Skoda confident but not complacent
India 2.0 focused on creating strategic pillars like building brand awareness for Skoda and improving customer satisfaction.
As Brand Director of Skoda Auto India, Zac Hollis is doubtless pleased with the growth story thus far but refuses to be lulled into complacency.
“I think you can never stop and our job is to continue driving the business. forward. Yes, customer complaints have fallen by 60 percent and we have expanded the dealer network but this country is huge with a growing car market and we need to work much more on customer satisfaction. You cannot rest on your laurels,” he says.
Hollis recalls how he set about transforming the Skoda brand’s positioning in India when he took charge. This was the time the Volkswagen group had put in place its India 2.0 strategy where Skoda would manage the turnaround story both for itself and VW. It was more than obvious that a lot of work needed to be done irrespective of the fact that Skoda had been around in India for nearly two decades.
People would tell me you have a great product BUT…and my job was to kick those BUTS,” reminiscences Hollis. There would be cribs about availability of workshops, the high cost of ownership and so on. All these issues required tough solutions and Skoda decided to part ways with those dealers who did not share its vision on customer-centricity.
It then kicked off the process of putting its house in order and the best news in recent times is that parts and servicing costs are now down by 22 percent. “People recognise this and Skoda is no longer perceived to be an expensive brand with service centres now closer to the customer,” says Hollis.
From his point of view, it is equally important to be future-ready especially with the kind of mobility disruptions now happening worldwide. “The transformation in the car market over the next decade is going to be momentous with alternative energy systems, electric cars and so on,’ he elaborates.
India 2.0 focused on creating strategic pillars like building brand awareness for Skoda and improving customer satisfaction. Beyond this, it was equally critical to focus on professionalising the dealer network and going beyond just selling and servicing cars. Today, it is about factoring in insurance, accessories, warranties, merchandising, used cars etc.
“The car business is now much more complex and we need to work on a host of revenue streams for dealers. Customers will also get a good value proposition in used cars and we will continue to get better in this space,” affirms Hollis while pointing out that there is a good team in place to carry out this task.
It is at this juncture that he rewinds a bit to the times of the pandemic when there were a lot of discussions on going the extra mile to give customers a better online experience, paperless transactions and what have you keeping in mind the necessity of social distancing brought about by the paranoia of proximity.
However, things have clearly changed since then. “We now find that people want to walk into showrooms and test drive cars which only means that the buying dynamics have not changed as we thought they would,” says Hollis. Shared mobility, likewise, was an issue during Covid but all indications are that it will resume given that people are no longer as afraid of this invisible assassin. “The car business is back to where it was before,” he adds.
The Skoda Brand Director admits that the sheer size of India and its diversity never ceases to amaze him and it is this reality that convinces him that the opportunities are limitless. For instance, a new retail outlet in a tier 3/4 city will translate into incremental sales because people would rather buy their cars from here rather than venture out elsewhere. This also explains why Skoda is working on establishing service outlets in these smaller regions for easy proximity to their residents.
All in all, Hollis is content with the pace of progress even while global challenges persist in the form of the Ukraine war and the recent lockdown in China. Skoda had earlier projected sales of 70,000 cars this calendar but given the volatility all around, a more realistic figure may be around 65,000 units.
“I am happy with the brand transformation of Skoda and want to continue working on improving customer satisfaction. This is the top priority going forward,” says Hollis while driving home the point that India needs to become more important in Skoda’s global roadmap.
He is also stoic about the challenges that are keeping the world on tenterhooks. “We exist in a global business and no country can work in isolation with parts coming from China and Europe. Shortage of chips are hitting the global industry. Yes, there are supply issues but India gets priority as a launch market for chip allocation,” he says. From the sales and marketing side, the goal is to be innovative and look for out-of-the-box solutions.
Hollis also believes that it is in the interest of the Skoda and VW brands to be successful in India even while healthy competition between the two is welcome to constantly act as a driving force. “At the same time, we are working together to ensure we get the right market and competitor information while giving constant feedback on product changes. What is important is to maintain our brand positioning and give customers a clear choice on styling, design, experience etc,” he says.
This is also true for smaller cities where it becomes difficult for dealers to have separate outlets for Skoda and VW. The solution lies in having multi-branded workshops at the front-end to impart individual brand experiences while synergies come into play at the backend.
In an earlier interview with this writer, Hollis termed this the “Y solution” where, as the letter indicates, it is about having two showrooms and a joint workshop. This also helps the dealer because he ends up with lower investments on overheads, manpower and “can manage the ups and downs” of one business versus another.
“We have got quite a few of these ‘Y’ concepts and they are working really well. This will be our focus as we expand more and more into smaller cities and towns since that is the only way to make a business case,” Hollis had said. At that point in time, market feedback had suggested that both the Kushaq and Taigun “offer a very different look” which was keeping in line with what the engineers and designers had set out to do.
According to Hollis, the “stated objective from the Board” is to become the top European brand in India which in turn calls for good products. “India is core to our growth strategy and we are here for the long term. It is already one of the largest markets and customers are looking for premium offerings and European brands,” he says.
Skoda is targeting one lakh units by 2025 and it will be interesting to see if it achieves this goal earlier. By the end of the day, a lot of this will depend on the way the world is heading. For Hollis and his team, it is more important to push the envelope constantly on customer satisfaction and extend the Skoda brand awareness. Exports will also become critical especially to the ASEAN region where the VW group will be keen on growing its presence.
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