VW group

Skoda gears up for India expansion and e-vehicle push

Bernhard Maier neuer Skoda-Vorstandsvorsitzender
Skoda's CEO is hitting the gas pedal. Source: dpa

Skoda’s CEO Bernhard Maier has an ambitious vision for the company’s future. Volkswagen’s Czech arm wants to conquer the Indian car market on behalf of the VW group. “We could start selling cars in India in early 2021,” Mr. Maier told Handelsblatt in an exclusive interview. “In a first step, we are planning a production of more than 300,000 cars per year,” he said.

Skoda is developing a platform for Volkswagen, which is set to produce affordable and smaller cars targeted for the Indian market. Volkswagen owns production sites in India, where Skoda is planning to produce these vehicles. “We will only be able to stay within our budget by producing them on site in India,” Mr. Maier said. In the long term, the VW Group wants to gain a market share of 5 percent in India.

It is not an easy undertaking, as competition is fierce in India, the 58-year-old admitted. Volkswagen has been unsuccessful twice in trying to secure a partner in India for budget cars. In August last year, talks collapsed between VW and India’s Tata Motors about jointly producing a car for customers in India and beyond. An earlier alliance with Japan’s Suzuki Motor Corp failed in 2015.

“We are aware of our responsibility and will continue to contribute to the reduction of emissions through clean and innovative technologies.”

Bernhard Maier, CEO, Skoda

Foreign carmakers like Volkswagen are trying to break into one of the biggest and most promising car markets. India could become the world’s third-largest car market by 2020 after China and the United States. Three million cars are sold annually in the world’s second most populous nation, but this number could rise to six million within a few years.

Maruti Suzuki dominates the Indian car market with an impressive market share of 49.6 percent followed by Hyundai Motor India, Mahindra & Mahindra and Tata Motors, according to the Society of Indian Auto Mobile Manufacturers (SIAM).

While inexpensive smaller models are particularly popular in developing countries like India, Mr. Maier suggested that a price point of $5000 per car could be difficult to meet. As technical requirements in terms of emissions and safety are tightening in India, so will costs. “The exhaust and safety standards in India will be closely tied to European levels in 2021,” Mr. Maier said.

Speaking of emissions: Volkswagen’s Dieselgate scandal also had an impact on Skoda. But Mr. Maier is convinced: “Diesel has a future, there’s no doubt. For frequent travelers on long journeys, the diesel remains worthwhile.” But, he added, “natural gas and affordable hybrid systems are interesting alternatives.”

The recent landmark ruling allowing German cities to ban diesel vehicles has led to “great uncertainty” among people who are dependent on their car every day, he added. “Regardless of this, we are aware of our responsibility and will continue to contribute to the reduction of nitrogen oxide and carbon dioxide emissions through clean and innovative technologies,” Mr. Maier said.

Taking this into account, Skoda is currently hashing out details for the biggest investment program in the company’s history: an electric car expansion. “We will invest €2 billion ($2.46 billion) in electric mobility and automation over the next five years,” Mr. Maier told Handelsblatt. By 2025, Skoda will offer 10 different e-vehicles, he said.

Skoda, headquartered in Mladá Boleslav, is the biggest company in the Czech Republic. Currently, it produces about 1.2 million vehicles a year at 15 sites. By the middle of the next decade, this number could rise to 2 million, Mr. Maier said.

India is not the only market Skoda is focusing on. Mr. Maier said Skoda planned to double car sales in China to 600,000 by 2020. SUVs are gaining popularity in China, where the segment grows at a higher rate than in Europe. That is why Skoda will launch two new SUV models in China. The country is already the biggest market worldwide for the company.

Stefan Menzel is one of Handelsblatt’s automotive reporters. Stephanie Ott, an editor for Handelsblatt Global in New York, adapted this article into English. To contact the authors: menzel@handelsblatt.com and s.ott@extern.handelsblatt.com.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!