibilities” including a partnership for developing an affordable EV model– priced up to Rs20 lakh. In the interim period, it would bring the Enyaq– a premium electric SUV to “test the waters.” Skoda Auto has outlined an investment of 6 billion euros 2027 to launch at least six EV models globally in the coming years.
Last month, Volkswagen Group and Mahindra & Mahindra said they have signed a supply agreement, focusing on the future of electric mobility in India. This collaboration will see Mahindra’s INGLO electric platform being equipped with Volkswagen’s MEB electric components and unified cells.
On whether the scope of partnership going ahead will go beyond and also include the two companies co-developing a low cost platform, Jahn said, “The deal with Mahindra has been done at the VW Group level and has nothing to do with Skoda specifically.” In response to if the company is in talks with JSW for a potential partnership. “We are exploring all the options,” he said declining to comment further.
Skoda’s EV strategy for India will be phased one as “everything is so dynamic in India and elsewhere when it comes to EVs – we will do whatever makes business sense,” he said.
