Skoda to sell its stake and leave India? Know the truth about their future in India here

There have been several reports in the past few days that Skoda Skoda is looking for a local partner in India and they are considering selling some stake as they are not getting profit due to tough competition in the market. Claims are being made on social media that Skoda and Volkswagen They may soon leave the Indian market to cut their losses. These are just two of the many speculations going on in the digital world. Still, let’s understand the root of these claims. All this was revealed by a discussion with Klaus Zelmer“He had a conversation with a group of journalists where I was also part of that discussion, so here is what actually happened,” the Skoda CEO said in an interview.
Before we move ahead I would like to share the official statement from Zelmer which reflects Skoda’s plans for India.
“India is key to Skoda Auto’s growth strategy as we bring our broadest and most up-to-date product portfolio to customers. India itself has huge potential, which we have seen more than double our sales since 2021. It also gives us a competitive advantage for our international expansion strategy. Our development and manufacturing base in Pune is a springboard into ASEAN and the Middle East. In India, the capabilities we have to build for India and the associated export potential are helping us to capture new international sales beyond Europe. Soon we will add a new, locally developed model to our lineup in India in the important compact SUV segment. At the same time, we continue to consider other models for Indian consumers, including thoroughly testing our popular all-electric Enyaq in the country. EV penetration in India is expected to grow between 15%-30%, and our global strategy is to offer customers the best of both worlds with their choice of electric or highly efficient combustion powertrains.”
Apparently, Skoda has plans till 2030 and they are planning multiple launches till then. Most importantly, they are developing a sub-compact SUV for India which will be launched in early 2025. Now anyone who understands how Automotive Industry insiders would know that developing a new vehicle is a very expensive affair. It requires investments in hundreds of crores or even more than a thousand crores. Now if Skoda was considering selling stakes and leaving India to cut losses, the last thing on their agenda would be to develop a new model specifically for India. Makes no sense, right?

So did Zelmer talk about partnering with any other companies? Yes, they did, but they also made it clear that nothing has been decided yet and they are open to any opportunities that can help the business. Mahindra Partnering is purely speculation. It is being said that Skoda is looking for a partner and the choice of possibilities is not just limited to Mahindra or Indian car manufacturers but could also extend to other players in the Indian automotive ecosystem.
He also clarified that it is yet to be decided whether this partnership will involve selling stake or it will be a technology partnership or it will involve exchange of Maruti and Maruti-like products. Toyota. When asked about the options under consideration, he said, “Anything is possible. Now whether or not a partnership is necessary is a story for another day when there are more details, but I would not make the mistake of predicting the future of something that I don’t even know when or how it will happen.
So, it can be said that Skoda and Volkswagen have no plans to leave the Indian market. India has been a tough challenge for them, but this is mainly due to the brands’ inability to understand the thought process of Indian buyers. I have said this time and again and it still applies to all European and American automotive brands that the smartest and most pathbreaking solution or the most important customer requirement in their domestic market may not matter to the Indian buyer. This is where they have struggled, but what about their future?

Is the future bright?

When we spoke to Zellmer, he admitted to the shortcomings in the brand’s understanding of the Indian market. He also pointed out that they seem to have ‘over-engineered’ their cars in the wrong departments, which were not important to Indian buyers. Inclusion of features, high VFM (value-for-money) and a design that makes the vehicle look bigger than its actual capability are some of the key things they are implementing in the new Skoda sub-four metre SUV, which hasn’t been officially named yet.
Zellmer told us that the new SUV will have around 77 or 78% localisation and this has been done to make the price more competitive. This means that Skoda has now understood that Indian buyers will not be impressed by premium pricing in a vehicle that looks smaller than key rivals, offers fewer features and is still priced the same or higher. If Skoda can develop the new SUV with these learnings and come close to what Maruti Suzuki and Hyundai, Kia are doing, I think their report card will look a lot better.
During our discussions with other senior executives of the brand, it was clear that they understand the importance of being able to react quickly to market dynamics. When asked about having only two mass-market models, the leadership team agreed that to succeed in India, the product portfolio needs to be more diverse. To achieve this, Skoda will also launch updated Kushaq And SlaviaThereby trying to increase their appeal. It is expected that what Zellmer has learned will be incorporated in these updates as well.

Zellmer also told us that Skoda is looking to achieve a five percent market share in India by 2030, along with a stake in the growing Indian EV market. Towards that goal, the brand will soon launch the Enyaq EV in India, which is expected to be priced around Rs 50 lakh and will also join the group’s upcoming Volkswagen ID.4. The brand will also consider low-cost new EVs for the Indian market, but clearly with these models the group will only have a nominal presence in the Indian EV space. Unless they develop a model for India, it is difficult for them to get anything that can be called a piece of the EV cake. Unfortunately, there is no concrete news on that front right now.

That being said, from the analysis so far it is clear that Skoda is not planning to leave India. The brand is big in Europe, but it is not a leading player in markets like the US or China. India is the brand’s biggest market outside Europe and they are currently committed to it for the long-term future. Will moves like partnering up prove to be bad? It is hard to say at this point, but I hope it won’t. And to end this story I want to share some good news. The fantastic Skoda Octavia VRS Coming to India soon and we have driven it, so stay tuned for our review and let us know your thoughts on the whole affair in the comments.