The company crossed the milestone of producing two million vehicles under its Made-in-India programme.
13 Jan 2026 | 376 Views | By Arunima Pal
Škoda Auto Volkswagen India (SAVWIPL) reported a 36% year-on-year growth in domestic sales in calendar year 2025, selling 117,000 vehicles, supported by demand across segments and a recovery in the auto market.
Total sales, including exports, stood at 159,500 units during the year. The company also crossed the milestone ...
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Škoda Auto Volkswagen India (SAVWIPL) reported a 36% year-on-year growth in domestic sales in calendar year 2025, selling 117,000 vehicles, supported by demand across segments and a recovery in the auto market.
Total sales, including exports, stood at 159,500 units during the year. The company also crossed the milestone of producing two million vehicles under its Made-in-India programme.
The strong performance marks a significant turnaround for the European carmaker, whose India journey has been marked by periods of promise and frustration. The Volkswagen Group entered India in 2001 with the Škoda brand, launching the first-generation Octavia. The sedan was ahead of its time, offering European build quality, a refined diesel engine, and features such as ABS and dual airbags that were rare in that era. The Octavia quickly established itself as a compelling value-luxury proposition, selling over 44,000 units in its early years and building a loyal customer base among Indian enthusiasts.
However, somewhere along the way, the group lost its footing in a market that was rapidly evolving. Both Volkswagen and Škoda vehicles, while technically superior, were perceived as expensive in a price-sensitive market where affordability often trumps engineering finesse. The cost of maintaining these European cars was significantly higher than that of rivals from Japanese brands like Maruti Suzuki and Toyota, and Korean manufacturers such as Hyundai and Kia, which had aggressively expanded their service networks and localised their offerings to bring costs down.
The European brands also lagged in refreshing their product lines, with many models remaining unchanged for extended periods. More crucially, they initially focused on sedans such as the Vento, Rapid and Jetta, even as Indian buyers increasingly gravitated towards SUVs. India's unique tax structure, which offers significantly lower levies for sub-4-metre vehicles, further disadvantaged European brands that traditionally build larger models. Japanese and Korean OEMs capitalised on this framework with cost-effective compact cars and SUVs, steadily expanding their dominance in Tier 2 and Tier 3 markets where European brands had limited reach. The Dieselgate scandal of 2015 added to the group's woes, denting customer trust at a critical juncture. By the mid-2010s, despite having cars that were often technically superior to the competition, the Volkswagen Group's market share in India had remained stubbornly modest.
Recognising the need for a strategic reset, the group announced the 'India 2.0' programme in July 2018, with Škoda Auto taking the lead on Volkswagen Group's model campaign in India. The programme came with a commitment of one billion euros in investment, primarily between 2019 and 2021, and a clear objective: achieve a combined market share of up to 5% for Škoda and Volkswagen in the long term.
The cornerstone of India 2.0 was the development of the MQB-A0-IN platform, a heavily localised version of the group's global A0 architecture, engineered specifically for Indian conditions and designed to achieve over 90% local content. This was crucial for cost competitiveness. The group also set up a technology centre in Pune and merged its three Indian subsidiaries — Volkswagen India, Volkswagen Group Sales India, and Škoda Auto India — into a single entity, SAVWIPL, in 2019 to unlock synergies and enable faster decision-making.
The first fruits of India 2.0 arrived in 2021 with the Škoda Kushaq, followed by the Slavia sedan, and their Volkswagen siblings, the Taigun and Virtus. These products helped the group achieve record sales of over 100,000 units in 2022, validating the strategy.
But the group's ambitions didn't stop there. With strategic exits from Russia and challenges in China due to intense competition from local players, India emerged as Škoda's most critical growth market outside Europe. This led to the India 2.5 strategy, a concerted effort to go after the heart of the Indian market: the sub-4-metre SUV segment, which accounts for nearly 50% of car sales in the country.
The Škoda Kylaq, launched in late 2024 with a starting price of Rs 789,000, is the first product under this renewed push. Named through a pan-India contest — the name derives from the Sanskrit word for crystal and pays homage to Mount Kailash — the compact SUV is designed in India, for India. Built on the same MQB-A0-IN platform as the Kushaq, but with a length under 4 metres to benefit from favourable taxation, the Kylaq pits Škoda against formidable rivals including the Maruti Suzuki Brezza, Tata Nexon, Hyundai Venue and Kia Sonet.
"Competitors are outselling us. There's room for more if we get the sweet spot right," Škoda Auto CEO Klaus Zellmer had noted when outlining the India 2.5 strategy. "European brands have typically lost out to their Japanese, Indian and Korean counterparts on pricing. This time, getting the pricing right has been a key area of focus."
Total sales, including exports, stood at 159,500 units during the year. The company also crossed the milestone of producing two million vehicles under its Made-in-India programme.
The MQB-A0-IN platform, developed for the Indian market, continued to underpin all locally manufactured Škoda and Volkswagen models. Cumulative exports crossed 715,000 units, with shipments expanding to new markets in the GCC and ASEAN regions.
Volkswagen retained its lead in the premium sedan segment, with the Virtus holding a 38% share year-to-date. Škoda reported growth during the year, led by the launch of the sub-4-metre Kylaq SUV and renewed demand for the Octavia RS. The first batch of the Volkswagen Golf GTI was sold out shortly after launch.
The group expanded its retail and service network to 700 customer touchpoints across India — a significant improvement from the limited network reach that had previously hampered its growth in Tier 2 and Tier 3 markets. In the premium segment, Audi introduced new variants across the Q3, Q5 and Q7 range, while Lamborghini and Porsche launched new models and expanded their presence. Bentley joined SAVWIPL as the sixth brand and opened dealerships in Mumbai, Bengaluru and Delhi.
Piyush Arora, Managing Director and CEO, Škoda Auto Volkswagen India, said the growth was driven by localisation, scale and a long-term strategy for India. The company plans multiple product launches in 2026 to build on this momentum.