Skoda CEO calls 'over-engineered' cars a mistake in the Indian market

Skoda Auto CEO Klaus Zellmer says "over-engineering" was a misstep for the Indian car market in the past and its new lineup including the sub 4-metre that's touted to be introduced early next year is set to change that. "We have a lot of lessons learnt in the Indian market. Often we build (a) car according to our own expectations. They tend to be over-engineered. And that comes at a price tag. And of course that's something that weakens your competitive position," he said. 

He added that the company needs to learn and be aware of the sweet spot. "That's what we're after. We want to build the cars that customers in India are willing to pay for. And this is a lesson we continuously need to learn. Our price position versus competition is very ambitious. The idea is to provide a car that's even better than what's typically being catered to, in that segment," he said. 

He added that the company will capitalise the way its cars drive, the fit and finish, sustainability, safety, etc. to get more volumes. "Competitors are outselling us. There's room for more if we get the sweet spot better. There are certain things which are undebatable. People who buy European cars in India go for quality. The cost reduction potential for us is exactly what we've done with the Sub 4-metre," he said. 

The company plans to cut cost by scaling where they source from, localise more. One of the engine derivatives is now fully built in India, he said, adding that benefiting from procurement and localisation is the way forward. 

The new compact SUV will be the third Škoda product on the MQB-A0-IN platform which is the first platform developed by the company outside of Europe and tailormade for the Indian market. The platform enables the use of efficient engines and advanced safety systems, specifically for the Indian market and to meet the country’s new, stricter safety and emission requirements.

About 50% of Skoda cars manufactured outside of the Czech Republic are produced in India, and the company's export strategy of India-developed products, too, will see a renewed focus going forward. 

"The sub 4m SUV will have 75-76% localisation. Its pricing will use excise benefits and pass them on to customers. What we are going to do differently is to learn from the lessons so far. We had a really good start with the 2.0 products," he adds. 

The car will be produced in the same production line where the 2.0 products like Kushaq and Slavia are made. Its production capacity is 270,000 cars per year in the Pune plant for Skoda and Volkswagen combined. Skoda Auto expects a potential annual volume of over 90,000 units to serve both the domestic and export markets of Skoda, which is trying to build its presence in Southeast Asia, the Middle East, the Commonwealth of Independent States and North Africa.