Skoda Auto's CEO, Bernhard Maier speaks to Hormazd Sorabjee on developing a low-cost platform, setting up a robust component supplier base and the Czech carmaker's ambitions in the Indian market.
Why did the MoU for an alliance with Tata Motors fall through?
We had good and constructive discussions with Tata Motors. Both parties concluded that the desired economic synergy could not be achieved. We at Skoda are now developing a new strategy based on the Volkswagen Group’s successful MQB A0 platform and are very confident about this approach for the Indian market. However, the possibility of future cooperation with Tata Motors is not ruled out.
In the next five years, where do you see Skoda in India?
The good sales results in the first eight months of 2017 formed a promising stepping stone for further growth and confirmed that Skoda offers a model range that is attractive for Indian customers.
We have ambitious plans for Skoda in India and aim to strengthen our presence across segments. We just started in our Strategy 2025, the biggest product campaign ever in the history of Skoda, and we are strongly focusing on the SUV segment. These segments are, by far, the fastest growing in the entire world and this is true for India too. So we are starting with the Kodiaq now.
The feedback we have gained from our customer base is really motivating. I think it will be a top seller, especially in India, and we are looking forward to come up with some interesting new products in the years to come. We will evaluate the Karoq for the Indian market too.
India is one of the most promising economies with a dynamically evolving automotive industry. This market will play an important role in Skoda’s global growth strategy. Our objective is to strengthen the brand as a preferred choice when it comes to best-in-class products, which offer great value. As part of our new strategy for the market, we are planning to re-enter into volume segments. Our goal is a market share of 5 percent in the Indian market after 2025.
What platform will be used for the India ‘Eco’ car project? Is it the MQB?
Currently, we are considering a localised MQB A0 platform for the Indian market. However, the final decision has not yet been taken. We are currently in constructive discussions with our colleagues in the VW Group about the feasibility of this platform for the market.
What are the key issues you need to tackle to make the platform cost-effective in India?
One of the aspects we have to look at intensively is finding out how to lower the cost of technical development. In this regard, we are considering establishing a local engineering centre in India. Additionally, we need to develop a solid supplier base in India, which will provide us with a cost advantage without compromising on quality. We will also have to tackle the issue of competitive material costs.
What makes you feel that Skoda is well placed to make cars for markets like India?
We are a very cost-conscious organisation, which forms a necessary basis for any such kind of business. This is a new responsibility which carries our full respect and commitment. The fact that Skoda has strong technical development expertise with a great pool of experienced professionals gives us immense confidence that we can develop cars relevant to the Indian market and possibly for further emerging markets.
How will you address the issue of economies of scale? Will you be looking at exports for higher volumes?
We have a strong brand, backed by an attractive product portfolio. This gives us the confidence to increase our overall volume in this market. Exports from India is one of the options we will be analysing in the future.
Can you share the minimum volumes you would be looking at with the Eco platform?
It is too early to arrive at such a figure as we are still evaluating what would give us most substantial volumes. Assessment of concrete numbers requires a detailed analysis of future market development, including segment structure.
What is the investment required to develop the Eco platform in India?
We will invest a substantial amount into the Indian market. A significant part of the investment would be the establishment of a local technical development centre which we are now considering. We are in the process of ascertaining the total investment.
When can we expect the first models based on a localised MQB A0 platform for the Indian market? What are the segments you would look at first? SUVs?
The launch of the first products based on this strategy will coincide with the changing regulations in 2020. We are evaluating various volume segments. The compact SUV and hatchback segments look to be particularly exciting.
Will you be developing products for the VW Group and Volkswagen brand in India as well?
Our strategy is, of course, closely linked to the development of the VW Group in India. Therefore, we will also be considering sharing the platform with VW. However, each brand and product will have its own identity.
(This interview was first published in the October 1, 2017 print edition of Autocar Professional)