NEW DELHI, Jan 28: Czech automaker Skoda aims to achieve profitability in India this year, anticipating a doubling of sales as it ventures into the high-demand sub-compact SUV market with its new model, Kylaq, according to a senior company official.
Optimistic about its growth, the company expects to see India rise into its top five global markets, driven by an increase in sales volume.
In a discussion with PTI, Skoda Auto Board Member for Sales and Marketing Martin Jahn mentioned that the company intends to broaden its model range, including electric vehicles, and enhance localization to scale up operations in India.
He added that Skoda plans to leverage India as a hub for exporting to various international markets.
“We aim to more than double our sales this year. We firmly believe that India will be among Skoda’s top five global markets. We also plan to utilize India as a base for exports to the Middle East, North Africa, and Australia,” Jahn stated.
Furthermore, he noted Skoda’s substantial success in Europe last year and its intent to expand in the Indian market.
“Last year, we reached the fourth position in Europe and significantly increased our market share, which is essential to us. However, diversification is key, making India a crucial market outside of Europe,” he explained.
When queried about upcoming product launches in India, Jahn emphasized that the company will focus on solidifying its current model lineup before pursuing further expansion.
In addition to the Kylaq, Skoda plans to introduce the Kushaq and Slavia models, along with the premium sedan Superb, a new Kodiaq SUV, and an electric SUV for the Indian market, Jahn confirmed.
“We need to establish these models in the market and achieve sales volumes. For the immediate future, our existing lineup is sufficient, after which we’ll evaluate further market developments,” he said.
“Achieving a baseline profitability is crucial,” he added, noting, “The biggest challenge for European or Western manufacturers is attaining profitability, which requires scale. Therefore, maximizing volumes of existing models is our priority before considering new releases.”
Jahn projected that the company aims to achieve profitability this year by enhancing localization and reducing costs.
“Efficiency programs are essential in every market, including Europe, where we already operate efficiently. We will apply similar programs in India,” he said.
According to Jahn, the most critical areas for attaining profitability in India include increasing volumes, localization, and efficient operations.
Additionally, he mentioned that Skoda is making improvements across the board, from lowering service costs to launching affordable new products in order to grow within the country.
Jahn noted that Skoda has already received 20,000 bookings for the Kylaq.
Last year, Skoda sold 36,000 units in India, and their sales increased to 49,000 units in 2023.
Regarding exports, he elaborated that the company is initiating CKD (complete knock-down) production in Vietnam based on Indian models.
“India remains a key focus outside Europe for local production, exports, and CKD production. It’s vital that the Indian economy continues to thrive, the market expands, and we have favorable conditions for growth,” Jahn added.
As for electric vehicles, he mentioned that regulations are expected to be finalized in the coming months, which will inform the company’s future policy.
“Government regulations will dictate which models we will launch this year, the production volume, and production timelines in India,” Jahn stated.
He emphasized that global EV markets are largely driven by regulations.
In Europe, a notable slowdown in electric vehicle demand has been observed.
“We don’t anticipate rapid growth in electric vehicle sales. It’s largely about consumer sentiment. Although I wouldn’t advise the Indian government, policies must align with market realities,” he commented.
“Each country should determine the best course of action based on its infrastructure, natural resources, customer sentiment, and profitability,” he continued.
Jahn also mentioned that Skoda is considering launching hybrid models in India.
“However, the current regulations do not favor hybrids. Our hybrid models feature advanced technology, which makes them quite expensive,” he added.
“Thus, bringing them to India would necessitate significant tax incentives for plug-in hybrids,” Jahn concluded. (PTI)
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