‘India a strategic base to build exports to Middle East and South Asia for Skoda’: MD Piyush Arora

Having laid a decent foundat­ion for the India 2.0 project, the third largest market in the world will take on more significance for Skoda Auto Volkswagen India, going forward. The Czech brand wants to make India a strategic export base to develop the Middle East and South East Asian region for the Czech brand.

Meanwhile, Skoda is open to joining hands with dealers, distributors and assemblers in these regions to increase its volume base. The company is exploring countries like Indonesia, Thailand and Malaysia as potential markets to expand.

As a first step, the Skoda brand will be entering the Vietnamese market in 2023 with completely built imports (CBU) before completely knocked down (CKD) kits from India are shipped to the South East Asian market in 2024. The company expects Vietnam to bring in incremental sales of 30,000 units per annum over the mid-term.

Piyush Arora, MD of Skoda Auto Volkswagen India told Autocar Professional that India region is playing a major role in developing the South East Asian region but also the Middle East, and these are the two main focus areas Skoda is looking at to go beyond the business which it has today.

“The question of ‘what is the best possible way to get more entry and market share into these markets’ is part of our overall strategy development for Skoda in terms of region. We have partners in the Middle East and will continue to (explore). But once we have identified the right strategy for the right product for the different markets, then we'll start looking at that (role of partners). Our immediate priority is Vietnam,” added Arora.

Exports have been a critical pillar for Skoda Auto Volkswagen Group to ensure that the company enjoys a scale advantage and makes profits. For the Volkswagen brand India has been an important base for exports to South Africa and Mexico for the Vento sedan in the past. While Volkswagen will continue to serve the Mexican market, development of exports out of India for Skoda will bring in the incremental volumes for the MQB A0 platform cars in the future, helping the group to reinvest into new models in the future.

Already, a dedicated exports team for the Skoda brand has been set up locally which works in tandem with the HQ to define the potential growth markets in the future. Even a dedicated bay has been created for parts and components exports from India to serve these needs.

Beating market growth with 20 new product interventions 
Back home, Arora says the demand momentum remains strong. However, the market growth rate is likely to drop to single digits of five to eight percent in the next financial year. Nevertheless, the group will continue to look at outperforming the market with the supply chain improving. 

“We are looking at a double-digit growth because we clearly want to move in the direction of the Group’s five percent market share. Last year was not only constrained because of the supply situation, but also because of the product availability. Slavia was only available for nine or 10 months, while Volkswagen Virtus was available only for six months. Having availability of all the products, we look at double-digit growth. Not only for Skoda, Volkswagen, but for the complete group,” said Arora. 

In the calendar year 2022, Skoda Auto Volkswagen produced 1,34,000 units with domestic sales of 1,01,000 units across all its brands – Skoda, Volkswagen, Audi, Porsche, Lamborghini. The group saw a one percentage point increase in its market share in 2022. Arora says in fact in the month of December, the group had a market share of four percent and he is confident that a raft of upgrades and tweaks for future models in 2023 will ensure double digit growth and improvement in market share.

According to company sources, the group is looking at a production plan of 1.57 lakhs to 1.75 lakh units for the current calendar year on the back of improved supplies, and expected rise in exports volumes. “For 2023, the focus will be on scaling new heights on a very strongly built foundation over the last years,” he added.

EV plans for India are progressing assured Arora and the Group is going to rely on CBUs and CKDs, before locally produced models for India are firmed up. VW group discussion with Mahindra may help the Indian subsidiary too, believes Arora.