Skoda's popularity a huge concern for Volkswagen India

Recently, Volkswagen said that it will reposition Skoda brand in India, to align it with its global practice. This means, the company wants to move Skoda brand down the pecking order; and reduce price of the cars sold under the brand name.

The Volkswagen Group, in the country, has three brands - Audi, Volkswagen and Skoda. The company had intended the positioning in same order - Audi as luxury car, Volkswagen as premium and Skoda right after the latter. Though adverse for the group's global practice, Skoda has become more popular as a premium car compared to Volkswagen brand.

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Volkswagen India currently sells seven models including the hatchback Polo, sedans Jetta, Vento, Passat, and Phaeton, SUV Touareg and the Beetle.

Skoda India, on the other hand, has managed to garner a greater fan-following despite just five brands in the market - hatchback Fabia, sedans Rapid, Laura, and Superb, and compact SUV Yeti.

Elaborating on the new strategy, Ulrich Hackenberg, Volkswagen Group board member and executive vice president, said, "It's a question of how different brands are placed against themselves in the market. Skoda has a quite high position (in Indian market). In the group, Skoda is little bit positioned under Volkswagen. So, we are on the way to make a correction."

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Since the popularity of Skoda cars in India has affected the sales and the premium standings of Volkswagen, this corrective measure might imply that cars sold under the Skoda brand will become cheaper in the future to make the positioning more distinct.

However, Volkswagen Group's decision to reposition Skoda beneath Volkswagen has raised eyebrows, especially among the Skoda loyalist, who are absolutely content with Skoda's current positioning in the Indian automobile market.

They believe the carmaker can only cut down prices by compromising on the features or by using cheaper materials.

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The carmaker can also repositioning Volkswagen's brand image by improving the standard of Volkswagen's after-sales service. There are reports of misdemeanours by authorised dealers, including one where a customer's Volkswagen Jetta was totalled at the dealership.

Another authorised Volkswagen India dealer was accused of taking 60 days, instead of two, for servicing a customer's Volkswagen Jetta.

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The after sales service can help in positioning, as car models in both the brands have little price difference. Comparing the ex-showroom Delhi price range of the two brands; the Skoda Fabia hatchback's price ranges between Rs 460,000 and Rs 810,000, whereas the Volkswagen Polo hatchback price range is Rs 480,000 to Rs 694,000.

Similarly, the Skoda Rapid sedan is priced between Rs 690,000 and Rs 950,000. On the other hand, the Volkswagen Vento sedan costs between Rs 729,000 and Rs 989,000.

Moving on to the premium sedan segment, the Skoda Laura sedan comes with a price range of Rs 12.9 lakh (Rs 1.29 million) to Rs 18.97 lakh (Rs 1.89 million), while Volkswagen Jetta is priced between Rs 13.6 lakh (Rs 1.36 million) and Rs 18.9 lakh (Rs 1.89 million).

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In the luxury segment, the Skoda Superb comes with a price tag between Rs 18 lakh (Rs 1.8 million) to Rs 24 lakh (Rs 2.4 million), while the Volkswagen Passat is available from Rs 22 lakh (Rs 2.2 million) to Rs 27.26 lakh (Rs 2.72 million).

Volkswagen India recently reported a 67.30 per cent increase in its Indian sales, with a figure of 7,266 units sold in October this year. With festival season around, the carmaker would eagerly hope that its positioning will help to sell more cars under Volkswagen brand.