We hope to capture 5% of the market by 2025: Skoda's Piyush Arora

Piyush Arora, managing director (MD) and chief executive officer (CEO), Škoda Auto Volkswagen India (SAVWPL), in an interview with Pavan Lall, talked about the push in tier-3 and tier-4 cities, how young buyers want a phone on wheels, and why finding the right product mix is the big challenge. Arora, who stepped into the position almost a year ago, has received a clear mandate to develop relevant products for the Indian market, which are also export-ready. Edited excerpts:

While last year was busy for you with four brand new cars between VW and Skoda, will you have more this year?

Our focus is to consolidate the four new launches from last year across VW and Skoda and ramp up their sales. Of course, we are always evaluating opportunities in the market. We exported around 33,000 cars and domestic sales grew by 86 per cent over 2021 with 101,270 units sold. We do expect double-digit growth for both domestic and exports this year. We had earlier exported mostly Volkswagens but now have started exporting Skodas to the Middle East. 

You had great success with the hatchback and notchback segments (The Polo and the Fabia) as well as the Skoda Octavia and the Skoda Superb when you started here. Those seem to be getting phased out. Will you renew or bring in new versions?

If you look at the trends globally, the notchback segment and also India is moving towards the SUV body styling, which is why we brought in the products we did last year. If the demand is there for a Polo kind of product, then we can bring it in and the way to bring them can vary. We don’t have to manufacture them; we can import them. Overall productions show that notchbacks are decreasing and SUVs are increasing but sedans maintain their position. 

While countries are pushing EV platforms, the cost benefits are yet to be seen. And, the infrastructure in India isn’t ready yet. So, when do you see the tipping point to launch such products at rational prices?

We project an automotive growth of 6-7 per cent a year in the next decade and electrification growing between 15 and 25 per cent in that time. So, if you extrapolate 3.5-3.7 million vehicles today and we reach around 5-5.5 million cars by the end of the decade, we then see around a million cars that are EVs. Of course, it won’t reach that number until infrastructure develops as does battery availability and everything else. In the second half of this decade, we at the company should get into EVs substantially. 

Your predecessors had set some targets for market share. Where are you on that?

We remain on track and we want to get to 5 per cent of the market by 2025 and all efforts are on in that direction. Last year’s numbers were almost 3 per cent and if you take the individual performance for December, we are almost at 4 per cent. I think we should stay on track by 2025.  

Where do you see growth coming from?

The strategy is definitely to want to get into tier-3 and tier-4 markets. We have around 450 touch-points and we will grow that around 10 per cent this year. We are in 125 cities now and it means we will also get into more cities then. In 2021, we were below 400; so we have grown the footprint by around 20 per cent over the last two years. Also, we see the possibility of supplying India-made auto parts to markets, which we hadn’t before, like Vietnam. If this is successful, it could also be used for other markets as well. We are setting up another manufacturing space for Vietnam.

Apart from the Ukraine war, supply-chain issues and the semiconductor shortage, what is your biggest challenge? 

It’s to define the future product portfolio because the transformation has to be funded by the ICE (internal combustion engine) business and you have to put your eggs in the right basket. So, a well-defined portfolio to take you in that 5 per cent range with the right products in all segments is the challenge.

Is there a shift in how young buyers apportion value to a vehicle? Is the badge-value still that important?

A new customer wants the car to be like a mobile phone on wheels and the world is headed in that direction by the end of the decade. So, you have to attract customers with the right features and drive comfort. So, digitisation and tech gizmos are the trend and to a different level than ever before. 

What big surprises have you seen in the Indian market?

It’s the adaptation and acceptability of EVs. I think the two question marks are infrastructure and if a customer will accept this new technology. 

Do you still see shared mobility and autonomous driving as a threat to car makers?

Pre-Covid and post-Covid, it’s been a very different discussion. It was the topic in the boardrooms of a lot of automotive companies but today there is a sense that personal mobility will not go away. The pace may slow down but in India you won’t see ownership grow from 2 per thousand people to say 500 or even 100. So, five to six million cars by the turn of the decade is a reality. It gives manufacturers of ICEs and EVs space to grow.