Skoda to play a pivotal role in Volkswagen AG’s India strategy

Skoda had planned to enter the American market by 2018 but has deferred its plans. The Czech car maker will lead Volkswagen AG’s Indian campaign as a part of VW’s strategy to increase its market share in the India.

Earlier this year, Skoda had entered into an understanding with Tata Motors to explore opportunities of working together in the low echelons of the car business. Skoda intended to explore if Tata’s new AMP platform could be tweaked to spawn budget compact hatchbacks as it is the one of the most lucrative segments in India.

Now that the joint exercise has been called off, Skoda is exploring the MQB-A0 platform, the smallest and the most cost-effective one VW has. But in its current form, the MQB-A0 is still too expensive even for the premium hatchbacks like the VW Polo in India. Which is also the reason why the new Polo is not being brought here.

Skoda is trying to find out if greater levels of localisation in construction of the platform and its ancillaries would be able to bring the costs down to acceptable levels. Otherwise, with the high input costs, the VW group will not be able to compete against the likes of Maruti, Hyundai and Tata.

In case the MQB-A0 trials fail, Skoda will have to develop an all-new platform that will host cars in the A-segment and the B-segment in India along with the corresponding sub-four metre compact SUVs. 

With the Indian car market expected to be the third largest in the world by 2020, VW has been pooling resources to consolidate itself. Once the Indian strategy is finalised, Skoda will get back on to its American plans. But we think it will take at least two more years for the Czech marquee to start realising its American dream.