Czech car maker Skoda has seen strong traction in the domestic market. Aided by the Kushaq SUV and the recently launched Slavia sedan, its sales in March—at 5,152 units—were second highest it has recored in the country, after its highest ever sales in March at 5,608 units.
On Monday, Skoda launched the top-end Monte Carlo edition of the Kushaq, to give the SUV a further boost. It will cost Rs 15.99 lakh ex-showroom for the manual and Rs 19.49 lakh for the automatic transmission variant. While a shortage of semiconductors and commodity costs increases remain a challenge, the company is hoping to treble its overall sales this year, Zac Hollis, brand director, Skoda Auto India, told THE WEEK in an interview. Skoda will update all its products in the Indian market this year, and has also begun testing its electric vehicle Enyaq to see how it works in the Indian conditions.
Q/ Both the Kushaq SUV and the Slavia sedan are doing very well. While demand is strong, how are you tackling the issue of semiconductor shortage and commodity cost pressures?
A/ These two definitely affect us. Even before the geo-political issues we have around Ukraine, the cost of raw materials was increasing. We have recently passed on cost increases through price increases like most other manufacturers. When you come to the supply of semiconductors, it is still affecting us. To certain extent, we are protected as we are a launch market. What you don’t want to do is to launch a car and then not being able to supply.
So, our supply of semiconductors is not as bad as it could be, but there is a lot of uncertainty going forward. Every week I am told this is how much I have got in terms of semiconductor supply for next week or the week after. So, there is very little transparency of long-term supply and that makes production planning very difficult. I get lot of customers write to me, I ordered this car two months ago, when can I get it. Quite often, I don’t know. We are doing our best, but there are so many challenges the semiconductor situation is giving us.
Q/ Given the challenges, how do you see the overall market growing from here on?
A/ After the pandemic, lot of people had saved money. Our kind of people are used to going to Europe, America and they didn’t. So, a lot of pent-up demand was there. We also saw in the pandemic, this desire for personal mobility. That has continued. So, the demand is very strong. I expect the market to be over three million cars this year (2022). Could it be higher with better supply, yes, probably.
Q/ How’s the year going to pan out for Skoda in terms of sales?
A/ From a level of 22,000 we achieved last year, we plan to almost treble our sales this year. There are things that can happen on supply of semiconductors etc., but our plan remains to treble our sales. We sold around 6,000 cars in March, around 5,000 cars in April, so we are well on track towards that, if we can do 5,000-6,000 cars a month. In March, we were actually the number two market worldwide for Skoda.
Q/ The general trend was that people were moving away from sedans to SUVs. So, is this response that you have got for the Slavia, surprising?
A/ I am not surprised at all. The first time I saw this car in the design centre, I thought this car looks good. Even a year before the launch, in Pune, our team was convinced that this car can be the segment leader. My objective was for the car to be the segment leader, with about 2,500-3,000 cars a month. I am pleased that last month we were the segment leader for the Slavia. What we also did is we grew the segment.
The reason the (sedan) segment has been shrinking is because there has been nothing new for customers. Companies have been launching lots of SUVs, and as a result people have been moving there and so, of course, the sedan segment has fallen. By bringing new product in to the market, we are breathing new life in to the segment. We are bringing in new customers, who perhaps didn’t look at sedans in the past.
Q/ What more can we expect from Skoda this year in terms of products?
A/ We have five strong products. We have Octavia, Kodiaq and Superb, other than Kushaq and Slavia. Octavia has 50 per cent segment share, the only competitors left in that segment are the premium guys and obviously there is quite a price premium. The Superb also has a 30 per cent segment share and in Kodiaq, we sold the entire allocation given by Skoda Auto in three weeks. So, all our five products are performing really well. We will bring more product updates this year; all of our products will see updates before the end of the year.
Q/ How is your network expansion panning out?
A/ We started three years ago with 65 sales outlets. By the end of the year, the plan is to have 190 outlets. Currently, we are at 155, so we will add another 35 outlets by the end of the year. We are also working on something called compact workshops. These are smaller two bay workshops, through which we are bringing service closer to customers. These compact workshops actually give the confidence for people to buy in some of the rural towns and cities of India, the tier III and tier IV cities. People are willing to travel to purchase the car, but they want the service issues to be dealt with locally. So, we are going to have a big expansion in service through smaller compact workshops.
Q/ The MQB-AO(IN) platform was the key when Skoda-Volkswagen launched the India 2.0 programme. Is this platform now at a stage where some of the products can be exported to other emerging markets as well?
A/ We are already exporting our sister-brand (Volkswagen) product to Mexico and we will continue to look at more opportunities, where our products fit that market. That’s in our interest to do that. It's in India’s interest to set up as a export hub. That's also something that Mr Schaefer (Global CEO) announced recently that India needs to be bigger and a export hub going forward.
Q/ Compact SUVs are driving lot of volumes in the country. Is this something that Skoda will look at?
A/ We will bring more products to India. One possibility is a compact SUV, but there are also other possibilities. We have localised the platform. We now have to see what opportunities are there for further expansion. Localising the platform, we have already brought four products, two for ourselves and two for Volkswagen and we need to look at what further products can we bring. That work is currently taking place.
Q/ Is electric vehicle also plart of your plans?
A/ For sure, we will bring electric cars to India. We have a long-term plan in India, we have invested substantially in the brand, in production and have expanded the dealer network. The group has already brought EVs to India. There are EVs coming from Porsche, Audi and we are in discussions right now on what our EV strategy will be going forward. We will bring EVs to India and mainstream products as well.
From a climate perspective, from a road network perspective, India is unique. So, we have brought the Skoda Enyaq for testing to see how the product fits for Indian conditions.
Q/ You started selling on Flipkart this year. What’s the overall plan around digital?
A/ Digital is an interesting area. You have got brick and mortar one one end and clicks on other end and in between you have got what I call clicks and mortar. We are currently environment of clicks and mortar, where digital is working for lead capture, it's working to drive information to customers, to build the brand and of course, ultimately, to build showroom traffic. Thing like Flipkart is an innovative way of exposing the brand, of creating a shop there and it's again about further lead capture. You can also book a car online.
