Led by the success of Skoda in India with the 2.0 strategic plan, the base has become “a key focus market” for the whole of Volkswagen Group, says Klaus Zellmer, global CEO, ŠKODA AUTO in his first interview to Indian media post taking charge.
Zellmer said, Skoda is already discussing the next strategic move for India. With new products, Skoda Auto will look to double its addressable market in the country.
He said the market is changing very rapidly towards battery electric vehicles, which is against many people’s opinion. In an interview to ET, Zellmer speaks about the balanced approach towards internal combustion engine and EVs, role of alliance with Mahindra & Mahindra and how Skoda will be taking a step-by-step approach and double its addressable market in India in coming years and create its own niche.
Edited Excerpts…
What is your view on Indian market performance in Calendar year 2022
We have recorded our biggest year ever in India within the first eight months of 2022. These outstanding results have enabled India to rank among the top three markets for ŠKODA AUTO globally in the first half of this year. A big contribution to fulfilling our global ambitions is coming from India. We are well on track to more than double our sales in 2022 over last year. Our success gives us tremendous confidence for a long-term, sustainable journey in India, which is an integral part of all future strategy planning.
What are the next steps for Skoda in India, beyond the India 2.0 Project?
With the success of the INDIA 2.0 project, India has become a key focus market for ŠKODA and the whole Volkswagen Group. Not just on the domestic sales front, but also as an export hub. The production sites in India are among the best in the Group.
From a Group perspective, we are already discussing our next strategic move. We have reported record sales numbers, but there is still room for growth in the future. We are in the process of discussing the way forward to build our portfolio. I am deeply convinced that both Volkswagen and Skoda have a distinct role to play in our growth in India.
India is completely changing; it is moving very rapidly towards the battery electric game. Initially everybody thought India would not adapt as rapidly as it has.
The way forward for ŠKODA in India will be a balance between ICE and EVs. We have already brought in some ŠKODA ENYAQs to India, which are being tested across the country. On the way forward, we need to find the sweet spot in terms of product mix and timing in introducing BEV to the market.
Can Skoda match the frenzied pace of development of rivals?
We have to grow step by step. Given our current market share and the fact that resources need to be optimized, first, we need to consolidate our INDIA 2.0 project, and then finalize the next steps.
It is really about capacity, available resources, and the transformation that the society, the market and our Group are going through. All these factors will be the basis for prudent decisions.
Today, ŠKODA products address 20% of the Indian market, in terms of the segments we are present in. We aim to more than double this in the mid-term.
What is the potential of bringing in global successful electric vehicle architecture, MEB A0 for India?
ŠKODA’s route for EVs in India will most likely be — first FBUs, then parts and components (assembly), and eventually local production, depending on how quickly the market matures and the ecosystem develops, especially the charging infrastructure.
Apart from this, localizing core MEB components in India are pivotal for scale. This is something that is being facilitated by the agreement for VW Group with Mahindra for them using MEB components. So needless to say, all possibilities and associations are being looked at, to best suit the customer needs.
You will also appreciate the fact that our Group is the most committed of the global players to BEV transformation, giving India a plethora of opportunities.
So I am looking forward to some exciting times ahead.
Your view on rising competition, especially Indian brands and how will that impact your plans?
We have recorded our biggest year ever in India within the first 8 months of 2022. India is an important market for ŠKODA AUTO’s global expansion plans and our global strategy.
Our success gives us confidence for a long-term, sustainable journey in India. In the first half of 2022, India was in our top 3 global markets and we expect India to drive future growth for ŠKODA AUTO. This year, we will more than double our sales compared to last year. So the journey is taking shape well.
Of course, India has always been a very competitive market and continues to be so. However, competition in the industry is great for the customer, as it will mean that they get the best of what is on offer. And ŠKODA has already created a value luxury niche in the market, which we will continue to drive and deliver on.
