Skoda Auto expects to conclude India partnership this year: Klaus Zellmer

Skoda Auto expects to conclude its search for an Indian partner this year, global CEO Klaus Zellmer said, indicating that negotiations over the Volkswagen Group’s next phase of growth in the country are moving closer to a decision.

“We are in discussions. I’m deeply convinced that our momentum can be much stronger if we have a local partner with strong roots,” Zellmer told media persons on the sidelines of the Slavia launch in Mumbai on Tuesday. “But it has to be complementary.”

A partnership would give the Volkswagen Group access to fresh capital and local capabilities as it seeks to expand its product portfolio, develop electric vehicles and strengthen its engineering and manufacturing operations in India.

Zellmer said Skoda was approaching the discussions carefully because the choice of partner would have long-term implications for the business.

“If you choose a partner for life, you need to choose carefully. You need to lay out what you’re in for,” he said. “This is the process we’re in. But I’m confident that this year we’re going to nail it.”

His comments are the clearest indication yet that Skoda expects the partnership negotiations to reach a conclusion in 2026.

Asked whether majority ownership mattered in the proposed arrangement, Zellmer said: “It does. You need somebody to have a clear say.” He declined to elaborate on the structure under discussion.

Autocar Professional had reported that Skoda Auto Volkswagen India, the group’s local unit, is in talks with the JSW Group for a potential alliance, with JSW likely to hold a majority stake in the proposed venture.

A fund infusion from a joint venture partner would help the group accelerate its India plans and share the investment required to bring more products to the market. It could also strengthen the business case for localising future vehicle architectures and technologies.

Global boards review India roadmap

The global boards of Skoda Auto and Volkswagen have separately visited India to review the local operations and their respective roadmaps for the market.

The visits underline India’s growing importance within the Volkswagen Group as it evaluates the products, technology and investment required for its next phase of expansion.

“We brought all our VW colleagues over. They’re also here, in order to help them understand why we are so passionate about India,” Zellmer said.

Asked whether the wider Volkswagen Group had bought into the vision for India, he replied: “They have.”

This alignment will be important as Skoda Auto Volkswagen India prepares to move beyond its current locally manufactured petrol-powered range. The next phase is expected to require substantial investment in electric vehicles, product development, engineering and manufacturing.

€2 billion programme takes shape

Autocar Professional learns that the Volkswagen Group led by Skoda Auto is likely to invest around €2 billion in India over the coming decade to execute multiple projects. These include the localisation of its China Main Platform, or CMP, which will be adapted for the Indian market. 

A localised version of CMP could underpin a new generation of electric vehicles for the Skoda and Volkswagen brands. Capital from a joint venture partner could help the group localise the architecture and achieve the scale needed to make the programme viable.

The investment is expected to be spread across several projects over the coming decade rather than made as a single commitment. Its final scope and timing will depend on the structure of the partnership and approvals from the companies involved.

The programme would give Skoda and Volkswagen a locally adapted electric vehicle architecture as both brands seek to expand beyond their petrol-only, locally manufactured portfolios in India.

India’s engineering mandate expands

Even as the partnership discussions continue, Skoda has started moving more development work to India and expanding its local engineering base.

Zellmer said the company was increasing the number of engineers it employs in India “dramatically” as it transfers more future development projects to the country.

“We’re really using the momentum that this country is creating,” he said.

The Kylaq compact SUV has become an important validation of Skoda’s local product strategy. Developed for India and positioned in the country’s largest passenger vehicle segment, the model has enabled the brand to reach a wider customer base.

“When we talk about India for India, the Kylaq is the best example,” Zellmer said. “It’s a car that carries our spirit, our engineering capabilities and our ambition, but it also carries the cultural values.”

Asked whether Skoda would develop more products locally along the lines of the Kylaq, Zellmer said: “Yes,” but declined to disclose details.

The performance of the Kylaq and the expansion of Skoda’s India business have strengthened the case for giving the local operation greater responsibility.

“If you put your mind to it and put the responsibility into the right people’s hands, business is local,” Zellmer said.

An agreement this year would settle a key question over how the Volkswagen Group funds its next phase of growth in India and give the two brands a foundation for their next generation of locally developed products.