Outside Europe, India most important market for Skoda: CEO Klaus Zellmer

Czech car maker Skoda is lining up new models, expanding sales network and also looking to forge partnerships to scale up business in India, the most important market for the brand outside Europe, according to global CEO Klaus Zellmer.

The company, which currently sells models like Kushaq and Slavia in the country, aims to drive in an all-new compact SUV early next year hoping to almost double its sales volume in the market.

Skoda Auto India sold around 49,000 units last year. India is the world's third-largest passenger vehicle market with annual dispatches surging to 42 lakh units in FY24.

The automaker, a part of the Volkswagen Group, is also looking to introduce electric vehicles in the country.

In an interaction here, Skoda Auto global CEO Klaus Zellmer said the automaker is willing to learn and be totally customer-centric as it considers India as the most important market for the brand after Europe.

"Outside Europe, our most important adventure is India because this is the place to be going forward," he stated.

India is crucial to the growth strategy of Skoda Auto as the automaker brings its broadest and most up to date product portfolio ever to customers, Zellmer said.

The country also gives the brand a competitive advantage in its international expansion strategy, he added.

"There is so much happening' we believe in India's growth potential, and of course we will be a part of that," he stated.

Zellmer noted that with the brand moving out from Russia and not doing so well in China, it expects to do well in India going forward.

"In a business, it is always not wise to stand on one leg. In our case, this is Europe. If it gets a little shaky, you want to stand on two legs, and the second leg for us is India," he said.

Zellmer further said: "India is not only the most attractive region for us outside Europe, it is also the most competitive environment."

There are new competitors, new entrants with new cars, so it really is a predatory environment, he noted.

Zellmer said the automaker has learnt its lessons and is now looking at enhanced localisation in India to be more competitive in terms of pricing.

"Often we build cars according to our own expectations, and they tend to be over-engineered. And, for that engineering, it always comes at a price tag and of course it is something that weakens our competitive position. So we need to learn, we need to be aware of the sweet spot," he stated.

In 2018, Volkswagen (VW) announced a major rejig in plans for the Indian operations giving group firm Skoda the responsibility for the market.

When asked if the company is also looking to tie up with an automotive manufacturer in India, he stated that one option is to "stand alone" and the other option is to find a partner.

"I very much believe in a scenario where we find a partner to be more in tune with society, with customers, with the industry, with all the prerequisites in order to be successful," Zellmer noted.

"We're currently discussing with various (prospective) partners," he added.

He noted that the intention is that the partnership should work out well for the entities, with both bringing something to the table.

It would be an equity partnership, Zellmer confirmed when asked about the details.

He however did not elaborate on the entities the automaker is in talks with for the intended partnership.

The Volkswagen group already has a partnership with the Mahindra group for electric vehicle components.

Zellmer noted that the group would continue to invest in the country even if it continues to operate solo. He said the automaker is now gearing up to enhance its sales network in India as it gears up to introduce the compact SUV in the country.

"We have 250 touchpoints now for our customers. By the end of the year, we're looking at about 300 in order to have reasonable coverage and to really attract as many customers for that car as possible," Zellmer said.

The brand is looking to enhance presence in smaller towns and cities with the latest expansion.

Zellmer stated that the brand continues to consider other models for the market including the fully electric Enyaq.

"EV penetration in the country is expected to grow between 15-30 per cent and our global strategy is to offer customers the best of the worlds with their choice of electric or highly efficient combustion powertrains," he added.

The automaker also aims to make India an export hub.

"Our development and manufacturing base in Pune is a springboard into ASEAN and the Middle East. The capabilities we have to build in India for India and related export capacity are helping us achieve new international sales beyond Europe," Zellmer said.